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Why did World Bank cancel Amaravati loan?

Why did World Bank cancel Amaravati loan?

The sudden decision of the World Bank to drop the proposal to lend US $ 300 million (approximately Rs 2100 crore) for the infrastructure development in Amaravati, the capital city of Andhra Pradesh has surprised many.

Though it is a fact that the new government headed by YSR Congress party president Y S Jagan Mohan Reddy has not been evincing much interest in Amaravati project works, there was never any indication that the World Bank would withdraw its loan proposal.

However, on Friday, it has become clear to everyone as to why the World Bank took such a decision.

The bank authorities made it clear that the loan was dropped following a letter from the NDA government at the Centre withdrawing the request for financing the Amaravati Sustainable Infrastructureand Institutional Development Project.

Apparently, the Centre had written to the Board of Executive Directors of the World Bank it was not interested in the loan and the board had dropped its plan to extend lending for the proposed project.

In 2016, Naidu government had put forth the proposal for a loan of US $ 715 million, of which the bank had committed to extend assistance of US $ 300 million.

But the question is why the Centre has written to the World Bank withdrawing the loan proposal.

Apparently, the proposal to reject the loan has come from the Jagan Mohan Reddy government itself and was routed to the World Bank through the Centre, since any external loan borrowed by any state has to be forwarded through the Centre.

“The World Bank deals with the countries and not individual states within the country. It gives loan to a state through the Centre. So, if the state doesn’t want loan, it has to be conveyed to the World Bank through Centre. That is what has happened here,” an official said.

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Tags: Amaravathi Jagan World Bank YSR Congress