Andhra Pradesh: World Bank And ADB Commit Rs 13,600 crore For Amaravati Capital City Phase I Development

In a significant boost for the development of Amaravati, the World Bank and the Asian Development Bank (ADB) have agreed in principle to provide funding of USD 1.6 billion (approximately Rs 13,600 crore) for Phase I of the capital city's development.

Chief Minister N Chandrababu Naidu declared Amaravati as the capital of Andhra Pradesh in 2015. It was selected as the new capital city of Andhra Pradesh due to its strategic location which lies between the two nodal urban centres of Vijayawada and Guntur in the capital region (8,600 sq/km).

According to a senior official from the Andhra Pradesh government, the funds are expected to start being released by January 2025.

Of the total Rs 15,000 crore required for the first phase of Amaravati's development, the central government will contribute the remaining Rs 1,400 crore. The official noted that the funds from the World Bank must be fully utilised within five years.

The International Bank for Reconstruction and Development (IBRD), a branch of the World Bank that provides loans and guarantees, and the ADB will each contribute USD 800 million (Rs 6,800 crore) towards the project.

"The project is being jointly funded by the World Bank and ADB, with disbursement starting as early as 30 January 2025, or possibly even sooner," stated the official, reports Economic Times.

The official also indicated that funding for the second phase of the project would depend on the state's progress in completing Phase I. There is optimism that the World Bank may continue its support for the second phase, depending on the pace of development.

The repayment of loans from both the World Bank and ADB will be handled by the Central government, easing the financial burden on the state.

Addressing Parliament on 23 July, Sitharaman detailed the government's plan to allocate special financial support for the development of a new capital for Andhra Pradesh, with Amravati earmarked to become a model capital city.

"Our government has made concerted efforts to fulfil the commitments in the Andhra Pradesh Reorganisation Act. Recognising the state’s need for a capital, we will facilitate special financial support through multilateral development agencies. In the current financial year, Rs 15,000 crore will be arranged, with additional amounts in future years," stated Sitharaman.  

Naidu’s vision includes transforming Amaravati into a world-class capital, that would represent people’s vision and aspiration of a happy, liveable and sustainable city.