More debtfare than healthcare: business as usual in the Multilateral Development Banks’ COVID-19 response in India

Abstract

Multilateral Development Banks (MDBs) have been a vital source of funds for the global South in responding to the COVID-19 pandemic, particularly in the healthcare sector. Prior to the pandemic, the big MDBs’ approach to healthcare reflected the post-Washington Consensus, that is a largely neoliberal agenda perpetuating the expansion of private healthcare markets through financialization mechanisms, though with some emphasis on a minimal level of universal healthcare. We studied the MDBs’ approaches to healthcare in India to evaluate whether the pandemic resulted in: (a) a re-evaluation of their healthcare models to ensure they were fit for a pandemic; (b) a business-as-usual approach; or (c) a disaster capitalism response exploiting the current socio-economic milieu to further neoliberalization processes. We found that the MDBs adopted an inadequate business-as-usual approach that is intensifying the financialization of healthcare in projects using interventions at the micro through to the macro level. This path dependent approach emphasizing multi-scalar financialization has long-term implications for human well-being. Further, we contend that MDB lending is deepening ‘debtfare’ through its healthcare and other support, a term Susanne Soederberg (2014, p. 3) conceived to describe the way neoliberal states ‘mediate, normalise and discipline the monetised relations that inhabit the poverty industry.’

Keywords:

• COVID-19
• healthcare
• multilateral development banks
• privatization
• financialization
• debt

Introduction

The COVID-19 pandemic has led to significant economic disruptions in the global South that have been compounded by declining investment, remittances, and tourism dollars. The pandemic has demonstrated that low and middle-income countries still possess limited fiscal capacity to adequately respond to crises, and that Multilateral Development Banks (MDBs) thus remain relevant. As the Institute for New Economic Thinking (2021, p. 9) highlighted, ‘[a]dvanced economies are expected to have taken fiscal support spending to 22.6 per cent of their GDP on average, but the comparable figures are only 6.2 per cent for emerging market and developing economies and 2.4 per cent for the low income countries.’ Thus, the more than 30 operating MDBs (Bazbauers & Engel, 2021) are functioning as significant sources of development finance to the global South in addressing health and other issues imposed by the COVID-19 pandemic. Considering the centrality and salience of healthcare in combating the virus, it is important to understand what projects MDBs have supported, how they have done so, and whether this will influence future directions for policy and service delivery in those sectors.

Healthcare has, for the most part, been only a secondary concern for MDBs - the World Bank led engagement in the sector from the 1980s but most other MDBs were slow to follow. Still, the World Bank’s neoliberal approach to the sector has had a disproportionate impact on the global health agenda. In the case of India, the agenda introduced by MDBs has increasingly been co-opted by the national government, resulting in an approach favoring austerity and privatization of health services. Before the pandemic, over 60% of hospital beds in India were privately managed and the national government expended only around 1.2% of Gross Domestic Product (GDP) on healthcare (Chakravarthi et al., 2017; World Bank Group, 2007).¹ India’s poorly coordinated, primarily private health system often neglects the most indigent and has overall responded unsatisfactorily to the pandemic.² As discussed shortly, this structure meant that many poor people needed to borrow money to get hospital care, making it a ‘debtfare’ system. Further, India has long been one of the biggest borrowers from two of the MDBs studied here, the World Bank and Asian Development Bank (ADB). Thus, India offers an important single case study of the MDB pandemic response in a state with a significantly under-funded healthcare system.

Using a neo-Gramscian approach that analyses the historically changing dialectical relationship between the MDBs (particularly the World Bank) and the Government of India (GoI), we seek to highlight the ‘patterning and framing tendencies’ of international policy transfer and how they have thickened and deepened the neoliberalization of healthcare in India during the pandemic (Brenner et al., 2010, p. 185). The state’s neglect of health before the mid-1980s opened an opportunity for the Bank to propagate neoliberal policies in the sector through lending instruments, training, technical assistance and other support, to create a new common sense (Gramsci, 1971). Over time, the health narratives of the GoI and MDBs converged on many points. The government now promotes universal health care through insurance, which is an agenda that appears universal but actually offers minimal, and indeed sometimes still no, coverage for the poor. We seek to analyze the pandemic response as a neoliberalization process that is ‘simultaneously patterned, interconnected, locally specific, contested and unstable’ (Brenner et al., 2010, p. 184), though we particularly highlight the international influences.

This article analyses the support that major MDBs have provided for both the public and private healthcare sectors in India from the start of 2020 to June 2021. It covers lending from the: ADB including its private sector operations; Asian Infrastructure Investment Bank (AIIB); New Development Bank (NDB); and the World Bank, including its private sector arm, the International Financial Corporation (IFC). Our analysis focuses particularly on the World Bank due to its leading role in MDB engagement in health lending and global health governance from the 1980s. Further, the loans dispersed by MDBs during the pandemic and analyzed in this article show the World Bank setting the path and the ADB, AIIB and even NDB following. The aim is to evaluate whether the MDBs have: (a) Reassessed their healthcare models to ensure they were fit for purpose in response to the pandemic; (b) adopted a business-as-usual approach; or (c) exploited the pandemic as a disaster capitalism opportunity to further drive neoliberal reform. Klein (2007, p. 6) defines disaster capitalism as ‘orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting marketing opportunities.’ Dimakou et al. (2020) have argued the World Bank used the pandemic in this way. In the health sector, if this were the case, we would expect to see radical privatization efforts, or funding to individuals through vouchers for healthcare. Our assessment is framed by a historical analysis of the impact of MDBs on the global health agenda, while the loan analysis draws on Engel’s long-term study of their lending. For example, she analyzed 113 World Bank loans to Indonesia and Vietnam to explore the differences between the Bank’s Washington Consensus and post-Washington Consensus lending (Engel, 2010).

The analysis evinces that the MDBs have taken a chiefly business-as-usual approach, meaning they continue with minimal standards of universal health care through insurance, piecemeal privatization efforts, and significant funds flowing to private hospitals, clinics and laboratories directly or through private sector operations, thus underwriting the existing, predominantly private, medical system (Jaffrelot, 2020; Paliwal, 2020). This business-as-usual approach demonstrating strong path dependency has been inadequate in responding to the pandemic as it has failed to address the radical inequities in India’s healthcare system, which has strong spatial dimensions disadvantaging rural dwellers and remote states, as well as socio-economic ones that leave women, India’s scheduled castes and tribes, and other vulnerable groups neglected. A fit-for-purpose response would have addressed these social inclusion issues, along with out-of-pocket expenses, as well as the rights of the healthcare workforce, and it would have sought to build permanent capacity in India’s healthcare system. We found that the MDBs were implementing multi-scalar financialization in their health engagements by directing finance through the state to private healthcare providers, or they were directly funding them; in addition, they fund financial intermediaries and private equity investment firms. Thus, financialization is a vital lens, but we go beyond it to ‘debtfare.’

