World Bank approved $800 million for Amravati despite negative internal view

Despite over 170 representatives by civil society organisations, hailing from 17 countries, all of them written to the World Bank’s executive directors calling upon the top banker to defer its approval, even as seeking further detailed studies, the Bank’s board of directors has approved $800 million for the Amaravati Capital City project.
Ironically, the Bank’s own Inspection Panel in 2019 had called for investigation into the project, and the Andhra Pradesh High Court had called the Land Pooling Scheme (LPS) for its “prima facie illegal and non-compliant” of the National Green Tribunal orders. The Panel had sought strict adherence to the Bank’s policies, including ensuring meaningful, transparent consultations with all affected communities, before the project is approved.
Bringing this to light, the well-known advocacy group Centre for Financial Accountability (CFA) said, the civil society groups had also asked the World Bank to resist political pressures from the Government of India and take a courageous stand in defence of the rights of people, the environment, and the Bank’s stated commitments to sustainable development and social equity.
In spite of this, “the Board of Directors going ahead with the approval of the project reeks of disregard for the judicial system of the country, undermining its own accountability mechanisms and disrespecting the rights and concerns of the people”, CFA regretted in an email alert to Counterview.
According to CFA, the approval should be seen in the light of the World Bank having a historically contentious legacy in India, “marked by projects such as the Narmada Dam, the Singrauli thermal power project, the Tata Mundra coal plant, the Mumbai Urban Transport Project, and the Himalayan dams, among others”.
Warning that this project “is poised to be yet another stain on the World Bank's legacy”, CFA reported, this project was first presented to the World Bank in 2017, when the Bank approved a loan of US $300 million. However, before the financing details were finalised, the political landscape in the state changed, and the project was shelved in 2019.
Five years later, the same political party that proposed the project returned to power and sought World Bank financing again, said CFA, pointing out, in 2017, local communities impacted by the project raised their concerns with the World Bank’s Inspection Panel (IPN), which submitted its Third Report and Recommendation in March 2019.
“The Panel’s findings highlighted significant issues with the project, particularly regarding the violation of the Bank’s Involuntary Resettlement Policy (OP/BP 4.12). These issues, including inadequate (and illusionary, as the Andhra Pradesh High Court has observed in its order of March 2022) compensation, lack of livelihood restoration, and the absence of necessary consultations, remain unresolved to this day”, CFA asserted.
The IPN’s 2019 Report made several critical recommendations, noted CFA, “including the need for a thorough investigation into the alleged harm caused to local communities, particularly landless labourers who lost their livelihoods years ago.”
”The Panel also raised concerns over the LPS, noting that it had never been implemented at this scale and could set a dangerous precedent for future development projects. The adequacy of compensation, particularly whether it meets the replacement value, was also questioned”, it added.

It continued, “The Andhra Pradesh High Court held the Land Pooling Scheme (LPS), under which the State government acquired lands from farmers, to be prima facie illegal. As a result of the flip-flop decisions of the State government in the choice of location of the capital city at Amaravati since the Bank considered the project in 2017, the farmers who gave up lands under the LPS have been subject to irreparable loss.”
According to CFA, “In the absence of a formal statutory notification issued by Government of India under the AP Reorganisation Act, 2014 on the location of the capital city as on date, the farmers continue to face severe uncertainties in the matter of valuation of their precious lands”, underlining, how in the past 10 years have demonstrated the serious gaps in LPS”, rocked as it was by protests by LPS farmers on the streets for more than 1,600 days with over 500 criminal cases having been filed, including on women LPS farmers.
“Despite this, the project is being pushed forward under an increasingly authoritarian political climate, both at the state and national levels”, CFA said.
The two crucial judicial orders pronounced by the National Green Tribunal (NGT) referred to by CFA had wanted the State government to put in place mechanisms for compliance with environmental norms in implementing the Amaravati project in a sustainable manner, even as requiring that the State government should conserve the floodplains of River Krishna. The NGT orders “are yet to be complied with by the State government”, it commented.
In the light of this, CFA demanded that, despite the approval, the Bank can “still hold on to its lending until detailed studies are conducted, completed with the High Court and National Green Tribunal judgments and adherence to the Bank’s own policies vis-a-vis adequate consultation with affected communities and adequately compensating the people for their loss.”