CPI(M)’s Kerala ADB Loan:
– V Shankar
There has always been much talk of the struggle between Kerala line vs Bengal line in the Communist Party of India (Marxist). This time we have, not a struggle between Kerala vs Bengal but a controversy between the active pro-liberalisation ‘young turks’ and the conventional, passive pro-liberalisation old guards in the CPI(M).
After a period of lull following the factional reconciliation over the choice of VS Achuthanandan as Kerala’s new CPM Chief Minister, the rift between the Achuthanandan and Vijayan factions has again started growing.
Pinarayi Vijayan, Politburo member and state secretary of the CPI(M) has earned the dubious distinction of perhaps being the first ever Politburo member of a Communist Party facing a CBI enquiry for corruption charges in the history of the Communist movement in the country. A recent Kerala High Court judgement has ordered a CBI enquiry into the SNC Lavalin scandal; in which Pinarayi Vijayan stands accused of having taken kickbacks to favour Lavalin over others offering a better deal, during his tenure as Power Minister in the previous LDF regime in the state. VS, who had campaigned hard against Coca Cola and ADB loan during the Assembly election last summer, now finds himself in the unenviable position of defending a huge $222.2 million (Rs. 995 crore) loan agreement his government has signed for the Kerala Sustainable Urban Development Project (KSUDB) with the same ADB.
VS and his supporters claim that the agreement has been signed behind VS’ back on behalf of his government with the connivance of the Vijayan faction. This has resulted in an open rupture in the CPI(M) with VS supporters clashing with Vijayan supporters in VS’ native district, and even organizing a signature campaign against Vijayan – an act that amounts to indiscipline in the party. Finally, the Central Committee had to intervene to restore a semblance of unity by forming a 5-member advisory committee comprising the LDF convener as well, which is supposed to meet every week to iron out differences in running the Government. Prakash Karat has also admitted that contrary to the claims of the Vijayan faction and Finance Minister Thomas Isaac, VS was indeed kept in the dark!
In West Bengal, the Haldia Development Authority issues a land acquisition notice that takes a toll of more than half a dozen lives. The Chief Minister and all senior Party leaders first deny that such a notice was at all issued and then Buddhadeb says it was a blunder and that he has asked the district administration to ‘tear up that piece of paper’! In Kerala a loan agreement is signed with the ADB and the Chief Minister claims he did not know about it! Who is the CPI(M) trying to befool? And if indeed these claims of ‘ignorance’ are true what has happened to the tenets of collective functioning within the CPI(M)? Or will the CPI(M) now agree that MNCs, big corporate houses and international financial institutions have developed their own lobbies within CPI(M)-led governments?
No matter whether VS was in the dark or not, the ADB loan has major adverse implications for the nature of governance and social sector spending in Kerala. Prakash Karat says that the party is not against taking loan from any bank in principle, including ADB, as long as Structural Adjustment strings are not attached. The fact is that no loan or aid from such international institutions comes without direct or indirect conditionalities, but the CPI(M) naturally needs to keep alive a fiction to the contrary. ADB loans in particular are known to carry conditionalities like increased private participation, privatisation and commercialisation of public utilities, creation of a flexible labour force, etc. Finance Minister Thomas Isaac is however thrilled that the ADB conditionalities in case of the KSUDB loan are less harsh than in the case of the Kolkata Environmental Projects!
The Bank, according to Isaac, has ‘conceded’ that user charges for water will be levied from municipalities instead of individual consumers in the beginning. This is certainly not a guarantee that user charges will not be directly levied on individual users ever. Even otherwise, it does not carry any meaning because the municipalities will levy the very same user charges on the very same people in any case. How else can the municipality or the state government raise funds to repay the loan?
The first blow of the loan conditions will be in the form of liberalizing the control of Kerala Water Authority (KWA). The process of redefining the role of KWA into an enabling regulatory framework and agency to facilitate private sector participation has already begun. The role of KWA will in future be only to ‘regulate’ the private players in their search for profit and loot of public resources like water.
The loan is also an attack on the autonomy of the state and the municipal corporations (the loan initially targets the five corporations of Kochi, Kollam, Kozhikode, Thiruvananthapuram and Thrissur) that will not be allowed to prioritise their annual budgets and revenue mobilization according to their own political and economic considerations. Rather, these will be dictated by the ADB in the interests of private players and multinational corporations. Moreover, ‘consultants’ will have to be appointed – chosen not by the State but by the Bank – at a cost of $10.2 million (Rs 46 crore). The state also loses its right to have bilateral negotiations with other financial agencies.
Most importantly, the tariff and taxes will have to be increased and fixed according to the directive of the ADB. Even the people below poverty line (BPL) will not be spared. All existing street taps will now be metered with no budget for new installations.
By all indications, the fabled Kerala model of development is now giving way to ADB-driven governance. This would mean, among other things, a serious drop in social spending and greater commercialisation of critical sectors like education, health and hygiene. Ironically, the undoing of the ‘Kerala model’ gathers momentum at a time when renowned economist Prabhat Patnaik, who has been the biggest proponent of the Kerala model calling it the greatest marvel of Marxist theory and practice in India, happens to be the chairperson of the state planning board.
On December 28, 2006 more thgan 100 organisations joined hands to form the People’s Forum against ADB (PFADB) and press for annulment of the KSUDP loan. The PFADB has pointed out ADB’s dismal record in urban development as borne out in two previous ADB projects in Karnataka. It has also pointed to various possibilities of internal resource mobilisation in Kerala including tapping the state’s vast reserve of foreign exchange remittances from Keralites working abroad. CPI-ML