While examining health sector support, our attention was drawn to the large loans supporting lending to Micro, Small and Medium Enterprises (MSMEs) as most of these are microenterprises. A portion of microfinance loans in India—as elsewhere—are diverted to consumption and healthcare (see inter alia Bateman, 2010; Fernando, 1997; Karim, 2011; H. Weber, 2006). The MDBs loans to support MSMEs were both direct and through financial intermediaries who on-lend. Even before the pandemic, 40% of Indians hospitalized borrowed money to cover expenses (World Bank Group, 2007, p. 33). Microfinance is a key mechanism Soederberg (2014) identified as monetizing the poverty industry and creating debtfare. By this, she means the pervasive debt relations that permeate the lives of contemporary workers across the globe, which is ‘a component of neoliberal state intervention that has emerged to mediate, normalise and discipline the monetised relations that inhabit the poverty industry’ (Soederberg, 2014, p. 3). Microfinance is a profoundly individualistic and neoliberal tool designed to push back against redistributive politics. It embeds financialization, which like other forms of finance, extracts value from borrowers through transaction costs and high charges. We argue that the MDBs are not just engaged in financialization but are normalizing the conversion of healthcare to debtfare and that this process will negatively impact the future of social reproduction in India.

The first section of the article briefly examines the evolution of the MDBs’ approach to healthcare. The second section explores the historical emergence of India’s increasingly privatized healthcare system, with a focus on the role of the World Bank, and it elucidates the impacts of the COVID-19 pandemic on the country’s health sector. This establishes an important foundation for section three, which offers a detailed empirical examination of health loans from the MDBs from the start of 2020 to June 2021, including their private sector operations, and feeds into the discussion of MDB loans as promoting the financialization of the sector in section four. Section five explores lending to MSME and links health financialization to debtfare.

The development banks and healthcare: a very brief history

Prior to the pandemic, many MDBs maintained only limited support for healthcare, with the World Bank having the most extensive engagement and influence starting in the 1980s and building in the 2000s. Coinciding with the first wave of neoliberalism in the 1980s and its focus on limiting public expenditure and involving private providers, the World Bank gradually became the leading voice in global health policy as the World Health Organization’s (WHO’s) influence receded, in part due to US actions (Lister, 2013; Sparke, 2020). A key outcome of the Bank’s expanding influence was a divergence from the primary health goals established in the Declaration of Alma-Ata (1978), which envisioned health as a fundamental human right. This shift was facilitated by a gathering in Bellagio, Italy facilitated by the Rockefeller Foundation in 1979, and attended by delegates from the World Bank and other development organizations (M. Weber, 2020). The gathering built off work that argued that Alma-Ata was impractical given financial constraints and that the benefits of primary health care were unproven. The attendees settled on narrowing the scope of healthcare goals by just targeting specific prevalent diseases to reduce mortality rates (M. Weber, 2020).

As M. Weber (2020, p. 178) notes, the Washington Consensus ‘focused on reconceptualizing ‘public goods’ as tradable commodities, on the enlargement of markets and investment opportunities in health services, and on consolidating private sector influence in governance and policy design.’ The 1993 World Development Report on Investing in Health was the clearest statement of the World Bank’s neoliberal vision for a two-tiered health system. Publicly funded hospitals and primary health care providers in the global South were to offer an essential but very restricted set of low-cost, high-return, mostly education-based activities, while the private system would deliver services and products dictated by the market (Lister, 2013; Sparke, 2020). This structural adjustment emaciated public healthcare with governments withdrawing budgetary allocations while the number of private insurance providers increased—indeed they became the principal means of accessing healthcare (Sparke, 2020).

The Millennium and Sustainable Development Goals influenced the Bank to shift towards a seemingly more universal health agenda, but it espoused emaciated public health services based on minimal universal care via insurance. Insurance is a medicalized and individualist approach to health, generally designed for those employed in formal sectors with regular incomes (Lister, 2013, p. 13). Most schemes offer the poorest little to no coverage, which became evident in many countries during the COVID-19 pandemic. In other words, even though the Bank proclaimed it had transcended the Washington Consensus, its approach was still framed by a neoliberal metanarrative, and this agenda was supported with training programs for government officials, policy reports, conditionalities or policy actions on loans, and direct support for private provision through the International Finance Corporation (IFC). Global health governance also underwent substantial changes at this time as new global health organizations emerged, which largely coalesced around an agenda of supporting disease-specific programs for the poor and private healthcare driven by technology.

The 2008 Global Financial Crisis acted as a spur for international financial institutions (IFIs) to focus on austerity for public healthcare budgets and privatization (Sell & Williams, 2020). The Bank’s facilitation of Universal Health Care (UHC) and privatization, including public-private partnerships (PPPs), has resulted in much of the global South developing:

‘a tiered health system with a handful of large private hospitals based almost exclusively in urban areas, a tier of smaller private hospitals and providers, and one of public sector hospitals, an informal health sector (such as corner shop pharmacies), and primary care facilities and community health worker programs, these serving poor and rural people who are left in the hands of a withered public system’ (Engel et al., 2020, pp. 10–11).

It is clear that neoliberalism is now so deeply entrenched in the sector that it severely constrains health-related discourse despite the private health market being replete with manifold failures (Sell & Williams, 2020; Sparke, 2020). Moreover, privatization ‘often involves the systematic elimination of human rights protections and further marginalization of the interests of low-income earners and those living in poverty’ (Alston, 2018, p. 2). The problems with tiered, inegalitarian systems became more pronounced during the COVID-19 pandemic with many of the poorest and most vulnerable lacking access to basic treatments like oxygen and pain medication, while the wealthy demanded and received almost unlimited treatments, even those demonstrating limited efficacy. Public systems are most effective at providing adequate, affordable and accessible care (for a review, see Lister, 2013), and this was visible in the fact that the countries responding best to the crisis have generally been those with strong, mostly universal public systems like Costa Rica, Sri Lanka, Taiwan or Vietnam. In contrast, many countries with privatized and non-universal health systems such as Brazil, India, and the US have had poor outcomes (see for example Lal et al., 2021).

The evolution of India’s healthcare system and the World Bank

Until the mid-1980s, India’s private healthcare sector was small. The World Bank was mostly concerned with population management and family planning in the country (Mason & Asher, 1973). Neglect and underfunding of the public health system manifested as an opportunity for the expansion of private health services primarily accommodating the wealthy (Sengupta & Nundy, 2005). Nine loans were distributed to India’s population, health, and nutrition sectors in the 1980s, though these accounted for only a fraction of Bank lending to the country (Guhan, 1997) and controversially funded coercive approaches to population control. During the 1990s, the Bank pledged USD $6.8 billion to fund 22 new projects in the sector, while between 2001 and 2007 there was a further commitment of $1.5 billion for ten more projects, with health comprising a noteworthy 37% of financial commitments from 1990 to the mid-2000s, although most were plagued with corruption (World Bank Group, 2007, p. 3).³ The Bank’s vertical or disease-specific delivery model for healthcare was implemented in India to combat HIV, tuberculosis, and malaria as they have ‘large externalities which more strongly justifies public intervention’ (World Bank Group, 2018, p. 78), a statement intimating that crude cost-benefit analysis of the peak Washington Consensus World Bank Group (WBG) persists.

