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India raps WB over funds diversion

India and some other countries have objected to the role that the World Bank has played in going out of its way to help resolve the financial crisis in east Asia, diverting its funds to tune about $ 6 to 7 billion in the last fiscal year, which should have gone to development projects in the member- nations.

The issue was raised at a meeting of the development committee, the policy-making body of the bank, in Washington yesterday.

India is understood to have argued that east Asian crisis pertained to the liquidity problem which falls in the domain of the International Monetary Fund, leaving the World Bank to take care of the development.

Finance Minister Yashwant Sinha, in his speech at the committee yesterday, raised the issue when he said that the bank's response to the crisis had significant implications for the bank itself.

India had wanted a clear demarcation in the roles of the World Bank and the IMF in view of their scarce resources.

According to official sources, the bank authorities promised to consider India's view along with its complaint against the increase in the cost of World Bank loans.

The bank, in its efforts to raise its revenue, has raised lending charges which will affect big World Bank borrowers like India which received over $ 2 billion in the last fiscal year which ended on June 30 and has asked for $ 3 billion in the next fiscal year.

India also made out a strong case for raising the bank's resources and that new facilities should be established without affecting the existing resources.

It also asked for putting more resources at the disposal of the International Development Association, a World Bank affiliate, which provides loans at nominal interest to the poor developing countries.

Earlier, during his press conference, World Bank president James Wolfensohn, in reply to a question, said that the 12th IDA replenishment would be of the order of $ 12 billion.

Earlier, the development committee approved a six-point strategy for restoring sustainable growth and reversing the dramatic increase in poverty in Indonesia, South Korea, Thailand and Malaysia with a view to containing the risks of crises erupting elsewhere in the world.

UNI