Bank on them

There is enough evidence to suggest that corruption is among the most important reasons for countries remaining poor and backward. So, anyone involved in multilateral funding to help remove poverty has no option but to address the problem of corruption. And that is precisely what World Bank President Paul Wolfowitz has done by deciding to put on hold projects worth around $800 million in India's health sector on account of serious allegations of corruption.

Even the Volcker report and its fallout on Natwar Singh were related to the problems of corruption. To be sure, it hurts to be put in the same bracket as countries like Chad, Kenya, Bangladesh and Congo, all of which have had loans put off or postponed due to the corruption issue. In the case of Congo, Wolfowitz refused to allow a debt write-down till government procedures were made more transparent. It is equally galling that while India's 88th rank on the Transparency International scale is not so great, Kenya and Congo are ranked 144th, while Bangladesh and Chad are even lower""158th.

But once you get over this stigma of being bracketed with corrupt countries, what's the problem? Surely, it cannot be anyone's case that India is not one of the corrupt countries in the world and that public contracts are not influenced deeply by bribes. Close to three years ago, this newspaper reported the preferential treatment given to one of the firms against which complaints were made to the World Bank and the investigation into which led to the postponing of fresh loans for the health sector. More importantly, the ministry of health was well aware of these complaints and its own documents showed instances of favouritism. In several cases, the firm would quote prices that were higher than those of the competitors, who would, for one reason or the other, get disqualified! The competitors, mind you, were not fly-by-night operators, but in some cases, the country's largest suppliers of particular drugs. Since, despite such overwhelming evidence, the government was not able to do anything to check the rampant corruption, someone else had to step in""and that someone happened to be the World Bank. What is heartening is that the government has not questioned the World Bank's jurisdiction or told the multilateral body that it should not interfere in its internal affairs. Indeed, it has written to the state governments and central departments, asking them to clean up their acts. Whether this will work or not is an open question. This is especially so because when asked to check leakages in huge expenditures before undertaking new projects, the ministry has taken the view that by such logic there can be no spending at all! By deciding to stop funding, the Bank has done a favour by forcing the highest in the government to take a very serious look at issues such as corruption.