IFC engagement in India’s health sector started in the late 1990s and expanded in the 2000s with 13 loans aimed predominantly at expansion of private hospitals and pharmaceutical production. The institution even ‘prepared a Guide to Investors in Private Health Care in Emerging Markets, as part of its Health and Education Advisory Services’ (Chakravarthi et al., 2017, p. 54), signaling that India’s healthcare sector was a potentially lucrative investment opportunity. By the late 2000s, the sector was awash with private equity and venture capital deals, the value of which for 2013 was reported at $1.11 billion (Chakravarthi et al., 2017, p. 53). India soon became one of the countries most dependent on private health spending as it was reported that the sector accounted for ‘64 per cent of all hospital beds and 80 per cent of doctors nationwide’ (World Bank Group, 2007, p. 31), which is still the current situation (Jaffrelot, 2020; Paliwal, 2020). While some private hospitals are administered by substantial enterprises like Apollo, Max and Fortis, most are relatively small with fewer than 25 beds, minimal regulation, and varying standards of care. The public hospitals that do exist are ‘understandably overburdened’ and, as the Government of India National Health Authority (2021) website noted, they suffer from a ‘lack of sufficient funds, a shortage of trained health workers and the erratic and often deficient supply of drugs and equipment which adversely impacts their functioning.’

Hospitalization in India has significant personal economic consequences, often leading to, or exacerbating, poverty. The WBG (2007) noted that the average patient in the country spent 58% of their annual income when using hospital services, 40% of people in hospitals borrowed money to cover their expenses, and at least 25% of borrowers ended up in poverty as a result. According to the National Health Authority (2021), a major cause of poor access to healthcare in India:

‘is the persistent underfunding of the country’s public health care system. Over the last two decades, the Government of India’s overall expenditure on health has remained stagnant at about 1.2% of its GDP. Of its total expenditure on health, India spends only 21% from the Government revenue and as high as 62% from out-of-pocket expenses.’

The government’s lack of commitment to the provision of affordable, comprehensive, and equitable public health services is a direct reflection of its commitment to neoliberal ideology. As Chakravarthi et al. (2017, p. 55) argued, the GoI’s ‘neglect of public health infrastructure… is a deliberate strategy to promote the large private health interests,’ which is in line with ‘neo-liberal thinking against healthcare as a social good and provision of welfare services by the state.’ This change occurred despite private sector services being much more expensive (20–54%) than public sector care; in-patient care is 100–740% more expensive (Lister, 2013, p. 103).⁴

Neoliberalism has molded health insurance systems in India, which are the government’s key strategy for achieving UHC. Chakravarthi et al. (2017) highlighted that health insurance is a mechanism to divert public funds to the private sector given the reliance on private providers in the secondary and tertiary care systems in India. In September 2018, the GoI launched a new insurance scheme, the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (PMJAY for short) which is ‘the world’s largest state-sponsored health assurance scheme… [and] covers forty percent of the country’s population, focusing on those who are poor and most vulnerable’ (Dhara, 2020). PMJAY is implemented by state governments, and its coverage reflects pre-existing diversities between the states’ health systems, which relates to their socio-economic situation, health expenditure, and degree of augmentation by private hospitals. The scheme has been chronically underfunded from the outset, leaving most of India’s ‘non-poor’ uncovered and neglecting caste and gender.⁵ Further, PMJAY helps to institutionalize private healthcare due to the many empaneled private hospitals, and it overlaps with the existing insurance schemes of state governments which have often been developed with loans and technical assistance (TA) programs from the WBG and ADB. Nevertheless, according to the 2018 National Sample Survey data, close ‘to 80.9% of people in urban India and 85.9% in rural India’ have no health insurance (Bhuyan, 2020).

Historically, India has received very few health-specific loans from the ADB, though elements of its programs have been influential. In 2009, the ADB implemented a TA project called Sustaining the Government of India-ADB Initiative for Mainstreaming Public-Private Partnerships (PPPs), which targeted five sectors including health. These programs trained staff to draft legislation, draw up PPP systems and procedures, and develop a pipeline of PPP health projects. The first loan explicitly for the development of health systems was provided in 2015: A $300 million loan and TA to build the urban primary health network. The loan documents acknowledged the fragmentation of India’s health system, the problems created by previous donor programs focusing on vertical healthcare service delivery, and the huge out-of-pocket payments (OOPPs) associated with reliance on private healthcare. But, such challenges were overlooked in the project, which supported the extant system, furthered privatization, and did not address public-private coordination (ADB, 2015). Health was a minimal focal point of the ADB’s Country Partnership Strategy India, 2018–2022; it appeared briefly under Pillar 2 of ‘inclusive access to infrastructure networks and social service,’ which noted the ADB’s continuing commitment to private health (ADB, 2017, p. 1).

In contrast, health was a prominent focus in the World Bank’s India Country Partnership Strategy 2013–17 and its Country Partnership Framework 2018–22. It was a central emphasis under the Bank’s pillar of support called ‘inclusion,’ which mixes health, education, financial inclusion and social protection (World Bank, 2013; World Bank Group, 2018). The Strategy noted problems like poor oversight of private health providers, a lack of accessibility for the poorest, and high OOPPs resulting in debt and poverty. In response, it proposed standard prescriptions: UHC and expanding PPPs. To achieve UHC, it promoted the expansion of insurance coverage, including among disadvantaged groups, but there were no activities to expand coverage for those whose income is just above the Bank’s problematically low poverty line. The IFC continued its lending to private hospitals and pharmaceuticals over the 2010s with 18 loans to beneficiaries such as pharmaceutical firms and the Apollo and Max hospital groups, both significant providers of medical tourism.

In the Andhra Pradesh Health Systems Strengthening Project (P167581, May 2019, $328 m IBRD loan), the Bank normalized contracting out of essential packages of clinical and non-clinical services to the private sector (World Bank, 2019, p. 12). A discursive device is used to dismiss concerns about private sector engagement and quality of care. That is, over two sentences, the discussion pendulated between acknowledging that the private sector may not improve healthcare, back to supporting outsourcing because ‘the private sector may be better placed than the government to deliver certain services’ (World Bank, 2019, p. 25). On PPPs, it acknowledged that evidence is ‘more mixed’ but immediately continued that they ‘can allow the state to quickly achieve health gains by leveraging their know-how and limiting public expenditure as the private sector takes on some capital investments’ (World Bank, 2019, p. 83).

