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Distribution of Water: the World Bank’s new trap. The example of Kerala (India)
by Eric Toussaint , Denise Comanne
2 April 2007

The World Bank is actively engaged in improved the system of water supply in the State of Kerala. [1] The Bank’s policy clearly aims at withdrawing the State from its responsibilities in the design and the management of the system of supplies and distribution of water. According to the programme set up by the Bank with the support of the government of Kerala and the central government in Delhi, the State intervenes only in the issue of financing. It borrows the funds from the World Bank and repays it with an interest rate of 2%.

In order to understand the system set up by the Bank, we went to Kadanad, 50 km from Cochin where Joy Thomas, the president of the Panchayat, received us. Panchayat is a rural territorial entity equipped with an elected assembly and is present everywhere in India. The State of Kerala consists of about 1,000 Panchayats among which 110 have been included in the programme masterminded by the World Bank. Approximately 4,000 families live in the Kadanad Panchayat i.e. roughly 20,000 inhabitants. Agriculture is the principal activity: rubber production is pre-dominant, while 70% of the rice fields were abandoned due to lack of water, and especially due to lack of profitability. Rice imported from other Asian countries competes with the locally produced rice. In the Kadanad Panchayat, rubber production is almost a monoculture.

The president of the Panchayat explained to us that the work is under progress in order to improve storage and purification of rainwater and river-water. This will enable 300 litres of water to be provided per day per family (approximately 60 litres per head). According to Joy Thomas, the principle is simple: the World Bank puts in 75% of the funds (one will further see that in reality this money has to be paid back to the Bank), Panchayat puts in 10% and the target families put in 15%. The total cost of the investment rises to 35 million rupees (approximately 636,300 euros since 1 euro = 55 rupees).

What are the various stages of the project?

1. The Panchayat agrees to enter the system conceived by the World Bank.

2. An NGO is chosen by the Indian State to manage the actual launching of the project. In this case, it is ESAF, Evangelical Social Action Forum. ESAF provides 6 engineers and 14 employees who lay out the project and direct the construction work. According to Joy Thomas, ESAF receives 10% of the total amount for the project, that is to say 3.5 million rupees (63,630 euros) as payment against its services. Its mission is accomplished once the system starts to function.

3. The families intending to become beneficiaries of the project must pay their share (i.e. 15% of the total cost). There are two categories of beneficiary families: those that receive river water through canals and those that receive rainwater collected in large reservoirs (under construction now). The first category will pay 70 rupees per month. The second category will pay 2,300 rupees in several instalments and will become joint owner of the large rainwater reservoirs. The recipients will pay for the maintenance of the equipment and this expenditure is included in the amount indicated above.

4. The Panchayat pays 10% of the project cost on the basis of the grant provided by the State of Kerala.

It must be realised that the Bank intelligently plays its game in this affair. From the outset, everyone is gaining: the State which is free from responsibilities, the NGO which just accompanies the consumers whose interests seem to be taken into account, the local authority is not involved in the debt. The only people not to be invited to the festival are the poorest, who do not at all have the means to have their voice heard. Yet, the State will repay the World Bank by drawing from its tax revenues, which are paid mainly by the poor (tax on consumption).

What are the concrete criticisms then?

1. This system is unacceptable because it does not guarantee the population’s universal access to drinking water: indeed, the families, which are unable to pay 70 rupees per month or 2,300 rupees in several instalments, are excluded from the right to water. During our conversation, the Panchayat president acknowledged that water used to be freely distributed earlier. The sum of 70 rupees is a considerable amount for poor families (not to mention the 2,300 rupees referred to as above). In order to verify, we asked him if the Panchayat gave grants to poor people, he answered in the affirmative. 646 people are assisted because they do not have any income: they receive a monthly sum that varies from 110 to 140 rupees (or from 2 to 2.5 euros per month!). How can they earmark 70 rupees per month for water only, if they receive just 110 to 140 rupees [2] of minimum income guaranteed per month?

2. The public authorities are released from a large part of their responsibilities in this system whereas they should be responsible for the management of the quality of water, its storage, its collection, its distribution and its purification in the interest of the entire population. The authorities must recruit qualified personnel and guarantee the quality of the services rendered to the population by integrating them into the decision-making process. On the contrary, in the system invented by the Bank, at first the NGO replaces the authorities; then the recipients take over because they are left to themselves for the maintenance of the equipment.

3. The World Bank stands out a bit more in the field of water without being charitable. It will be completely reimbursed and the interest will be paid to it as well. Why then resort to its services? Why not resort to taxes and revenues for the direct financing of the project cost without resorting to an external debt in hard currencies?

In conclusion, two important actors play an eminent yet questionable part within the current framework: the Indian State supports the system of setting the authorities free from responsibilities while indebting the country and the World Bank is the instigator of this new trap.

Translated by Sushovan Dhar

Footnotes :

[1The State of Kerala is in the extreme South-Western part of India. It has 32 million inhabitants. The current government is run by two Communist Parties (CPIM and CPI).

[2336 agricultural labourers of more than 60 years of age receive 120 rupees per month; 103 handicapped persons receive 140 rupees per month, 81 widows, 115 old people and 11 unmarried women of more than 50 years of age receive 110 rupees.

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

Denise Comanne

Was a militant feminist active in local and international struggles against capitalism, racism and patriarchy. She was one of the founders of CADTM along with Eric Toussaint and others.
A tireless revolutionary, Denise struggled for Human emancipation from all forms of oppression to her last day.
She died suddenly on 28th May 2010 shortly after taking part in a memorial forum for the fifty years independence of the Democratic Republic of the Congo.
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