World Bank, ADB to release USD 200 million for Amaravati by year-end

The World Bank (WB) and Asian Development Bank (ADB), which have each committed USD 800 million to the development of Amaravati Capital City Phase-I, are expected to release the second tranche of USD 200 million by the end of this year, a senior official of the Andhra Pradesh government said on Thursday.

The total funding from the two multilateral institutions amounts to USD 1.6 billion (approximately Rs 13,600 crore), while the Government of India has allocated Rs 1,400 crore from its total commitment of Rs 15,000 crore for Phase-I.

As per S. Suresh Kumar, Principal Secretary, Municipal Administration and Urban Development, the World Bank has already disbursed USD 207 million, of which less than 50% has been utilized so far. “Once we spend 75% of the first tranche, we can claim the next installment. The second tranche is likely to be of a similar amount,” he said.

Under the terms of the agreements, the Department of Economic Affairs (DEA), Government of India, is the borrower, while the Andhra Pradesh Capital Region Development Authority (APCRDA) is the implementing agency responsible for on-ground project execution. The World Bank loan is being provided through the International Bank for Reconstruction and Development (IBRD), which offers concessional loans to middle-income countries like India.

Both the WB and ADB loans carry low interest rates, estimated around 1.5–2% per annum, floating, based on LIBOR plus a small spread. The loans have a tenor of 15–20 years with a grace period of five years before principal repayment begins. Repayment is structured semi-annually, with only interest paid during the grace period, followed by principal plus interest payments over the remaining term.

Disbursement of the funds is tied to Disbursement Linked Results (DLRs), which include milestones such as the commencement of construction and establishment of the Environmental and Social Management Unit. According to the WB, the project has successfully achieved DLR 7.1 and DLR 1.2 (i), reflecting satisfactory implementation progress.

Project monitoring is rigorous, with WB and ADB teams conducting monthly inspections, reviewing records, meeting with APCRDA officials, and performing field visits to ensure proper utilization of funds.

The Amaravati Phase-I project is among the largest single-city development projects in India funded by multilateral banks. Other states, such as Tamil Nadu, Karnataka, Maharashtra, Odisha, and West Bengal, have received WB and ADB funding for urban infrastructure projects, but Amaravati stands out for its scale and scope.

With the second tranche expected by December 2025, the Andhra Pradesh government aims to accelerate infrastructure development in Amaravati while meeting the financial and environmental safeguards stipulated by the multilateral funding agreements.