The COVID-19 pandemic caused a liquidity crisis for private sector health providers internationally, particularly in low- and middle-income countries (LMICs) (Engel et al., 2020; Williams, 2020). The major impacts on India’s private health sector were that access to private finance subsided in many LMICs making refinancing difficult, while elective and outpatient services were initially delayed and medical tourism was dramatically curtailed hitting the viability of some private providers (Suri, 2019). Further, the costs of COVID-19 patient care were high due to the requirement for strong infection control systems and large quantities of personal protective equipment (PPE). The pandemic illuminated fundamental weaknesses in India’s healthcare system such as: Its lack of system-wide planning, coordination, and communication between the public and private systems (Williams et al., 2021); geographic disparities in access to medical services (Dhara, 2020); poor regulation for ensuring private hospitals admit indigent COVID-19 patients⁶; and unaffordable medical costs and price gouging by private providers (Williams et al., 2021).⁷

Overall, with limited funding, the MDBs seem to have had a strong impact on the Indian government’s approach to the healthcare system. Reflecting transnational policy circulation processes, the Modi government pre-pandemic was aligned with the World Bank’s neoliberal healthcare agenda as an individual responsibility. This approach assists the government to meet its commitment to deficit targets and the IMF’s calls for further fiscal consolidation and support for large physical infrastructure projects (as PPPs), over state employment in areas such as health and education (IMF, 2019). Such policies, as ActionAid (2020) pointed out, prevent countries from investing in health workers and are a major impediment to achieving the Sustainable Development Goals (SDGs). In light of this framework, and the possibility that the MDBs responded to the pandemic as an opportunity, the article turns now to a detailed investigation of their healthcare lending during the pandemic.

MDB COVID-19 response: health loans in India

The WBG, ADB, AIIB and NDB provided a set of extensive loans to support the GoI’s health response. The WBG and AIIB co-financed the India COVID-19 Emergency Response and Health Systems Preparedness Project for $1.5 billion using WBG environmental and social policies (or safeguards); the ADB and AIIB co-financed the COVID-19 Active Response and Expenditure Support Program for $2.25 billion using ADB safeguards; and the NDB has funded a stand-alone project for $1 billion (see Table 1). All of these projects support the GoI’s own COVID-19 Response and Health Systems Preparedness Project announced on 24 March 2020.

The ADB/AIIB loans are both for healthcare and social assistance/security measures directed toward those most impacted by the crisis (ADB, 2020, p. 11). The social components align with the Prime Minister’s Welfare Scheme for the Poor (PMGKY) announced on 26 March 2020, while the WBG had two separate loans supporting it, totaling $1.2 billion. The healthcare loans are all in line with the GoI program, but as budget support loans they contain limited detail, prompting transparency concerns (not just in India). The loan documentation indicates they are following the GoI and WBG lead, which this section thus focuses on. The first four components of the WBG loan follow the four components of the GoI program, with two additional components, which are listed below along with key activities:

1. Emergency COVID-19 response – updating the training of workers; improving lab capacity including ‘engaging private laboratories to expand capacity and test and manage COVID-19,’ procurement of PPE, oxygen delivery systems and medicine; additional payments for health workers across the public and private system; and new isolation wards in public health facilities. Note that the latter included the arguably unhelpful goal of ‘single occupancy negative-pressure isolation rooms in infectious disease hospitals and districts hospitals,’ as such services would only have been accessible to the very wealthy (World Bank, 2020d, p. 14). The Stakeholder Engagement Plan provided further clarity of where the funds were to be spent when it explained that constrained ‘public sector capacity for isolation and intensive care services for COVID-19’ will see the private sector contracted ‘to surge India’s capacity for diagnostic and intensive care treatment services for the disease’ (World Bank, 2020c, p. 1). The critical role of the private sector in the case of escalation of the pandemic was noted. Further, it was outlined how this component would help MOHFW and PM-JAY ‘pilot private sector engagement for COVID-19 in patient care services’ (World Bank, 2020c, p. 2).

2. Strengthening national and state health systems for prevention and preparedness – building a network of high containment laboratories; expanding molecular testing capacity at point-of-care; enhancing disease surveillance systems; developing district level epidemic response institutions; and improving referral transport systems.

3. Strengthening pandemic research and multi-sector, national institutions and platforms for One Health – biomedical research to generate evidence to help the COVID-19 response, including reviewing and strengthening detection, surveillance, management and staff training systems for zoonoses.

Community engagement and risk communication—marketing physical distancing measures and behavior change programs.

Implementation management, capacity building, monitoring, and evaluation.

Contingent emergency response component - provision of immediate response to an eligible crisis or health emergency.

The activities supported are logical responses to the crisis, though there is very much a sense of business as usual. The plan lacks urgency and a focus on scale and poverty. There was inadequate attention to medium-term activities under components 2 and 3. Odd activities like the containment laboratories, a One Health Centre of Excellence, and surveillance in the dairy sector were removed from the project in March 2020 (World Bank, 2021b).

It is evident that the GoI/MDB response was framed and constrained by a neoliberal metanarrative. As Kahneman (2011) explains, strong commitment to particular heuristics means that evidence to the contrary is easily ignored and MDB experts believe in their own skills, even though they can be illusory. Relying on standard heuristics or ways of thinking is even more prevalent during times of crisis. Thus, these loans sought to address the pandemic by expanding support for India’s mostly private, complex, and inefficient health system. To be clear, this is a health system that was not providing coverage for the majority of the population; it created debilitating OOPPs which drive people into poverty; and perpetuated systemic inequalities for women, Scheduled Tribes (STs), Scheduled Castes (SCs), and other vulnerable and disadvantaged people. However, the officials involved still seemed to consider this the best option.

The vulnerable health workforce was provided limited support including extra payments under Component 1 to help retain and increase the workforce. However, this is not included in the loan monitoring and evaluation documents, hence outcomes are not being reported. These payments may extend to India’s Accredited Social Health Activists (ASHAs)—these are female ‘volunteer’ community health workers who receive small performance-based incentives for achieving immunization targets and referrals to reproductive and child health services. There are approximately one million ASHAs across India and they function as the first point of contact in communities for health-related concerns (Ved et al., 2019). Essentially, they are underpaid and informal government workers. They became frontline health workers during COVID-19 by conducting tests and undertaking patient visits (Ganeshan, 2021). Some states provided ASHAs with a fixed monthly payment for periods during the pandemic or increased their support payments. They were also given death coverage under the Pradhan Mantri Garib Kalyan Package Insurance Scheme, along with other workers in the public health system and private providers offering COVID-19 care. However, they were not covered by general health insurance! In some states, their income fell during the pandemic as they could not meet immunization and other targets (Ganeshan, 2021). The death toll among ASHAs has been high, and access to the promised compensation payments has proved challenging (Ganeshan, 2021).

On the surface, the loans prioritize state funding and systems. Yet, given the dominance of the private sector in the tertiary system, it is highly probable that the bulk of the funding flowed to them directly, or indirectly through insurance schemes like PMJAY. Indeed, the Stakeholder Plan (outlined above) and Project Appraisal Document (PAD) acknowledged this. The latter stated that ‘private sector engagement will be done through states and central agencies to surge the capacity for laboratory and intensive care services for COVID-19, as maybe [sic] necessary during the response to the COVID-19 pandemic’ (World Bank, 2020d, p. 17). Demonstrating transparency issues, the implementation reports do not provide data on the relative funding going to public versus private systems.

