As Modi man takes over as VP of China-sponsored infrastructure bank, civil society objects to "lack of transparency"

A cartoon on AIIB appearing in "Business Monitor" in 2014

By A Representative

India’s top civil society organizations have taken strong exception to manner in which India’s membership to the Asian Infrastructure Investment Bank (AIIB), a multi-national Asian bank founded by the Government of China, was ratified on January 16 “without any public debate”.

The objection comes on the day India chose controversial retired IAS bureaucrat, D Jagatheesa Pandian, former Gujarat chief secretary known to be close to Prime Minister Narendra Modi, as AIIB vice-president and chief investment officer of the AIIB.

Pandian served World Bank before returning to Gujarat as head of ex-blue-chip public sector undertaking, Gujarat State Petroleum Corporation (GSPC) in early 2000s, and has been under scanner for having “misled” the state about the hype he created around “unverified” oil-and-gas exploration in KG Basin, leading to heavy losses to the PSU.

India won the post on becoming the second largest investor to the AIIB, enabling it to elect to its 12 member Board of Directors with 10.34 per cent voting rights.

In a letter to Prime Minister Narendra Modi, the civil society organizations said, “It is unfortunate that the ratification of India’s membership to the Bank was done without a public debate. This deprives the citizens of a platform to raise their concerns and apprehensions about the functioning of the Bank, while the impact of the investments would be borne by the them.”

The letter to Modi has been signed by National Alliance of People’s Movements, National Alliance of People's Movements, Narmada Bachao Andolan, National Fish Workers' Forum, Indian Social Action Forum, International Rivers, Environics Trust, Environment Support Group, among others.

From Gujarat, three NGOs, Paryavaran Mitra, Paryavaran Suraksha Samiti and Machchhimar Adhikar Sangharsh Sangathan signed the letter.
The letter says, India’s ratification without public debate “deprives the citizens of a platform to raise their concerns and apprehensions about the functioning of the Bank, while the impact of the investments would be borne by the them.”

This is particularly serious, India is likely to “receive half of the $1.2 Billion the bank would disburse for infrastructure projects by the end of 2016”, the letter says.

“We are aware that AIIB has promised quick disbursal of funds with ‘high efficiency at low cost’ and takes pride in its ‘lean, green and clean’ policy”, the letter says, underlining, “While the AIIB seems a little too eager to start its investments, the same does not reflect on ensuring a strong set of safeguard policies.”
Pointing out that at present the AIIB is involved in finalizing its Environmental and Social Framework (ESF), the letter says, “This demands a serious debate”, adding, already, the draft has come under criticism for “outsourcing” ESF responsibility to selected clients.
“The need for infrastructure development is one that cannot be discounted in a rapidly growing economy like our country”, the letter insists, adding, “These developmental projects would have the positive impact that the government wishes only when proper safeguards and accountability mechanisms are in place.”

Saying that an accountability mechanism is particularly important for a country like India, the letter says, it alone can take care of the problems of displacement of local people without proper rehabilitation, leading to “serious and irreversible damages to its natural resources.”

Demanding an urgent “open debate both within and outside Parliament on role in and implications for India and ESF”, the letter also wants the Government of India to conduct “face-to-face consultations with the civil society groups.”

The civil society organizations’ objections are similar to the ones raised by the US, which wondered that the AIIB would at all have “high standards of the World Bank and the regional development banks… particularly related to governance, and environmental and social safeguards.”