After withdrawing its prospective loan of $300 million towards the Amaravati project, the World Bank has now indicated that it is willing to compensate by extending a loan of a similar magnitude for the state, according to sources.
The World Bank had committed to providing a loan of 300 million USD for Amaravati Sustainable Infrastructure and Institutional Development Project. However, the project has now been dropped for contested reasons. According to sources close to Chief Minister Jagan Mohan Reddy, the World Bank is still likely to provide a loan for urban development projects in Andhra Pradesh, although the priorities would have to be reworked. The works can be based anywhere in AP and not necessarily in Amaravati.
The previous TDP government’s Amaravati project has been mired in controversy, surrounded by several allegations of land scam and flouting of environmental regulations. Several farmers and people's organisations have been lamenting that the Amaravati project would create food insecurity, with constructions being built on fertile land.
They had written to the World Bank’s Inspection Panel in May 2017 seeking their intervention and said that the World Bank’s decision to grant a loan conflicted with their SESA-ESMF (Strategic Environmental and Social Assessment and Environmental Social Management Framework). While the inspection panel had not concluded its probe, government sources say the team has found numerous irregularities in land pooling, loss of livelihood, destruction of fertile land, environmental violations, constructions on flood plain etc.
The renewed proposal from the YSRCP government is likely to focus on public welfare-oriented projects, with a focus on the Navaratna promises. With the only condition being that the proposal is centred on urban development works, sources say that the government may seek funds for developing the health and education sectors in urban areas. The World Bank is also not averse to increasing the loan amount above 300 million USD if required, sources indicate.
Farmers who had given up their land under the TDP government’s Land Pooling Scheme (LPS) have been faced with uncertainty since the change of government in May, with most projects in the region coming to halt. The World Bank’s withdrawal has added to their worries.
After the World Bank withdrew its funding for the capital, the Asian Infrastructure Investment Bank (AIIB), which was expected to provide funding worth $200 million, is also expected to make a decision over the loan soon.