With the Asian Infrastructure Investment Bank withdrawing from the project in Amaravati, uncertainty over works in the capital continues.

After the World Bank withdrew an expected loan of $300 million for construction of the Andhra Pradesh capital, the Asian Infrastructure Investment Bank (AIIB) has also dropped its plans to support the Amaravati project, according to Reuters

Laurel Ostfield, Director General, Communications for AIIB reportedly told Reuters in an emailed statement, “AIIB is no longer considering the Amaravati Sustainable Infrastructure and Institutional Development Project for funding.”

The World Bank dropping the project last week has led to controversy and confusion in the state, with the ruling YSRCP and opposition Telugu Desam Party (TDP) taking turns to blame each other for the loss of funding. 

Three days after news of the World Bank’s withdrawal was announced, sources close to Chief Minister Jagan Mohan Reddy had said that 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. Many 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 livelihoods, destruction of fertile land, environmental violations, constructions on flood plains etc. 

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 a halt.