The program documents did not indicate any specific measures to reduce OOPPs, despite their acknowledged role in pressing people into poverty. The PAD noted the substantial risks ‘to marginalized and vulnerable social groups (women, the elderly, the differently abled, scheduled tribes [ST], scheduled castes [SC], communities in remote and hilly locations, etc.) in accessing the benefits and services of the project’ (World Bank, 2020d, p. 28). Still, there was no useful analysis of these issues, and strategies addressing them were limited to: Updating guidelines; developing awareness campaigns specifically for the poor; ‘prioritizing districts and vulnerable areas within those especially the poorer localities, remote and hilly areas with building awareness about the risk and services associated with Covid19’; and recommending extra support for informal workers. However, the results framework and monitoring again did not cover these issues—nor did it mention gender or women. Finally, it is worth noting that the economic analysis for the project indicated that a key benefit was ‘[p]reventing loss of human capital’ not human lives (World Bank, 2020d, p. 19), which strongly indicates neoliberal logic permeating the Bank. MDB efforts to protect the poorest from catastrophic healthcare costs are markedly insufficient, and those just above the poverty line may be impacted harder as they lack even the meagre coverage the PMJAY offers.

Other World Bank and ADB loans and TAs

In addition to the large COVID-19 response loans, the World Bank and ADB provided two other loans to India’s health sector and the ADB offered a number of TAs—one of its favorite mechanisms—which are insightful regarding development bank priorities.

The World Bank Mizoram Health Systems Strengthening Project (P173958, $32 million from the International Bank for Reconstruction and Development (IBRD), approved 31 March 2021, aimed to improve health systems in the small north-eastern state. It has the second highest spending on health in the country (though OOPPs remain significant) and one of the largest public healthcare systems with private providers concentrated in major urban centers. The Bank interpreted this as the state’s population being ‘more dependent on government health services than is usual in the rest of India’ (World Bank, 2021a, p. 11), implying this was a bad thing. Mizoram has overlapping insurance schemes, including a program developed in 2009 from an ADB loan and PMJAY, but only 55% of eligible people are enrolled in a scheme, which the Bank simplistically attributes to low awareness. Given the WBG’s commitment to insurance as the pathway to UHC, there is notably no discussion of how it can work equitably in this context, or whether it can effectively address the large gender disparities. The loan has a significant component of performance incentive grants to health agencies and facilities that have the new public management goal of shifting the state from ‘input-based financing to performance-based financing systems’ (World Bank, 2021a, p. 17). New public management is neoliberalism applied to state management to supposedly improve efficiency, but in practice, it tends to concentrate on shifting service provision to the private sector. Again, there is a business-as-usual approach evident in the project’s limited acknowledgement of the pandemic and its aim to strengthen a health system that had proven inadequate even before COVID-19. There is also a sense here of what Brenner et al. (2010) identify as a dynamic of failure that does not in effect result in learning but rather the re-invention of approaches that give momentum to neoliberalization processes.

ABD loans and TAs commenced in December 2020 with the Strengthening Comprehensive Primary Health Care in Urban Areas Program under the Pradhan Mantri Atmanirbhar Swasth Bharat Yojana Loan and TA (53121-001, $300 million, December 2020). It was presented as a sound project designed to strengthen the GoI’s urban Health and Wellness Centre program and focused mostly on the public sector, though the viability of business-as-usual health sector development during the pandemic is questionable. Localization is visible here with the Centre’s having a strong focus on Ayurveda. Output three contains a goal to develop ‘scalable models to engage the private sector to partner in improving health outcomes,’ which linked ‘innovative approaches and best practices’ directly to ‘private sector engagement.’ The performance indicator is to achieve ‘at least 20 innovations or private sector engagement practices implemented in 13 states’ by 2024 (ADB, 2020b, p. 10), while the associated $2 million TA also has a strong focus on private sector participation. The ADB also approved two other TAs in the study period. The first supported implementation of the PMJAY to accelerate the achievement of UHC in India, including via promotion of private sector responses—an odd priority amid a pandemic ($1.4 million, May 2020). The second supported the COVID-19 response, particularly emergency supplies of oxygen, and capacity for the Responsive COVID-19 Vaccines for Recovery Project, again including building private sector capacity ($7.0 million TA, June 2020). Clearly, the MDBs cannot issue a health loan without some element of privatization.

Private sector operations: the IFC and ADB

The IFC’s mandate is to provide direct loans to clients and support partner financial institutions, and it was tasked with a major element of the WBG’s response to COVID-19. Of the $14 billion in the initial COVID-19 Fast Track Facility, the IFC target was 57%, or $8 billion. In India’s healthcare sector—in addition to some direct loans or investments to clients—we found a much larger group of loans to private equity funds promising investments in healthcare and other sectors in India. This is a way for the IFC to distribute funds quickly, with limited due diligence (safeguards).

As of the end of June 2021, the IFC had two direct loans or investments in the healthcare sector.⁸ These were $50 million to Glenmark Pharmaceuticals for an ongoing capital expenditure program and refinancing of foreign debt maturities, and $30 million to Biological E. Ltd to expand its vaccine manufacturing capability. Historically, many IFC investments have been in pharmaceuticals, a sector controlled by a set of dominant, near oligopolistic private firms that receive large-scale public finance for research and development and maintain market supremacy through mergers and acquisitions, not original research. This reinforces ‘the inability of poor people to afford commodified health technologies by locking in legal monopolies over drugs as private goods’ (Sell & Williams, 2020, p. 13). Private equity investments from January 2020 to June 2021 with healthcare as a sector for on-investment were: $30 million in Seabright IV LP (headquartered in the tax haven of Delaware); $40 million in Faering Capital International Growth Fund III; $50 million in Gaja Capital India Fund 2020 LLP; $60 million in Stellaris Advisors LLP; $19.84 million in Endiya Partners Fund; and $10.5 million in India Alternatives Private Equity Trust. Additionally, there was a proposed $50 million investment in Everstone Fund IV (based in the tax haven of Singapore) for India and Southeast Asian investments. What is also significant in the IFC documents was the sizeable number of the projects funded for an amount higher than suggested in the initial recommendation, which was rarely the case in earlier IFC activities examined. Before the pandemic, Nongovernmental Organizations (NGOs) and academics had pointed out the lack of transparency and accountability associated with funding financial intermediaries. Much of this work rightly focuses on whether these intermediaries are funding fossil fuel investments, though their role in funding for-profit healthcare for the wealthy should be a topic of study.

The ADB Private Sector Operations Department (PSOD) financed three healthcare loans in India during the study period. The first was a $20 million debt security for the ‘India: COVID-19 Hospital Service Delivery Project to Global Health Private Ltd,’ operating under the Medanta brand; the second was a COVID-19 Hospital Capital Support Project for Apollo Hospitals Enterprise Ltd to support short-term financing needs during the pandemic; while the third was $20 million in non-convertible debentures for the Krsnaa COVID-19 Diagnostic Services Project to help them scale up their coronavirus screening and detection capacity.⁹ The PSOD did not fund any private equity projects in India during the study period, though it had financed several beforehand including the Tata Capital Growth Fund II (2019) and Multiples Private Equity Fund III Ltd (2018).

