Press Release | July 23, 2019

After the World Bank, Asian Infrastructure Investment Bank Pulls Out of Amaravati Capital City Project

New Delhi: The China-led Asian Infrastructure Investment Bank (AIIB) pulled out of Amaravati Capital City Project in Andhra Pradesh. This decision, communicated by its spokesperson Laurel Ostfield to a news agency, follows the decision of the World Bank – a co-financier of the project – last week to pull out from the project.

AIIB was considering financing $200 mn out of the total $715 mn project while World Bank was considering $300 mn.

Never before did the four-year-old AIIB have to drop a project which they were considering for financing.

The news agency Reuters quoted Laurel Ostfield, “AIIB is no longer considering the Amaravati Sustainable Infrastructure and Institutional Development Project for funding.” AIIB was considering this project only as a co-financier and was to adhere to the World Bank’s safeguard policies in this project. After the Bank’s decision to exit from the project, AIIB’s decision on this was being keenly watched.

The monumental violations resulting out of the socio-economic damages, land transactions affecting thousands of agricultural, coastal, and pastoral labourers, tenants, landless families, dalits who have undergone severe pressure and fear due to the land acquisition and displacement process, financial non-viability, massive land-grabbing of the fertile land in the name of voluntary land-pooling were raised time and again with the government and both AIIB and World Bank by affected communities, people’s movements and civil society organisations.

Working Group on International Financial Institutions (WGonIFIs) and the affected communities of the Amaravati Capital City Project welcome the decision and consider this as a victory of the people who despite intimidation and coercion from the administration, and indifference from financial institutions, stood their ground.

“World Bank funding to any project brings in other bi-lateral and muti-lateral financing agencies without each one of them independently doing due-diligence, as we have seen in the case of the Narmada dam project. This nexus between financial institutions and mechanisms are strengthening, and only people united and scientific facts can make them bow down, as we have seen in the case of Amaravati project,” Medha Patkar, senior activist of Narmada Bachao Andolan and National Alliance of People’s Movements said.

World Bank had issued a statement the other day saying that it was the Government of India which withdrew the request for lending, reminding one of what the government did in the case of Sardar Sarovar (Narmada) dam in 1992, 27 years back. After a scathing report on SSP by Morse Committee, the Bank insisted that the Indian government must meet tough conditions – mostly on R&R and environmental safeguards. The Bank planned to send a team to India to check that the government had fulfilled these conditions before paying the remaining $170 million of the loan. On the day before the deadline – March 31, 1992 – the Bank announced that India had ‘decided to complete construction work on its own’.

In this case, a week before the independent accountability mechanism of World Bank, the Inspection Panel is to deliver its decision on the investigation into the Amaravati project, Government of India withdrew its request.

“AIIB pulling out of the project after World Bank is a great victory for the people. The technicality of Govt of India withdrawing the request from the Bank is only hogwash. A probable investigation by the Inspection Panel would have revealed several violations and methods of coercion and unjust use/deployment of force on the farmers by Chandrababu Naidu’s government,” said Prof. Ramachandraiah, Centre for Economic and Social Studies, Hyderabad.

This victory would not have been possible without the solidarity and support of a large number of people’s movements, experts and civil society organisations. “This exit of two big financial giants from this environmentally and socially disastrous project is a victory of people, civil society organisations, activists who have been relentlessly challenging this project at various fora for the past four years. It is time for these financial institutions to realise that people will raise a collective voice against them, and will win if these institutions continue to follow undemocratic and unjust ways to finance disastrous projects,” said Anuradha Munshi, Centre for Financial Accountability.

WGonIFIs reiterates its demand to the State government that it should:

  1. Scrap the CRDA Land Pooling Act, CRDA authorities and notifications passed subsequently, which are inconsistent with the 2013 Central Act and fully implement the Land Acquisition and Rehabilitation Act, 2013 in the case of all the affected people of Amaravati Capital Region. Also, the government should return the plots that were taken involuntarily from the people.
  2. Initiate a Judicial enquiry into the socio-economic damage, land transactions and psychological trauma of agricultural, coastal, and pastoral labourers, tenants, landless families, Dalits who have undergone severe pressure and fear, due to the land acquisition and displacement process.
  3. Announce a Special Compensation Package for Dalits and other assigned landholders as their social life has been damaged to a great extent in the past five years.
  4. Prosecute brokers, real estate agents and other persons who purchased or facilitated the purchase of assigned lands after the announcement of Capital Region.
  5. Stop attempts to de-list dalit farmers from records through dubious documentary manipulation and consider all dalit cultivators in possession of the land as the original owners of the land for purposes of compensation and R&R under the 2013 Act.

About the Project: 

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 ten years. In September 2014, N Chandrababu Naidu, the former Chief Minister of Andhra Pradesh announced Amaravati as the proposed capital city, to be developed over many years. The World Bank and AIIB were under consideration to finance the USD 715 million project.

Even in its risk assessment, World Bank had assigned this Project category A, signifying the social and environmental impacts. The project was criticised for building the city on the floodplains of river Krishna, diverting fertile farmlands and forests, displacing around 20,000 families, forcefully acquiring lands, and favouring contractors for the construction of the city. A complaint with the Inspection panel (Independent accountability mechanism) of the World Bank has been filed by the affected community in 2017 to investigate the project for violation of the World Bank’s safeguard policies. This complaint was under process, and the Board of the Bank was waiting for the recommendation on the eligibility of investigation from the Inspection Panel.

For more info: Encroachment of Nature, People and Livelihoods: A Case of the Abusive, Greedy and Failing Amaravati Capital City (2014-2019)

More information about the project also available here.

Contact details:

  1. G. Rohith
    Human Rights Forum, Andhra Pradesh
    +91 99852 50777
  2. Meera Sanghamitra
    National Convenor, National Alliance of People’s Movements
    +91 73374 78993
  3. Tani Alex
    Researcher, Centre for Financial Accountability
    +91 96500 15701

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