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Beijing-backed, India-supported infra bank lacks compliance mechanism, "rue" Andhra farmers

An anti-AIIB protest
By Our Representative
Even as the People’s Convention on Infrastructure Financing is all to set to meet in Mumbai on June 21-22, ahead of the Asian Infrastructure Investment Bank’s (AIIB’s) annual meeting on June 25-26 in Mumbai, one of the civil society networks has said that the new bank has no mechanism to address grievances of the those threatened the massive infrastructure projects it seeks to fund in India.
In a communique, issued on June 20, the National Alliance of People’s Movements (NAPM) regrets, “AIIB currently goes by the policies of the co-funders like World Bank and Asian Development Bank (ADB) in the absence of a policy of its own”, yet, it has no mechanism where farmers could complain. Following China, India is the second largest investor in AIIB, which has in all 86 approved member countries.
Thus, says NAPM in an email alert sent to Counterview, “Farmers affected by the land pooling scheme of Amaravati Sustainable Capital City Development project in Andhra Pradesh have raised questions on AIIB and World Bank co-funded project and had to take up their grievances with the compliant mechanism of the World Bank, the co-financier of the project, in the absence of compliance mechanisms and policies of that of AIIB.”
Says NAPM, networks with tens well-known civil rights organizations, “AIIB has a co-financing model which serves AIIB well, particularly if other institutions, such as the World Bank and Asian Development Bank, do not charge the AIIB all the costs they incur for due diligence and oversight. With low-cost co-financing fees, the AIIB can make significant profits since its own loan charges can easily cover its low administrative expenses.”
Notes NAPM, “Other institutions, with their full suite of safeguard policies, protect the AIIB from reputational risks associated with infrastructure projects”, giving the example of how two of AIIB-funded projects, one being the Transmission System Strengthening Project, which it is co-financing with ADB, and the other being Amaravati as the future capital of Andhra Pradesh, funded along with World Bank, leaves AIIB absolved of any obligations.”
A civil society meet in Andhra Pradesh on the state's future capital Amravati
According to NAPM, “Policies related with due diligence applicable are the responsibility of the lead financier, and there is no clarity on the role and liability of AIIB”, adding, “Concerns have also been raised regarding AIIB’s proposed investment in the National Investment and Infrastructure Fund (NIIF) as a financial intermediary. which will further reduce the transparency of how this money will be spent in high-risk investments without taking proper accountability.”
NAPM says, the Mumbai convention will see various Indian groups joining their counterparts from across the world in raising questions “on the energy policy as well as their concerns about shifting decision making power in approving projects from the executive board, which is accountable to constituent governments, to that of the bank management.”
AIIB’s lack of concern for complainants has come about, says NAPM, at a time when a consensus has emerged among “international finance Institutions (IFIs) that infrastructure constitutes a primary element for pushing growth.” It adds, “The IFIs have been perpetuating the assumption of a huge infrastructural gap in emerging countries. Such gaps could only be filled by diluting regulatory mechanisms that govern labour markets, environmental safeguards and land acquisition laws.”
Pointing out that the “IFIs perceive such dilutions to improve investment climes and help improve ‘ease of doing business’ rankings”, NAPM adds, “Besides institutional and regulatory issues, lack of finance is often viewed as a major reason for the slow pace of infrastructure development in most of the developing and Less Developed Countries.”
AIIB’s lack of concern has come about also at a time when, says NAPM, while “global infra investment needs are projected at about 4% of global GDP, for India, this is a huge 9% of its GDP”, adding, “These huge estimates are served to propagate the need for development finance, particularly private finance for which nations will have to create the investment climate through deregulation and ease of doing business.”

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