The World Bank has decided to pull out of the USD 300 million lending to the Amaravati Capital City project in Andhra Pradesh. The World Bank arrived at this decision after a series of representations it received from many people’s movements and civil society organisations over the past years, and a complaint to its accountability mechanism, inspection panel by the affected communities.

The total project cost was USD 715 million and the state government in 2016 had sought the entire funding from the World Bank and AIIB. However, it committed USD 300 million.

After bifurcation of the erstwhile Indian state of Andhra Pradesh in June 2014, both the new states of Telangana and Andhra Pradesh decided to share Hyderabad as capital for 10 years.

In September 2014, N Chandrababu Naidu, former Chief Minister of Andhra Pradesh announced Amaravati as the proposed capital city to be developed over many years. The master plan for which was prepared by the government of Singapore.

The capital city is to come up in areas of 217 sq km. Under Phase-I from 2015 to 2025, the state capital was to be built at a cost of nearly Rs 50,000 crore while the subsequent two phases were estimated to cost over Rs one lakh crore.

Even in its risk assessment, the World Bank had assigned the Project category A, signifying social and environment impacts. The project was criticised for building the city on the floodplains of river Krishna, diverting fertile farmlands and forests.