A March 2021 report by the GoI’s premier policy thinktank, NITI Aayog, outlining opportunities for further private sector investment across the entire health sector, reaffirms that the MDBs’ health privatization agenda has become common sense (Sarwal et al., 2021). Positioning the pandemic as an opportunity, it blithely ignored the failings of the private sector during the first wave, instead highlighting major earlier private equity investments in health (and in two of the seven cases presented, the IFC was a key investor), as well as FDI access and tax incentives available to investors. In the section on hospitals, NITI Aayog even outlined a new model for facilitating the privatization of district hospitals. NITI Aayog has had an intimate relationship with the World Bank and ADB over many years, as they have provided training for many of its officials and engaged in a range of other forms of cooperation. Their promotion of privatization in the health sector demonstrates transnational policy flow based on shared neoliberal values.

MDB COVID-19 loans as financialization

The above data demonstrates that MDBs are assisting in constructing a healthcare system in India with elements of complex financialization embedded from the macro to the micro levels. To theorize this record, we now explore financialization, the ways it has been applied to development banks, and how this study of the Indian health sector helps improve our understanding of its patterns and interconnections. The term highlights the profound structural transformation of capitalist accumulation since the late 1970s, particularly the multi-scalar processes implemented to expand financial practices through the incorporation of novel assets and customers, from which income streams can be extracted and the poor converted into ‘sources of financial profit’ (Jain & Gabor, 2020, pp. 814–815). Lapavitsas (2013, p. 792) identified the altered conduct of three fundamental and interconnected agents of accumulation in the global North as key: Large non-financial corporations progressively able to finance their own investments through retained profits and equity markets, thus reducing their reliance on financial institutions; banks redirecting operations to generate profits through financial markets as opposed to traditional lending and borrowing; and households and individuals investing savings in equity markets and becoming ever more dependent on the financial system to attain access to goods and services, resulting in rising debt and diminished public expenditure.

Examining the ways financialization has transpired in the global South, Gabor (2018a) contended that shadow banking is paramount: That is, the expansion of non-bank financial institutions that are less regulated than banks. Musthaq (2021) emphasized the escalating economic dominance of financial instruments and transactions that aim to adjust risk and amplify returns through the management of liquid assets. As such, she framed shadow banking as a private finance-led model of development that affords short-term profits to institutional investors, rather than facilitating finance to satisfy development objectives. The World Bank has played a role in financialization through strategies to de-risk asset classes which came to the forefront of Group strategy with the Maximizing Finance for Development (MFD) agenda announced in 2015 (Gabor, 2018b). This envisioned the Bank collaborating with developing nations, other MBDs, and investors to leverage private finance to augment development outcomes (Musthaq, 2021), and de-risk projects for private investors (Dimakou et al., 2020; Gabor, 2018b). Gabor (2021, p. 435) conceptualized this shift in the global development agenda as the Wall Street Consensus (WSC); an emerging ‘development as derisking’ paradigm that reframes the post-Washington Consensus by defining development interventions as state-mediated collaboration with institutional investors to transform projects into ‘investable’ asset classes. It renders emerging markets more accommodating to global finance and restricts policy maneuverability. The WSC extenuates the volatility of the macro-financial order it endeavors to impose, while concurrently heightening the precarity of capital flows and colonizing public infrastructure as asset classes by precipitating state dependence on financial markets. Finance-related capital’s permeation of economic activity creates innovative ways of generating profits at the same time as exacerbating socio-economic inequalities and compounding the frequency and severity of crises (Lapavitsas, 2013, pp. 792–793). MDBs are at the forefront of engineering derisked development assets by acting as auxiliaries to banks and asset managers. Healthcare is ideal for derisking due to the extent of the sector and the fact that there ‘are substantial profits to be made’ from ‘the public purse’ (Sell & Williams, 2020, p. 17). In the global South, private investors can concentrate on the most profitable health sectors involving the middle and upper classes, as well as medical tourism.

Financialization is clearly embedded in the logic of the MDB health operations in India discussed above. The multi-scalar pathways are shown in Figure 1: The loans work indirectly through governments to promote financialization in healthcare and ensure that the state contracts healthcare services to private sector actors, finances PPPs, and creates a regulatory environment suitable for private health provision, with the utilization of insurance as a key contemporary focus. IFC loans and investments in healthcare focus on de-risking private sector investment and expanding the role of domestic and international private equity (PE) in the sector, while concomitantly undergirding private providers facing liquidity crises begotten by the pandemic. PE firms fuel financialization because much of their investment in companies is debt, which is placed on companies’ balance sheets and only minimally serviced at the same time as special dividends are extracted by the PE firm (Mazzucato, 2018). Further, they extract annual management fees of around 2% per annum services, which adds up, and even when they sell to realize capital gains (normally in 3–7 years) they sometimes continue to charge fees to the company (Mazzucato, 2018, p. 157).

Figure 1. Pathways of financialization in MDB loans to India’s healthcare sector.

Source: author’s own.

Table 1. Large MDB health loans in response to COVID-19.

Bank	Approval Date	Amount	Project Name
WBG	2 April 2020	$1bn IBRD loan	India COVID-19 Emergency Response and Health Systems Preparedness Project (P173836)
AIIB	7 May 2020	$500 m loan	India: COVID-19 Emergency Response and Health Systems Preparedness Project (000380)
NDB	30 April 2020	$1bn loan	Emergency Assistance Program in Combatting COVID-19
ADB	30 April 2020	$1.5bn loan	COVID-19 Active Response and Expenditure Support Program (54182-001)
AIIB	16 June 2020	$750 m loan	COVID-19 Active Response and Expenditure Support (000409)

Source: author’s compilation, similar shading indicates co-lending.

Figure 1 also indicates the ways MDBs expand health financialization through lending to households requiring funds to cover their healthcare debts. This occurs through MDB lending to the Micro, Small and Medium Enterprise (MSME) sector, which in India comprises primarily microenterprises, with microfinance loans frequently diverted to cover personal consumption, health, and education costs.

MSME lending in India: financialization and debtfare

India’s microfinance sector originally comprised NGOs based on the Grameen Bank model. However, at the behest of the state, the sector has been increasingly dominated by Non-Bank Financial Companies (NBFCs)—for-profit organizations regulated by Indian central banks (Siddiqui & Lohi, 2016, p. 184). More recently, some NBFCs have been converted into Small Finance Banks and others merged with mainstream banks, resulting in these public and private banks now controlling over 70% of India’s microcredit portfolio (Chandorkar, 2021). Approximately 99% of MSMEs in India are microbusinesses (ADB, 2020a, p. 1) and they employ a large proportion of non-farm labor in India. Two-thirds are operated by socially vulnerable groups (including SCs/STs) but just 10% by women. The World Bank (2020b, p. 5) indirectly acknowledged the importance of surplus labor to capitalism when noting that MSMEs contribute 30% of India’s GDP and 40% of exports. Government and MDB’s emphasis on expanding the MSME sector’s access to microfinance speaks to Soederberg’s (2014, p. 3) argument that surplus workers are vital to capitalist accumulation and to the ‘expansion and intensification of credit-led accumulation.’

