Only a year ago, buoyed by landslide electoral victory, the Chief Minister of Andhra Pradesh had taken the World Bank heads on by calling its policy 'an anti-people condition for lending.' Taking exception to the governments' promised free electric power to the farmers, the World Bank had expressed its inability to support some of the components of the structural adjustment programmes in the state. By refusing to get cowed down by the diktats of the apex lending institution, the Chief Minister had made clear his intentions of rewriting the previous regime's 9-years of donor-driven history.

Far from any rewriting, the Chief Minister Dr Y S Rajasekhara Reddy may well be part of the same history. Having negotiated a World Bank's loan of Rs 7,510 crores, of which Rs 1,610 crores is for structural adjustment, Rs 1,300 crores is for municipal infrastructure/slum development, Rs 3,000 crores for modernisation of right and left bank canal of Nagarjunasagar project and Rs 1,600 crores for roads, the Chief Minister has followed his predecessor’s footsteps. However, to avoid embarrassment the Chief Minister has clarified that there are no strings attached to this loan.

Much as one would like to accept this blind clarification, it is a forgone conclusion that development aid of any hue is not without strings. Further, the acceptance of the one of the largest development loan comes about at a time when a report by the well-known British charity Christian Aid has held the 'development assistance' by Department For International Development (DFID) of the British government responsible for the more than 4,000 farmers' suicides in Andhra Pradesh in the last 10 years. Will the fresh 'cache' of assistance not augment peasants' agony?

It indeed will as the UK's development policy is much too similar to that of the World Bank and the IMF, based strongly on liberalizing principles. The report "The damage done: Aid, death and dogma" provides compelling evidence that unfettered free trade policies backed by the British government have led to a crisis in Indian agriculture, spiralling rural debt and an epidemic of suicide among poor farmers. The report unveils the shocking fact that the funding was also used to run a privatising scheme that cost some 45,000 public sector workers their jobs.

Christian Aid's revelations vindicate what celebrated author George Monbiot has been writing about in his column in The Guardian. Exposing the unholy alliance between development aid and political power, Monbiot had questioned the British Government's motive behind continuing development aid (£342 million) to Andhra Pradesh. Monbiot had even indicted the then government of Andhra Pradesh for conniving with the British companies in bargaining away the interests of the poor by privatising public utilities and creating business opportunities for their overseas clients.

Although the Tony Blair government has announced a 'U' turn on its development policy saying that the countries henceforth will not be forced to liberalise and privatise in order to receive aid, previous policy of unrestricted 'free' trade has already devastated the lives of the poor people in India, Ghana and Jamaica. While in Ghana the doctrinaire of free market policies had effectively overturned a law to protect poor farmers, increasing numbers of women have been driven to prostitution and drug smuggling in Jamaica by a continuing round of liberalization that has wrecked their employment opportunities.

Back in Hyderabad, the report has come in handy for the Congress to flay the erstwhile government led by the Telugu Desam Party. Reacting to the Christian Aid report, the Congress has held former Chief Minister N Chandrababu Naidu responsible for the epidemic of farmers' suicides and asked him to take responsibility for the tragedy. As charges get traded across political lines, the CPM has asked the present government to spell out its stand with regard to the World Bank loan. Is the present government not toeing the route taken by the previous regime?

Whatever be the political fallout of the controversial report the crucial question remains: Why have the states' not been able to pull out without development aid? Why has development aid remained inevitable? What forced the self-assertive Chief Minister to chew his own words? Often kept under wraps, the truth of the matter is that the states in the country are reeling under a cumulative debt of a whopping Rs 791,400 crores! Without raising grants and loans in development assistance it might be practically impossible to run the affairs of the government.

According to the Reserve Bank of India's Handbook of Statistics on States' Finance 2004, Andhra Pradesh ranks fourth amongst indebted states with a debt of Rs 57,574 crores. Uttar Pradesh, West Bengal and Maharashtra top the table. The Centre is in no better position to help the debt-ridden states either. According to the Union Budget 2004-05, for the year ending 2004 the country had accumulated public debt to the tune of Rs 1,181,427 crores. In addition, the external debt stood at Rs 47,407 crores during the same period.

It will be for economists to unfold the hidden implications of the current debt-load. But it is clear that the bustling economy is only on the surface. And conveniently kept away from the general public, these figures are passed on to successive governments by the previous regimes. Change in the government may have a new name but the face will continue to remain the same. How does it matter if it is Reddy and not Naidu!