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In an effort to fight fraud, corruption and systemic deficiencies in India's health sector, the Government of India and the World Bank Group have joined forces and announced immediate steps to investigate indicators of wrongdoing and to implement further safeguards.
The government has announced its intention to re-examine all ongoing and future projects to ensure that they incorporate the lessons from a Detailed Implementation Review (DIR), which is an instrument used by the World Bank to help assess the risk of fraud and corruption.
The five projects covered by the DIR include the US $114 million Malaria Control Project, the US $82.1 million Orissa Health Systems Development Project, the ongoing US $54 million Food and Drug Capacity Building Project, the US $193.7 million Second National HIV/AIDS Control Project and the US $124.8 million Tuberculosis Control Project.
The DIR launched by the World Bank in 2006 and supported by the Government of India has found serious incidents of fraud and corruption in five health projects, which began implementation between 1997 and 2003, financed by the government and the World Bank and other donors.
The detailed review was prompted by a World Bank investigation in 2005 into a Reproductive and Child Health (RCH1) project, where it found corrupt practices by two pharmaceutical companies which were subsequently disbarred by the bank and the government.
Both of them have introduced detailed anti-corruption plans into all new health projects in view of the findings of the RCH1 investigation.
Mentioning that the probe has revealed unacceptable indicators of fraud and corruption, World Bank Group President Robert B Zoellick said that the government and the World Bank are committed to getting to the bottom of how these problems occurred.
He further added that, on the bank's side, there were weaknesses in project design, supervision and evaluation and there are also systemic flaws.
Zoellick expressed his determination in fixing these problems with the help of Volcker Report which points the way towards what has to be done.
Both the government and the bank have committed themselves to tighten oversight of the entire bank-supported health portfolio, currently nine projects.
They would also ensure that all new health sector projects include measures to counter the risks identified in the DIR such as comprehensive audits and performance reviews by independent third-party agents.
Zoellick said the Bank's governance and anti-corruption work from now on would be placed before the scrutiny of independent and external reviewers to ensure that the institution was making tangible progress in its fight against corruption.
The bank and the government have already sought to address a number of the risks identified now in the DIR through new project design over the past two years, taking guidance from the RCH1 investigation.
Some of these remedial measures already being built into new projects in health and other sectors include enhanced transparency, building on India's recent Right to Information Act, to include Web publication of all procurement processes, bidding and contract awards.
Besides implementing oversight by project beneficiaries, citizens and civil society, using community score cards and social audits, tightening oversight and recruitment of NGOs (for example the National AIDS Control Organization has terminated 163 NGO contracts out of 952) are also suggested.
Other measures includes tightening quality control to ensure the quality of pharmaceuticals procured, including independent validation of World Health Organisation
(WHO) good manufacturing practice certificates and disclosing full results on government websites.
It also suggested procurement audits for 100 per cent of projects annually and aggressive tightening of procurement controls to catch collusive bidding, including designing new software detectors, besides aggressive acceleration of complaints processing and action.
In lieu of the mission to curb fraud and corruption, the Ministry of Finance said that necessary action under the relevant laws, rules and regulations would be taken against those suspected of wrongdoing and, if found guilty, they will be visited with exemplary punishment.
The World Bank will also be continuing its probe, which may lead to further sanctions such as debarment of companies and appropriate action under the rules against any bank staff if found negligent.