The World Bank has decided not to fund Amaravati Sustainable Capital City Development Project, the ambitious project of former Andhra Pradesh chief minister Chandrababu Naidu.
The World Bank's website shows the status of the project as "dropped" without giving reason.
According to the website, the total project cost was USD 715 million with the World Bank planning to provide loan of USD 300 million.
The project was to be co-financed by another multilateral funding agency Asian Infrastructure Investment Bank (AIIB). Beijing-based AIIB had committed USD 200 million.
Environmental activists, farmer leaders, and civil society organisations opposed and criticised this project for building the city on the floodplains of river Krishna, diverting fertile farmlands and forests, displacing around 20,000 families, acquiring lands, and allegedly favouring contractors for the construction of the city.
Some residents in the vicinity of the proposed city had written to the inspection panel of the World Bank on May 25 2017, alleging harm related to their livelihood, environment, food security, and resettlement "due to the World Bank's non-compliance with its environmental and social standards in preparation of the proposed project".
Promising a corruption-free government in Andhra Pradesh, newly elected Chief Minister Jagan Mohan Reddy said he would initiate a probe into the alleged financial irregularities in the construction of new state capital Amaravati, the Polavaram project and other schemes launched by Naidu.
He alleged that the powers that be and benamis resorted to 'insider trading' as the former chief minister was privy to the information where the new capital was going to be located.