The Bank's accommodative stance is not surprising. It needs a success story. Seemingly, it had one in Pakistan, till the military coup changed the scenario. Even so, note that Mr Wolfensohn is no hurry to plunge into India.

Annual aid goes up at best by $1 billion in the foreseeable future. For upping assistance, the World Bank has a time horizon of five years.

Why five years? Is the Bank looking for the green signal from the US? It could also be that the Bank does not see India as being ready to absorb expanded assistance. There is no worthwhile social sector development plan, despite the over-abundant foodgrain stocks available for fuelling a massive food-for-work programme. Highway development is yet to take off. It did seem that the oil cess would substitute toll, but this is yet to be declared an explicit strategy.

The reckoning is that the World Bank expects India to bungle through with a credible reform programme in about five years. So, it waits. India is short of power and could do with a few large projects. These could absorb a couple of billion dollars of annual funding. What holds back Mr Wolfensohn? By way of an answser, read the following quote:

"The politicians...chose to turn a blind eye to the refusal of the World Bank to finance power projects unless they were selected in a competitive way. The country lost at least $2 billion of concessional loans for the power sector apart from losing the advantage of competitive power". Thus wrote Mr G V Ramakrishna, former Planning Commission member, in this paper's November 14 issue.

To this day, policy does not focus on producing power in the most competitive way; the accent is on ensuring that power producers get paid by the cash-strapped state electricity boards (SEBs). The producers insist on escrow cover; the alternative offered is power reforms to improve SEBs' realisations-with shortfalls being made good by the state governments concerned (and in the last resort by the Centre). The half-way reform scenario leaves abnormal transmission and distribution losses open; this is hardly conducive to power tariff re-structuring.

Why, even the fuel policy for power leaves much to be desired. LNG is slated to become increasingly expensive with 100 per cent fuel parity (up from 75 per cent) and creeping depreciation of the rupee. The power producer is protected by cost-plus pricing, but gas-based power is slated to become unaffordable.

Logically, policy should favour coal. This will require investment in washeries; but investment will be worthwhile only when coal is priced on the basis of calorific value. There is more to reform than just making the consumer pay more. There are a range of inter-linked policy issues; these have yet to be identified, let alone addressed. Mr Wolfensohn's five-year time horizon seems appropriate, for now.