After the World Bank decided on Thursday, 18 July, to not fund the ‘Amaravati Sustainable Capital City’ – an ambitious project undertaken by former Andhra Pradesh CM Chandrababu Naidu – the institution cited withdrawal of financing request behind their decision.
On Thursday, the World Bank posted on its official website that the funding proposal for the project has been ‘dropped.’
According to the website, the total project cost was $715 million, with the World Bank planning to provide a loan of $300 million.
The project was to be co-financed by another multilateral funding agency, the Asian Infrastructure Investment Bank (AIIB). Beijing-based AIIB had committed $200 million.
World Bank Issues Clarification
The World Bank said on Friday that it 'dropped' the $300 million loan proposal for the project as the central government withdrew the financing request, triggering a blame game between the ruling YSRC and Opposition TDP in Andhra Pradesh.
“The Government of India has withdrawn its request to the World Bank for financing the proposed Amaravati Sustainable Infrastructure and Institutional Development Project,” a World Bank official said in an email response.
The bank's board of executive directors has been informed that the proposed project is no longer under preparation following the government's decision, the official added.
"The World Bank is not in a position to comment on the nature of internal consultations conducted by the Government of India," the official said, when asked for the reason behind the Centre's decision.
Andhra Pradesh Capital Region Development Authority Commissioner Lakshmi Narasimham told PTI that they received "no communication" from the Department of Economic Affairs (DEA), under the Union Ministry of Finance, as to why the Centre withdrew the loan request.
Environmental & Livelihood Concerns
Some residents in the vicinity of the proposed city had written to the inspection panel of the World Bank on 25 May 2017, alleging harm related to their livelihood, environment, food security, and resettlement “due to the World Bank's non-compliance with its environmental and social standards in preparation of the proposed project.”
Environmental activists, farmer leaders, and civil society organisations had opposed and criticised this project for building the city on the floodplains of river Krishna, diverting fertile farmlands and forests, displacing around 20,000 families, acquiring lands, and allegedly favouring contractors for the construction of the city.
According to sources, the World Bank had also taken into consideration widespread complaints lodged by farmers in the region on alleged forcible taking over of their fertile lands by the previous dispensation in the name of land pooling for capital development.
Promising a corruption-free government in Andhra Pradesh, newly elected Chief Minister Jagan Mohan Reddy said he would initiate a probe into the alleged financial irregularities in the construction of new state capital Amaravati, the Polavaram project and other schemes launched by Naidu.
He alleged that the powers that be and benamis resorted to 'insider trading' as the former chief minister was privy to the information where the new capital was going to be located.
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