In a major boost to the Andhra Pradesh capital city project, the World Bank has agreed to provide a loan of Rs 15,000 crore for the development of Amaravati city.
The World Bank has sent a letter to the Union finance ministry approving the loan of Rs 15,000 crore for this year's Amaravati capital city project.
“The discussions on the modalities of lending will be held between the top officials of the AP Capital Region Development Authority (APCRDA) and the World Bank representatives in the presence of the Union finance ministry officials in New Delhi on Thursday,” the official sources said, adding that the final round of discussions would be held on November 8. The agreement is expected to be signed by November 15.
The development follows a series of visits by the World Bank team to Amaravati's capital region in the last two months. They inspected the ongoing clearance of jungle in the region and abandoned buildings and other infrastructure works in the last five years, besides interacting with the farmers.
Once the agreement is signed, the APCRDA is expected to get the first tranche of a loan of Rs 3,750 crore in November, as per the proposals submitted by the APCRDA. The remaining tranches would be released before the closure of the financial year, the officials said.
The World Bank loan would be utilised for the development of infrastructure, development of layouts of residential and commercial plots allotted to farmers who gave away their lands for the capital under the land pooling system, construction of the Amaravati government complex, including the state assembly, high court, secretariat towers and various departmental buildings.
“The total cost of these works was estimated at Rs 49,000 crore of which Rs 15,000 crore is being obtained as a soft loan from the World Bank,” the official sources said, adding that there would be a moratorium of 15 years on repayment of the loan, which would be borne by the centre and the state in the ratio of 90:10.
Political controversy
The World Bank’s green signal brings the curtains down on the political controversy over the loan issue. The opposition YSR Congress Party has been spreading a narrative that the lending agency was not in favour of extending the loan because the location was not suitable for developing the capital city.
During the recent floods that ravaged Vijayawada and surrounding areas, this narrative was sought to be repeated by those opposing the Amaravati project. However, the state Municipal Administration Minister P Narayana asserted that Amaravati remained unaffected during the unprecedented floods, countering the argument that it was vulnerable to heavy rains and flooding.
In 2015, the then Telugu Desam Party government, under the leadership of N Chandrababu Naidu, approached the World Bank for financial assistance under Amaravati Sustainable Infrastructure and Institutional Development Project (ASIIDP) to the tune of $300 million to develop infrastructure in Amaravati.
However, this initiative faced opposition from the YSRCP and several non-governmental organisations (NGOs), who filed numerous complaints with the World Bank. These complaints accused the TDP government of forcibly acquiring land from local farmers for the Amaravati project.
In response, the World Bank initiated an investigation into these allegations. An investigative panel toured Amaravati and found no substantial evidence to support the claims. However, the opposition continued to raise objections and attempted to stall the project by sending additional complaints to the World Bank. The international financial institution, in turn, considered conducting a further review.
Amid these developments, elections were held in Andhra Pradesh, and Y S Jagan Mohan Reddy of the YSRCP assumed power. From the start of his tenure, Jagan expressed his opposition to the development of Amaravati as the state capital. When the Union Finance Ministry inquired whether the new government wished to proceed with the World Bank loan for Amaravati, the YSRCP-led administration remained silent. Initially, the state government indicated that Chief Minister Jagan would review the project before making a final decision, but no response came even after repeated reminders from the central government.
Finally, after months of inaction, the Union Finance Ministry notified the state government that if they did not provide a decision by July 15, 2019, the World Bank would be informed that Andhra Pradesh was no longer interested in pursuing the project. As no response was received, the World Bank was formally notified, and it officially withdrew its support for Amaravati.
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