The World Bank on Thursday temporarily suspended financial support to the roads and resettlement components of the $940-million Mumbai Urban Transport Project dealing a blow to the facelift programme of the country's commercial capital.
It had suspended assistance until concerns over the equitable treatment of people affected by the works were resolved, a World Bank release said.
The MUTP is supported by an IBRD (International Bank for Reconstruction and Development) loan of $463 million for the road and rail components of the project and an IDA (International Development Association) credit of $79 million for resettlement.
Disbursements to the IDA credit and the road component of the loan ($150 million) have been suspended pending a resolution of these issues. IDA is the concessional lending arm of the World Bank Group.
MUTP is an ambitious road and rail renewal plan, which involves the involuntary resettlement of more than 17,000 households and 2,500 shops and small industrial units. About 14,000 households have already been moved to secure dwellings.
"Serious problems have arisen with the resettlement of some households which has not been carried out in compliance with agreements between the bank and the government of Maharashtra," the statement said.
"Suspension is a serious move, reflecting how serious we are about a successful outcome for these issues," said Michael Carter, World Bank Country Director for India in New Delhi.
T Chandrasekhar, project director of Mumbai Metropolitan Regional Development Authority, the nodal agency for implementation of MUTP and other infrastructure projects in Mumbai, was not available for comment.
MMRDA sources said the project would be carried out with its own funds and the World Bank's suspension of assistance would not affect its progress.
"We will be working closely with the government to support its efforts to ensure satisfactory outcomes for the affected people. Once progress has been made, we will review the suspension," Carter said.
"We will not disengage for a moment in the process of helping the government to fix this, consistent with our agreements and in a manner in which civil works can continue without undue delay. No one should be left behind, neither shopkeepers nor householders," he added.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Discussion Group