Microfinance has long been used in India and elsewhere to establish small-scale businesses, but also to cover private consumption and health expenses. Indeed, capitalism requires that surplus labor wants to produce things through the market and reproduce without expectation of support. Given surplus cheap and unskilled labor is a significant comparative advantage for India, the government has sought to stimulate growth in the MSME sector (World Bank, 2020e, pp. 3–4). Due to liquidity constraints, cashflow shortages, job losses, and the potentiality for solvency issues caused by COVID-19, the GoI implemented a series of regulatory and policy measures to support the sector, earmarking approximately 1.5% of GDP to MSME finance, which the World Bank has been instrumental in supplying (World Bank, 2020b).¹⁰ These include: Additional government-guaranteed lending to MSMEs; establishment of a debt fund for overwrought MSMEs; a fund to suffuse equity into MSMEs; and rectification of liquidity issues of NBFCs through a specific facility for debt securities and an extended partial credit guarantee scheme (World Bank, 2020b).

The World Bank (2020b, p. 4) also partnered with the IFC to deliver ‘a comprehensive set of interventions to support MSMEs in India.’ The Micro, Small and Medium Enterprises Emergency Response Program (P174292, approved January 2021, $750 million) aimed to assist the Indian government’s aforementioned program, upholding financial flows and liquidity to MSMEs during the pandemic. In addition to the targets of reaching 1.5 million MSMEs through incremental credit facilities and providing 1 trillion Rupees (Rs.) in incremental finance by June 2021, the loan gave Rs. 500 billion in incremental funding to NBFCs through purchases of MSME loan pools. This supports privatization and financialization contributing to GoI’s objective of complementing and diversifying the country’s primarily public sector financial system by: Leveraging private intermediaries in India’s financial sector through channeling financial flows to MSMEs; supporting NBFCs; and incentivizing the mainstream use of fintech and digital financial services in MSME transactions (World Bank, 2020b, p. 4). These clear business-as-usual financialization objectives shaped both GoI objectives and World Bank loans during the pandemic. Furthermore, the Raising and Accelerating MSME Performance Program (P172226, $500 million) included a strong focus on access to finance and endeavored to improve MSME performance in India through the provision of market-based services at the federal level and in selected states (World Bank, 2020e). Similarly, the World Bank’s two Accelerating India’s COVID-19 Social Protection Response Program loans (P173943, $750 million IBRD and P174027, $400 million IBRD), which aimed to strengthen the Indian state’s capacity to deliver coordinated and sufficient social protection to the poor and those most vulnerable to the impacts of the COVID-19 crisis, included a component to support MSMEs and the financial system on which they depend (World Bank, 2020a, 2020f).

The IFC distributed multiple loans aimed at bolstering India’s MSME sector during the COVID-19 pandemic. These include: BajajFin Debt (45266, up to $150 million loan) for expanded lending to MSMEs, particularly those owned by women; the Hero Fincorp TW (44200, secured debt investment of up to $100 million) a firm whose consolidated loan portfolio comprises 21% of MSME loans to clients in low-income states throughout India; and the Fullerton Loan (43960, secured debt funding of up to $100 million) to a diversified, MSME-focused NBFC headquartered in Mumbai, aimed at supporting its lending program to MSMEs in India, especially in low-income states and to women.

Examining the myriad ways that microfinance is linked to financialization and debtfare, we settled on two key points. First, these loans simplistically perpetuate neoliberal discourse that commercial microfinance is a pathway to economic growth and poverty reduction (Bateman, 2010; Dulhunty, 2022; H. Weber, 2006). This is despite the fact that the World Bank’s gold standard of research, the randomized controlled trial, has demonstrated that it has no net impact on household income (Banerjee et al., 2015). This is not so surprising given interest rates and charges are very high—in India the top 5 lenders charge between 12–25% interest, with most in the 18–22% range, and the Reserve Bank of India uncapped rates in May 2022 (Dey, 2022). Providers can also charge processing fees and insurance premiums on loans. MDB support for microfinance is building financialized capitalism into the fabric of development and ensuring that debt is viewed as a common-sense social protection measure in the World Bank and more broadly.

Second, decades of research have demonstrated that microfinance loans are diverted to, or used for, consumption and healthcare. As Mader (2015) highlights, its expansion to these and other new sectors demonstrates the need for constant geospatial fixes in the path of financializing poverty. In healthcare, loans can be provided directly to small healthcare providers; or they can be given to borrowers who use the funds to cover their healthcare OOPPs—one study in Kerala, which has one of the best healthcare systems in the country, showed that 11% of microfinance loans in 2003–04 were used for healthcare purposes (Saraswathy, 2007). Yet, the World Bank MSME documentation does not mention this use of microfinance. It does not even mention its role in consumption smoothing, which the Bank has in the past used to bolster the case for microfinance, that is in helping households navigate income shocks through debtfare (Soederberg, 2014).

Microfinance is a deeply problematic instrument using peer pressure and shame to ensure repayment (Engel & Pedersen, 2019). It indebts many borrowers and there are reports of increasing pressure from MFIs in India to recover debts (Bateman, 2020). Before the pandemic, the World Bank estimated that 4% of Indian households fell below the poverty line each year because of OOPPs (World Bank, 2020d, p. 10). While data from the pandemic is lacking, there are many news reports of families struggling with health and other debts. One survey of general debt levels covering 75 households (518 people) across eight villages reported close to two-thirds had acquired debt during the pandemic, with more than 80% of it not being serviced (Aljazeera, 2021). This has caused significant repayment crises for NBFCs (and MFIs) in India, despite a six-month debt moratorium in 2020. However, the quantification of money-debt (Graeber, 2014) and the ‘social power of money’ (Soederberg, 2014), along with the particular way microfinance functions as a disciplining and emotive poverty-shame debt (Engel & Pedersen, 2019), have historically ensured very high rates of repayment despite the huge pressure on individuals and families.

Microfinance relies on financial subsidies indicating that the MDB MSME loans can be interpreted as an unofficial bailout of MFIs dressed up as an investment (Bateman, 2020). It is time to see microfinance’s endemic failure as facilitating the ‘continual reinvention and ever-widening interspatial circulation’ that is central to the forward momentum of neoliberalization processes (Brenner et al., 2010, p. 209). The MDB support for debtfare also helps institutionalize the idea that India’s poor and uninsured are free, equal consumers who cannot, and should not, expect any market protections (Soederberg, 2014); this is a shift from healthcare to debtfare that will negatively shape the future of social reproduction for the poor and working class in India.

Conclusion

This article outlined the transnational policy transfer behind, and the institutional framework produced by, a new round of neoliberalization processes propelled by the COVID-19 pandemic. It demonstrates that it has resulted in India rapidly moving towards a US-style, private healthcare system replete with all its gaps in coverage, inefficiencies, and emphasis on profit margins. At the start of the pandemic, 62% of health infrastructure was private (Jaffrelot, 2020), 80.9% of the urban population, and 85.9% of the rural, had no insurance (Bhuyan, 2020), men were far more likely to be insured than women, and 70% of health expenditures were paid from patients’ own pockets (Rao, 2018). The 1980s were a turning point when the government’s neglect of the sector, along with the World Bank’s and IMF’s focus on macroeconomic fundamentals and privatization, coalesced to facilitate the significant expansion of private healthcare. The WBG’s application of its neoliberal metanarrative to healthcare in the global South produces a vision of a two-tiered system with publicly funded hospitals and primary healthcare providers providing a minimal set of low-cost, high-return activities for the poorest, while private providers have free market reign for those who can pay. The Bank promoted this by influencing policy debates, training public officials, and lending, though in the 1990s, the ADB stepped in to lend support through TA and loans. The ruling Bharatiya Janata Party’s (BJP’s) 2017 New Health Policy demonstrated increased local ownership of the agenda along with intensified engagement with the private sector to achieve UHC through the strategic purchase of private services (Jaffrelot, 2020), and through insurance, which is an individualistic approach to healthcare.

