World Bank drops $300 million in funding for Amaravati Capital City project

Sreenivas Janyala
Amaravati Capital City Project. (Visual representation)

Former Andhra Pradesh chief minister Chandrababu Naidu’s dream capital project of Amaravati suffered a setback Thursday as the World Bank has decided against funding $300 million for the purpose. The World Bank’s website shows the status of the project as ‘dropped’. On a loan sought by the former CM, the bank was considering lending $300 million for infrastructure development in the capital under the Amaravati Sustainable Capital City Development Project; Amaravati Sustainable Infrastructure and Institutional Development Project.

Several NGOs led by Capital Region Farmers Federation, and Narmada Bachao Andolan, Working Group on International Financial Institutions (WGonIFIs), Human Rights Forum, Andhra Pradesh, National Alliance of People s Movements, and Centre for Financial Accountability have been opposing the previous Telugu Desam Party (TDP) regime s plans to build the capital by acquiring land from farmers, and protested against development very near to the Krishna riverbank.

Based on several petitions by the NGOs, the World Bank had sought an inspection report on whether the then Andhra Pradesh Government had honoured all the commitments it made and whether the construction of the capital city followed all rules and regulations. The inspection report was submitted in January this year. The inspection was done on nearly 50 points but the report has not been made public.

Mallela Sheshagiri Rao, a lawyer who represented Capital Region Farmers Federation, said that the TDP Government misrepresented facts and made all kinds of promises to secure the loan. "None of the assurances and promises by then CM Chandrababu Naidu to farmers of the region were being fulfilled. Farmers in the capital region lost land and livelihood and spent sleepless nights. It was a four-year-long struggle and finally the people have won with the WB dropping the idea of funding this project," Rao said.

"This should be a message to AP Government that they should first address the concerns of the people before seeking such loans. It is unfortunate that the WB is not making the inspection report public otherwise all the truth about how the previous government broke rules and dishonoured it commitment would have come out," Rao said.

Environmental activists, farmer leaders, and civil society organisations opposed and criticised this project for building the city on the floodplains of river Krishna, perting fertile farmlands and forests, displacing around 20,000 families, forcefully acquiring lands, and allegedly favouring contractors for the construction of the city. A complaint with the Inspection Panel (Independent accountability mechanism) of the World Bank has been filed by the affected communities in 2017 to investigate the project for violation of the World Bank s safeguard policies. This complaint was under process and the Board of the World Bank was waiting for the recommendation on the eligibility of investigation from the Inspection Panel which was submitted this January.

G Rohit of the Human Right Forum, Andhra Pradesh, said it was a landmark decision by the bank. "WB took this decision after several representations from NGOs and people s movements. In the TDP government, there was no transparency or accountability regarding the Amaravati capital city project. The concerns and issues of affected communities were brushed aside. There were gross violations which threatened the environment, stole livelihoods," Rohit said.

The Narmada Bachao Andolan (NBA) issued a statement saying: "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. After Narmada and Tata Mundra, this is the third major victory against the World Bank Group. We are happy that the Inspection Panel which was created due to the struggle of Narmada Bachao Andolan played its 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."

Mallela Sheshagiri Rao, the lawyer who represented Capital Region Farmers Federation, said that ever since the Amaravati Capital City project was announced,environmental experts, civil society organisations and grassroots movements have expressed their anguish over the grave violations of the social and environmental laws, financial unviability, massive land-grabbing of the fertile land in the garb of voluntary land-pooling, open threats to the complainants by none other than the then Chief Minister, along with concerns of losing fertile farmlands and livelihoods.

"Asian Infrastructure Investment Bank (AIIB), which was supposed to give 50 per cent of the $300 million may also withdraw from the project as a co-financier," Rao said. The World Bank and AIIB were under consideration to ultimately fund about $715 million for the Amaravati project.

The Working Group on International Financial Institutions (WGonIFIs) had petitioned the World Bank several times and put a lot of pressure demanding that Andhra Pradesh scrap the CRDA Land Pooling Act and notifications passed subsequently, which, they claimed, were inconsistent with the 2013 Central Act. The group demanded that the state fully implement the Land Acquisition and Rehabilitation Act, 2013 in the case of all the affected people of Amaravati Capital Region.

Also, the government should return the plots that were taken involuntarily from the people, the group demanded. WGonIFIs also demanded a judicial inquiry into the socio-economic damage, land transactions and psychological trauma of agricultural, coastal, and pastoral labourers, tenants, landless families, Dalits who have undergone severe pressure and fear, due to the land acquisition and displacement process; announce a Special Compensation Package for Dalits and other assigned landholders as their social life has been damaged to a great extent in the past five years; prosecute brokers, real estate agents and other persons who purchased or facilitated the purchase of assigned lands after the announcement of Capital Region; stop attempts to de-list Dalit farmers from records through alleged dubious documentary manipulation and consider all Dalit cultivators in possession of the land as the original owners of the land for purposes of compensation and R&R under the 2013 Act.