The sudden decision of the World Bank to drop the proposal to lend United States $ 300 million (approximately Rs 2100 crore) for the infrastructure development in Amaravati, the capital city of Andhra Pradesh has surprised many.
AIIB spokeswoman Laurel Ostfield told Reuters in Beijing that it was aware the World Bank has dropped the project from its investment pipeline.
Except for those which are already under progress like apartments and bungalows for government staff and All India Service officers, contracts awarded after April 1, 2019, for new projects have been cancelled by Chief Minister Y S Jagan Mohan Reddy who has ordered an inquiry into the contracts citing irregularities and corruption. The state overnment had also sought $200 million from Asian Infrastructure Investment Bank which has not taken any decision yet. Apart from seeking funds from Centre we will apply elsewhere for loans, " he said.
The bank's website showed the status of the Amaravati Sustainable Infrastructure and Institutional Development Project (A) as "dropped". "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. "Is not the YSRC responsible for the World Bank going back (on the loan commitment)", he asked during an informal chat with reporters in the assembly lobby. There was much speculation that the loan was dropped as many complaints had been made to the World Bank regarding irregularities and alleged illegalities surrounding the construction. The previous government had estimated that Rs 48,000 crore would be required to complete the construction of the capital over 10 years.
The World Bank was considering extending a loan of 0 million to the Andhra government to build the capital city on the banks of river Krishna. "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 said.
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However, a top official of the Andhra Pradesh Capital Region Development Authority (APCRDA), the implementing agency of the capital project, said there was no official communication from the World Bank on the loan cancellation.
Apparently, the proposal to reject the loan has come from the Jagan Mohan Reddy government itself and was routed to the World Bank through the Centre, since any external loan borrowed by any state has to be forwarded through the Centre.
The Inspection Panel, constituted by the World Bank to look into the complains by farmers and non-governmental organisations in 2017, reportedly sought a deeper inspection of the ground situation as the alleged violation of environment and other laws were against the bank's policy for lending.
Under Naidu's ambitious plans the capital city was to come up in an area of 217 sq km, spread across 29 villages between Vijayawada and Guntur. It gives loan to a state through the Centre.