Muddy waters: inside the World Bank as it struggled with the Narmada projects

When the World Bank cancelled its loan for the Sardar Sarovar Project on the Narmada in 1993, it was the first time that the institution had terminated an agreement due to environment/rehabilitation reasons. The decision culminated nearly a decade of an intense tussle within the World Bank between the central and regional offices and between the India division and those in charge of resettlement; between the World Bank and transnational and national non-governmental organisations; between the World Bank and the Government of India and the Government of Gujarat; between the board and the management of the institution; and across many other areas of conflict. For the World Bank the Narmada issue was a defining moment in its relations with NGOS. There were also two lasting outcomes - a greater disclosure of information and the establishment of the independent Inspection Panel. However, even as issues relating to rehabilitation and environment are now integral to World Bank appraisals, there remain doubts within the institution about the importance of such concerns.