Boon or bane?

WB walks out of Mumbai urban transport project

By Nidhi Jamwal
Published: Friday 31 March 2006

the World Bank (wb) has suspended the grant of us $150 million loan to the Mumbai Urban Transport Project (mutp) to express its dissatisfaction over mutp 's resettlement package. But the Maharashtra government seems unfazed by the funding body's move.

The bone of contention is the resettlement of over 2,500 shopkeepers displaced by the road projects under mutp. Maharashtra's relief and rehabilitation policy allows them free accommodation of 21 square metres, but wb wants the shopkeepers be given commercial space equal to the area they are going to lose. It has said the moratorium, issued on March 2, 2006, will continue until concerns about equitable treatment of those displaced are resolved.

"Suspension reflects how serious we are about a successful outcome of post-resettlement problems," said Michael Carter, country director, wb. "We will be working closely with the government to ensure that. Once progress has been made, we will review the suspension."

State officials, however, seemed relieved. "The World Bank was imposing too many impossible conditions, T Chandrashekhar, metropolitan commissioner of the Mumbai Metropolitan Region Development Authority (mmrda), the agency implementing mutp, told the media . " It wants global laws for local conditions. We provide free housing for the project-affected, but were asked to provide equal space to every encroacher. This isn't possible. We would have to shell out Rs 20-30 lakh per slum dweller," he said.

Since wb has released most of the loan, suspension of only us $150 million will not affect the ongoing projects, mmrda officials said. wb provides loans, not grants, and these should be accompanied with more relaxed conditions, they assert.

The Maharashtra government is already holding talks with the Japanese Bank for International Cooperation (jbic) for funding infrastructure projects such as the Mumbai metro project; jbic has less stringent rehabilitation conditions and offers loans at a 1.3 per cent interest rate. jbic has funded Delhi metro project.

mutp's road and railways renewal plan is worth us $940 million. Of this, us $542 million -- us $463 million for road and railway components and us $79 million for resettlement -- was to have come from wb.

More than 17,000 households and around 2,500 shops and small industrial units will have to be relocated because of the project. Around 14,000 households have already been shifted into multi-storeyed buildings.

Even here, wb has found serious problems. It says the resettlement of some households "has not been carried out in compliance with the agreement between the Bank and the Maharashtra government". Post-resettlement problems include issues related to water supply and waste removal, increased commuting times (see page 44), delay in transferring funds for upkeep of buildings and the tardy functioning of the grievance system.

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