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World Bank Drops $300 Million Funding for Andhra Pradesh's Amaravati Project

The Indian government withdrew its request the bank said, while the ruling YSR Congress party accused former chief minister Chandrababu Naidu of irregularities.

New Delhi: In a jolt to the Andhra Pradesh government, the World Bank has “dropped” out of the Amaravati Sustainable Infrastructure and Institutional Development Project, pushing the state capital citys development into further jeopardy.

Though the World Bank did not assign any reason for pulling out, it took into consideration various complaints it has received from people’s groups about environmental concerns and forcible taking over of fertile land.

The bank’s website showed the status of the Amaravati Sustainable Infrastructure and Institutional Development Project (A) as “dropped.” On the request of previous chief minister N. Chandrababu Naidu, the bank had agreed to loan $300 million for the project. His government had claimed that the World Bank agreed “in principle” to lend $1 billion for the development of Amaravati.

Several NGOs and environmentalists have been opposing the previous Telugu Desam Party (TDP) governments plans to build the capital by acquiring land from farmers and protested against development very near to the Krishna riverbank.

A screenshot of the World Bank’s website showing that the project has been dropped.

World Bank’s South Asia senior communications officer Elena Karaban told The News Minute that the government of India has withdrawn its request for financing the project. “The World Bank’s Board of Executive Directors has been informed that the proposed project is no longer under preparation following the government’s decision,” she said.

On the other hand, the ruling party YSR Congress Party government claimed that the withdrawal was because of alleged irregularities in the project by the TDP government. The party’s MP Vijayasai Reddy said that the decision to withdraw the loan application was taken “since the Indian and Andhra government did not want a foreign agency conducting an inquiry into any alleged irregularities by the previous Naidu government”.

“The World Bank had received numerous complaints on these irregularities…. sought permission to conduct an inquiry. Understandably, the Home Ministry was concerned and so was the Andhra Pradesh government, that a foreign agency would conduct an investigation in a sovereign nation like India,” Reddy told The News Minute.

Officials who headed the AP Capital Region Development Authority (CRDA) during the previous dispensation even claimed that the World Bank included the project under retro-financing category, which meant that the international lender would reimburse all the amount the government spent on the project.

The Chandrababu Naidu government reportedly listed it under the Externally-Aided Projects under the Special Assistance Measures announced by the Narendra Modi government in 2016 so that the repayment burden would be taken on by the Centre.

Also Read: Amaravati Reveals How Public Projects in India Remain Dependent on Whims of Politicians

Under the proposed EAP, the World Bank was to lend $300 million, while the Asian Infrastructure and Investment Bank (AIIB) was supposed to lend another $200 million. With the World Bank dropping the loan proposal, CRDA officials are unclear over the fate of the AIIB component.

People affected by the development of the capital welcomed the move. Mallela Sheshagiri Rao from the Capital Region Farmers Federation said the project’s uncertainty “hovering above us in respect to our land and livelihood, we had suffered sleepless nights with fear and pain”. He said, “The struggle has made a mark in our lives that we can never forget. We hope the larger message of World Bank’s pulling out of this project will be heard by the state and other financiers and will address the concerns of people with honesty and commitment.”

Sreedhar R. of the NGO Forum on ADB and said good sense has prevailed upon the World Bank to withdraw from the “disastrous programme”.

Activist Medha Patkar also expressed happiness at the World Bank’s decision. She said the bank had taken cognisance of the “gross violations involved in the Amaravati Capital City project, threatening the livelihood of people and fragile environment”. “While we celebrate this victory of people, who stood up to the intimidation and terror of the state, we warn the government and financial institutions not to push their agenda without the consent of the people” she said.

Also Read: ‘Let the State Give Us the Jobs It Promised’: Andhra’s Landless Labourers

Speaking to Livemint, a senior TDP leader blamed the current YSR Congress Party government for the development. “Till we were there, it was fine. [Chief minister Y.S. Jaganmohan Reddy] came and sabotaged the project. Let YSRCP stop Amaravati’s development if they can and run the state with the help of NGOs who worked against the interests of the state,” he claimed.

While many farmers have agreed to pool their lands for the project, NGOs and activists have claimed that a majority of them were coerced or left with no option. Farmers also expressed opposition because very fertile agricultural land was being converted into commercial and residential areas. The land, located in the Krishna basin, produces three crops a year and farmers can choose from 120 varieties. Building on the Krishna’s river bed would also increase the risk of flood, activists said.