8 March 2006
The World Bank has temporarily suspended financial support to the Mumbai Urban Transport Project due to concerns about the equitable treatment and resettlement of affected communities.
One of the World Bank's largest projects in India is no longer receiving a major component of its funding as a result of increasing uncertainty over the resettlement of thousands of project affected persons. With 90% of the project already completed, the World Bank announced that it would be temporarily suspending any further disbursements for the project which has been investigated by the Bank’s Inspection Panel. The government of India has suggested that it will continue the project with or without the World Bank's support.
The World Bank reports that "The US$940 million MUTP is supported by an IBRD loan of US$463 million for the road and rail components of the project and an IDA credit of US$79 million for resettlement. Disbursements to the IDA credit and the road component of the loan (US$150 million) have been suspended." The conflict stems from a dispute between Bank officials and the government about how to equitably resettle 17,000 households. The affected communities have expressed grave concerns about the delivery of essential services such as water and waste removal at their new locations.
News reports suggest the Project Executing Agency, the Mumbai Metropolitan Region Development Authority, may approach other donors for completion of the Project and not seek resuscitation of the suspended World Bank money. If this were to happen, it would be important to see what role the World Bank will play to enforce its environmental and social safeguard policies. It’s feared the Bank's withdrawal could potentially leave the already distressed communities with no one to hold accountable for their inadequate resettlement.
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