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Union Finance Minister mentioned the term ‘multilateral development assistance’ in her Budget speech on July 23 in the context of providing aid to states. However, did she use the term only to score political brownie points?
At least one expert agrees that this could indeed have been the case. “Loans or assistance received by states from multilateral development banks (MDB) are not mentioned in budget documents. State governments also take loans from MDBs at their level,” Arun Kumar, a former professor of economics at Jawaharlal Nehru University, told Down To Earth (DTE).
“The process of taking loans from MDBs is long and complicated. So, it cannot be said in advance whether the states will get actually this money,” said Kumar.
But what are MDBs?
MDBs, also called international financial institutions, provide financial assistance and loans to developing and underdeveloped countries. They include institutions and banks like the World Bank, Asian Development Bank and the International Monetary Fund.
The Union finance minister made special mention of MDBs while alluding to the Himalayan state of Himachal Pradesh.
“Last year, Himachal Pradesh suffered heavy damage due to floods. Our government will provide assistance to the state for reconstruction and rehabilitation through multilateral development assistance,” said Sitharaman.
Sitharaman also mentioned Uttarakhand and Sikkim in her speech. Like Himachal Pradesh, these two Himalayan states too had suffered due to natural disasters last year.
“Uttarakhand has also suffered damage due to cloudbursts and massive landslides. We will provide assistance to the state,” Sitharaman noted, adding, “Recently, devastating floods and landslides in Sikkim have devastated the entire state. Our government will provide assistance to the state.”
The Union minister did not talk of multilateral development assistance or banks in the case of Uttarakhand and Sikkim. But she also did not specify whether Uttarakhand and Sikkim will be provided financial assistance by the central government.
A careful reading of the minister’s speech also shows that she talked about providing financial assistance through MDBs to Bihar and Andhra Pradesh as well.
In case of Bihar, she said, “Additional allocation will be provided to support capital investment in the state. The requests of the Government of Bihar for external assistance from MDBs will be processed expeditiously. ”
On Andhra Pradesh, Sitharaman said: “Our government has made concerted efforts to fulfil the commitments made in the AP Reorganisation Act. Understanding the need for a state capital, we will facilitate special financial assistance through multilateral development agencies. An amount of Rs 15,000 crore will be provided in the current financial year, and additional funds will be given in future years.”
The finance minister mentioned MDBs in another part of her speech as well. It pertained to 100 major cities of the country: “In partnership with state governments and MDBs, we will promote water supply, sewage treatment and solid waste management projects and services for 100 large cities through bankable projects. These projects also envisage using treated water for irrigation and filling of tanks in the vicinity.”
However, upon going through Sitharaman’s speeches of the last five years, DTE found that she had never mentioned MDB assistance in her speeches before.
“The references were made purely for political advantage. It is a classic case of the Hindi aphorism about an elephant having different types of dentition for display and for eating,” said Kumar.