World Bank decides not to fund project to build AP's new capital Amaravati

World Bank 'drops' project after getting complaints from civil society groups that the project will displace thousands.

The World Bank will not give loans to build Andhra Pradesh's new capital city, Amaravati, after getting complaints from civil society groups that the project had displaced thousands and the government had forcibly acquired farmlands.

The multilateral lending agency on its website categorised the $ 300-million project as "dropped" after studying for months representations sent to its officials against the project. 

N Chandrababu Naidu, when he was chief minister of the state, had sought funding for the project in 2015, but the Bank had deferred its decision in the light of the alleged government excesses.

Andhra Pradesh is now governed by chief minister Y S Jagan Mohan Reddy, and a senior official said the government is yet to hear from the Bank. According to this official, the Bank communicates such decisions to the central government, which then passes on the information to states.

Civil society activists, including Medha Patkar's Narmada Bachao Andolan and National Alliance of People's Movements, hailed the World Bank's decision.

" We are happy that World Bank took cognisance of the gross violations involved in the Amaravati Capital City project, threatening the livelihood of people and fragile environment. We are happy that the inspection panel which was created due to the struggle of Narmada Bachao Andolan played a critical role here. 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," said Patkar.

In a bid to mobilise resources for the project outside budgetary support, Naidu's government had pursued funding from banks and financial institutions for around Rs 40,000 crore. Naidu's government had raised Rs 2,000 crore for the project by issuing Amaravati Bonds last year. It's estimated that his government had issued construction contracts worth of over Rs 25,000 crore in the region where the city will be built.

The YSR Congress Party, which now governs the state, had alleged that Naidu's government forcefully took more than 30,000 acres from farmers in the name of voluntary land pooling for the project. The new government has allocated Rs 500 crore for the project in the recent budget.

            Controversy's favourite child 

• In 2014, then chief minister N Chandrababu Naidu had announced Amaravati as the proposed capital city, to be developed over many years 
• The project was criticised for building the city on the floodplains of Krishna river, diverting fertile farmlands and forests, displacing around 20,000 families