Indian PM Modi

Modi’s govt withdraws request to World Bank to support Temasek-led Amaravati capital project

According to a Reuters’ report last month (Jul 2019), the World Bank announced that it had withdrawn US$300 million of funding for the new capital in Andhra Pradesh, after the Indian central government dropped support for the project.

In a statement, World Bank said, “On July 15 the Government of India (GoI) withdrew its request to the World Bank for financing the proposed Amaravati Sustainable Infrastructure and Institutional Development Project. The World Bank’s Board of Executive Directors has been informed that the proposed project is no longer under preparation following the government’s decision.”

The World Bank website had also showed the status of Amaravati Project as “dropped”. The total project cost was US$715 million and the state government in 2016 had sought funding from the World Bank. However, it had committed US$300 million. But now, even this US$300 million has been withdrawn, thanks to the request from Modi’s central government.

“For a change, good sense has prevailed upon the bank to withdraw from the disastrous programme,” Sreedhar R., the director of the Environics Trust, one of the activist groups that has been critical of the project, said in a statement.

New opposition government not keen on Amaravati

The construction of the new capital city Amaravati for the state of Andhra Pradesh was the brainchild of the state’s former chief minister, N. Chandrababu Naidu.

The project is a joint development between the Singapore Consortium led by Temasek-linked Ascendas-Singbridge and Sembcorp Development, and Amaravati Development Corporation Limited, a company set up by the former Naidu’s state government. Indian PM Modi laid the foundation stone for the project in 2015.

The state of Andhra Pradesh was earlier governed by the Telugu Desam Party (TDP) headed by Naidu, which was aligned with Indian PM Modi’s Bharatiya Janata Party (BJP). However, at the recent India’s general election in May, the ruling TDP lost the Andhra Pradesh Legislative Assembly election. The YSR Congress Party led by Y.S. Jagan Mohan Reddy swept the elections with a majority of 151 out of 175 Assembly seats, propelling Reddy to become the new Chief Minister of Andhra Pradesh, defeating Naidu.

Unfortunately, the new Chief Minister Reddy is not a keen supporter of the Amaravati project and has even publicly announced that the project is “not a priority” for him. The new state government is reviewing all ongoing works and cutting finances, triggering uncertainty over the future of the state capital project which Temasek-linked entities Ascendas-Singbridge and Sembcorp Development have invested in.

Work on the capital city, which has been running behind schedule, came to a standstill. Chief Minister Reddy has set up a team of technical experts to review every aspect of the project, following allegations that the previous Chief Minister Naidu was involved in corruption over the way land was acquired, as well as other improprieties including insider trading.

People linked to the previous Chief Minister were said to have allegedly bought land with the knowledge of where the capital city was going to be located before any formal announcements were made. Reddy has even gone ahead to cancel flight arrangements connecting Amaravati’s Vijaywada Airport and Singapore’s Changi Airport, an agreement signed by Naidu’s state government with Singapore.

Even between Naidu and Modi, there were issues with the 2 men. Modi and Naidu fell out after Naidu’s party broke from Modi’s ruling coalition last year, angering Modi.

Singapore sends High Commissioner to talk to new Chief Minister Reddy

Last Friday (9 Aug), it was reported that the Singapore government sent its High Commissioner to India Lim Thuan Kuan to meet the new Chief Minister Reddy. Lim was accompanied by officials from Singapore’s Ministry of Trade and Industry.

Lim told Chief Minister Reddy that Singapore is ready to invest more in thermal, solar, aerospace and related fields, apparently in an attempt to appease the new Chief Minister. He also informed the Chief Minister about the present collaboration Singapore already has in the many areas with the state of Andhra Pradesh, from urban planning and development to public healthcare.

The High Commissioner reminded the Chief Minister that investments by Singapore companies in the state now exceed Rs20,000 crore (S$4 billion) creating a substantial number of jobs across the state.

However, the Chief Minister explained to the Singapore delegation that the challenges and steps his administration was taking are to improve literacy in the State, and to collaborate with industries to improve the skill levels of workforce in Andhra Pradesh. The meeting ended with the usual pleasantry that both sides would agree to continue exploring further opportunities for mutual benefits.

“Rather striking was the omission of Amaravati in the statements of both the sides”, observed the Indian media, New Indian Express.