The Midweek Essay: World Bank quits funding Indian project

Nonetheless, is this enough?

Inspection Panel’s Report on Amaravati Project only Validates the Issues Raised by CSOs

WGonIFIS (Indian Working Group on International Finance Institutions)

26 July 2019

Confirming the concerns raised by the communities and civil society organisations, Government of India withdrew its request from the World Bank for financing Amaravati Capital City Project to save itself from an investigation by Bank’s accountability mechanism – the Inspection Panel.

It was confirmed by the report– dated March 23, 2019 – released by the Panel on July 23, 2019. An investigation into the project would have brought to the fore the monumental violations of Bank’s policies vis-à-vis social and environmental [issues], as was in the case of Sardar Sarovar (Narmada) dam and Tata Mundra projects in the past.

This confirms that Government of India is aware of and want to hide the violations due to the irresponsible execution of the project.

In its final report, which was published on July 23, 2019, Inspection Panel, while noticing multiple violations and lapses in the World Bank-funded project, had stressed for the need to have detailed investigation.

WGonIFIS, a collective of over 90 people’s movements and civil society organisations from across India, demand that the Government of India and the Government of Andhra Pradesh immediately conduct an independent review of the Amaravati Capital City project to look into the socio-economic damage, land transactions and psychological trauma witnessed by agricultural, coastal, and pastoral labourers, tenants, landless families, and the most vulnerable communities due to the land acquisition and displacement process.

An independent enquiry and prompt action on the findings will deliver justice to people who otherwise, with the Bank management, central and state governments and the investigating agency Inspection Panel have conveniently washed off their hands, the affected communities are yet to receive justice and strong response to their call for accountability.

Summary of the Panel’s report:

The Inspection Panel, which visited the Amaravati Capital City site to “carry out an investigation into the alleged issues of harm and related potential non‐compliance with livelihood restoration requirements of the Bank’s Involuntary Resettlement Policy,” had submitted its ‘Third Report and Recommendation on India: Amaravati Sustainable Infrastructure and Institutional Development Project’ to the Board of Executive Directors of the World Bank on March 29, 2019.

The Panel in its report pointed out economic displacement; uncertainties regarding livelihood restoration of both landless labourers and landowners; lack of specificity of Project documents; strong assertions of the complainants and Bank Management; timeliness of implementation of Master plan; immediate assistance to the most vulnerable families; and lack of cohesive data and methodology of independent assessment and third party monitoring report.

The Panel observed, “It is important that people not only have access to temporary jobs but obtain more long-term income-generating opportunities to ensure livelihood restoration, which is the ultimate objective of the Bank’s involuntary resettlement policy”. The Panel also expressed concerns about the delay in addressing the needs of 21,374 landless labourer households, who lost their source of income about four years ago.

Recognising that the Land Pooling Scheme at this scale has never been implemented anywhere in the world and that this may be established as a model for similar initiatives in future, the Panel emphasised the need to investigate the harms. Though the Management asserted that LPS farmers have received adequate compensation, the Panel questioned whether it is possible to establish with certainty that the compensation meets replacement value and noted that the affected landowners will bear the ultimate financial risk.

The documents of Bank’s Management on the exact implementation of the livelihood restoration lacked specificity. The Panel also noted that the Project documents do not refer to a labour market analysis assessing future jobs that will be created in the new city and the skills necessary to match these jobs. The Panel observed “about 45 per cent of Project Affected Persons within the footprint of the Bank-financed roads are illiterate, and many have farmed their whole lives. Therefore, they may lack financial literacy, as well as business and investment know-how, to successfully avail themselves of this alternative.” Moreover, the Panel stressed that the larger concern of drastic ‘imposed’ social change during the lifestyle transition from rural, farm-based livelihoods to urban non-farming livelihood inherently involves a high risk of impoverishment.

While the Panel acknowledged that the implementation of the Bank Project has not yet started, the Panel remarked that the design of the Project is based on government activities and the welfare schemes that are already under implementation and have encountered certain challenges. And, these challenges may continue under Bank Project implementation.

Though the complainants, activists, peoples’ groups and CSOs had always raised other larger issues of this flawed project – namely lack of consultation and participation of affected people, multi-crop fertile lands getting converted to urban concrete jungles, food security issues, and most importantly coercion and intimidation by the previous government and the police, and at many instances by landlords too – all of these are shelved aside in the Panel’s report explaining the rectifying actions and project design by the Bank Management.

As the World Bank is no longer financing the project, the Panel updated its report and withdrew its recommendation to investigate the project.

However, it is noteworthy that the Panel’s reports majorly relies on three reports: World Bank’s Independent Assessment on Land Pooling; Crisil’s note on Land Pooling Scheme for Development of Amaravati; and the Third-Party monitoring report of Vasavya Mahila Mandal, an NGO which deals with the grievance redressal mechanism of Andhra Pradesh Capital Region Development Authority (APCRDA). Despite multiple requests for accessing the reports, these reports have not been made public.

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)

Contact details:

Tani Alex
Centre for Financial Accountability
+91 96500 15701
tani@cenfa.org

Ankit Agrawal
Working Group on IFIs
+91 95603 61801
wgonifis@gmail.com