The World Bank on Monday agreed to a greater say for member countries in dealing with issues of governance and corruption after India, Britain and others questioned the bank's 'overemphasis' on these matters at the cost of its core development agenda.
A communique unanimously adopted at the end of the World Bank's Development Committee meeting said: "Given the importance of this issue (governance and corruption), we stressed that the World Bank Board oversee the strategy as it is further developed and then implemented, and we look forward to a report (on the issue) at our next meeting."
Analysts said this compromise meant that the board, which comprises finance ministers from various member countries, would have a say in dealing with governance and corruption, a major problem in the implementation of World Bank projects.
It also meant that individual member countries would have a say in dealing with these issues and any action to deal with it would be in consultation with countries concerned where the projects are implemented.
The issue dominated the committee meeting during the World Bank-IMF annual meeting in Singapore.
Indian Finance Minister P Chidambaram made it clear that though the issues of governance and corruption were vital, "they cannot replace the core of the development agenda, which is the support needed by millions of the poor and downtrodden."
He said that development could not wait for improved governance and a corruption-free world.
"Both must go hand-in-hand. We support a simultaneous and curative approach to these issues in any bank strategy in this regard. This will avoid the risk of governance becoming a conditionality for development," he said.
World Bank President Paul Wolfowitz told a news conference at the conclusion of the committee meeting that laying stress on governance and corruption was "not intended to be new form conditionalities."
In case of specific cases pertaining to India, he said: "We have had some issues about rural health programmes which was resolved after Indian authorities cooperated."
"We will continue to be working with Indian authorities with our safeguards. It is again an example of most of our partner countries, who want to control corruption and improve governance themselves," he said.
World Bank resumed last month its $662 million lending to India for three health projects, which were discontinued for over a year following charges of corruption.
The bank's board of executive directors had approved the resumption after intensive efforts to dispel misgivings it might have had.
At his meeting with the World Bank president at that time, Chidambaram gave a commitment to have fully transparent procurement processes conforming to the highest standards. The government accountability plan was jointly drafted to bring about greater transparency in the procurement process of the health sector.
Of the three projects, two pertain to the central sector -- the reproductive and child health project-II which was estimated to cost $350 million and $170 million for national tuberculosis control project.
The third project, costing $142 million, is for Karnataka health systems development and reform.
The Development Committee communique clearly stated that the actions to promote good governance were crucial to successful development and poverty reduction, and helping member countries on these issues was important to the bank's mission and to achieving the millennium development goal to halve the number of people living below poverty by 2015.
Tackling corruption effectively and firmly was a significant part of this, the communique said, adding that the principal objective of the bank's governance work should be to help develop capable and accountable states to deliver services to the poor, promote private sector led growth and tackle corruption.
"We supported the bank's engagement in governance and anti-corruption work. . . we asked the bank to further develop and use disaggregated and actionable indicators, recognising that IDA resources will continue to be allocated through the existing country performance and institutional assessment and performance based allocation system," the communique said.
Chidambaram pointed out that as on date, there was no universally accepted methodology for measuring governance.
The correct approach would be to determine, in consultation with country governments and through extended research, a set of transparent, measurable and consistent governance indicators.
"Till such work was complete, the established deliberative mechanism of country policy and institutional assessment, which gives due weightage on governance indicators and also involves consultations with governments, should be followed," he emphasised.
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