As Kentikelenis et al. (2020, p. 758) note, the World Bank and IMF were essential in supporting developing nations during the pandemic by acting as ‘financial firefighters.’ Thus the pandemic is an important moment to study the ‘patterning and framing tendencies’ of international policy transfer (Brenner et al., 2010, p. 185). The pandemic was an opportunity to cease the undermining of public health systems and to make an effort to advance universal coverage for those lacking sufficient access to healthcare (Kentikelenis et al., 2020). However, as we have demonstrated, the MDBs offered their usual panoply of loans supporting the private healthcare system and pursued neoliberalization processes involving the privatization of healthcare through direct funding, PPPs, and indirect support through microfinance to pay health debts.

During the pandemic, India accessed sizable loans from the WBG, ADB, NDB and AIIB. On the surface, these loans satisfied the call of World Bank shareholders at the Spring Meetings 2020 to fund governments and public health interventions (Dimakou et al., 2020). However, closer inspection revealed substantial funds flowing to private healthcare providers and the prioritization of the private sector in the response. Dimakou et al. (2020) argued that the WBG used the crisis to expand its private sector agenda, but our equally troubling conclusion with MDB loans is they were business-as-usual: They offered an inadequate healthcare model that gradually undermines public health through ongoing support for privatization and PPPs. In other words, the GoI and the MDBs have been so constrained by path dependency to the neoliberal health metanarrative that they could not transcend it, even during a pandemic. Indeed, it may be that crises promote standardized thinking. At the same time, we have demonstrated the role of specific local factors, in this case, how the complexity and technocratic nature of India’s health system helps obscure alternative visions. MDB funds are channeled through the government to insurance schemes, private hospitals, testing facilities, and other complexly structured services. India did not see emergency measures to reduce OOPPs for the poor and marginalized (particularly women and SCs/STs) to ensure they received adequate public healthcare during the largest global pandemic in a century.

In examining microfinance as a key mechanism through which Indians finance health costs, we demonstrated the multi-scalar levels of financialization at play, backed by MDBs providing substantial loans to fund microfinance’s expansion. Microfinance’s failures did not, as Bateman (2020) called for, lead to a radical restructuring of microfinance during the pandemic, or rather in the India case, the NBFC sector, to limit access to it and its harm to the vulnerable. Rather, as Brenner et al. (2010) posited, its failures simply offered another opportunity for layering reforms and re-inventing policies that give momentum to neoliberalization processes. We demonstrated financialization processes at play, too, with the MDB’s private sector operations and their increased engagement with private equity as a way of supposedly de-risking investment. This financialization is adding to the tendency towards financial crisis (Mazzucato, 2018). The MDB response to the pandemic also has to be seen in the light of the contemporary debt context, whereby the accumulation of debt in emerging markets and developing economies between 2010 and 2018 was the ‘largest, fastest and most broad-based increase’ in the past half century (Kose et al., 2020, p. 111). This build-up had many of the same features as previous ones that all ended in financial meltdowns. Yet the MDBs, with the World Bank at the forefront, continued to promote complex financialization in the global South where financial systems tend to be more fragile than in the North.

By going beyond financialization and examining the relationship of the MDB’s healthcare approach to debtfarism, we sought to avoid Soederberg’s (2014) concern that analysis of financialization tends to be excessively economistic and ignores social relations. Indeed, we hope that this analysis has illustrated some of the ways that the GoI and MDB response to the COVID-19 pandemic obfuscated the historical and contemporary ‘forms of structural violence with which workers have to contend under neoliberal-led accumulation’ (Soederberg, 2014, p. 202). For political economy, we hope this article offers a model for undertaking transnational policy transfer analysis embedded in a historical materialist tradition that demonstrates both path dependence and unevenness (Brenner et al., 2010) and that gives adequate attention to the interplay of the national and international, though given space constraints we have not given sufficient attention to the role of market interests. Finally, while we think this case study of India is indicative of trends, comparing MDB approaches in states with, in particular, stronger public health systems and those facing debt crises, would help round out our understanding of the contemporary political economy of public health and the MDB role.

Acknowledgements

We would like to thank Public Service International for funding Susan’s earlier research that contributed to this paper. Thanks also to Adam David Morton for his suggestion on the title and the reviewers for their useful comments.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

Some of the background research to this study was supported by Public Service International.

Notes on contributors

Susan Engel

Susan Engel is an Associate Professor in Politics and International Studies at the University of Wollongong. She is a co-editor of the 2022 Routledge Handbook of Global Development and co-author of The Global Architecture of Multilateral Development Banks: A System of Debt or Development? With AR Bazbauers (2021, Routledge). She is a scholar-activist who works with a range of NGOs.

David Pedersen

David Pedersen is completing his PhD at the University of Wollongong. His thesis is: “Pandemic in Paradise: A Critical Political Economy Analysis of Crisis Management in Bali’s Tourism Sector.” He has published papers on emotions in microfinance and international relations teaching.

Notes

1 Countries with better performing systems spend around 7% of GDP on healthcare.

2 There are significant differences between states. For example, Kerala invests strongly in its public health system, Maharashtra with a large private healthcare sector, less so. To mid-July 2021, the fatality rate for Kerala from COVID-19 was 0.48%, while that for Maharashtra was 2.04%, four times higher (Shukla, 2021).

3 All figures are in USD.

4 Some private sector services may be of better quality than public ones, but this varies between providers and regions.

5 Most hospitals, particularly private ones, persistently discriminate against Dalits and Other Backward Castes (Dhara, 2020). There is also a large disparity in healthcare expenditure and insurance between men and women across the country. For example, in Mizoram only ‘17 percent of women against 44 percent of men ages 15–49 years… are covered by any health scheme or health insurance’ (World Bank, 2021a, 12).

6 Williams et al. (2021) found that most reports on private hospitals refusing to admit COVID patients came from India. While data is limited, it is likely that many of those refused treatment were Dalits and OBCs.

7 The bill for a two-week hospital stay in Delhi is over what 94% of the Indian population earn in one year.

8 All the data on the IFC is derived from the IFC (2021), Project Information & Data Portal, correct as of 22 June 2021.

9 ADB PSOD data is from ADB (2021).

10 The ADB promised a $300m loan for MSMEs in their CARES loan documents that was not finalized during the timeframe examined. They approved a TA in December 2020 for an MSME Ecosystem project (54367-002) with similar goals to the World Bank loans that aimed to improve MSME access to enterprise development services and promote strategic cluster development.