August 14, 2000
World Bank officials took a Hippocratic oath when they agreed in 1997 to lend India more than a half-billion dollars to mine coal -- above all, Bank officials swore to themselves, the project would do no harm. "We thought we could make a real difference in this project," says Edwin Lim, the Bank's director for India. "We've been disappointed with the project on a number of fronts."
Bank officials envisioned that many displaced subsistence farmers would be transformed into small-business people. But the Bank made a skeptical Coal India responsible for this ambitious retraining, despite the company's lack of experience with such a task. With the company failing to satisfy Bank expectations, both sides agreed last month to cancel the loan, with only half the money disbursed.
Bank officials realized as early as 1998 that thousands of villagers wouldn't even get Coal India's training, let alone go into business, says the story. Poverty specialists at the Bank suggested a solution that hadn't been in the original loan plan: Coal India should provide refilled mine land or unused company property for peasants to start livestock farms, fish hatcheries or even forestry operations. These pursuits would be more familiar to people whose agricultural roots reached back untold generations, the specialists said.
Coal India signed on, at least in principle, in 1998. But the company didn't agree to set up test projects until a year later. And even today, the land-based projects languish in planning stages. Bank officials carried out six supervisory visits in 1999 and this year. Each tour led to a stern letter to Coal India about the slow progress in dealing with the woes of resettled villagers. By this spring, frustration had mounted on both sides, as the Bank's warnings started to sound more like ultimatums.
Bank officials defend their gamble on Coal India. "We were confident that these projects would be better done with our involvement than without it," says Lim.
Company officials are ambivalent. "The World Bank loan was very welcome when it came - no doubt," says SN Sharma of Mahanadi Coalfields. But "if some part of it isn't available, we'll manage. India will run, World Bank loan, or no World Bank loan."
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