Mumbai, March 3:

Indian officials snubbed the World Bank (WB) today, claiming it was a ‘blessing’ it had suspended financial backing for a huge public transport project in the western city of Mumbai.

The World Bank suspended payments for the ambitious road and rail scheme because of problems resettling thousands of slum dwellers to new tenement blocks that have water shortages and problems with waste removal. The Indian authorities criticised conditions set by the Bank and said it would look elsewhere for funding to complete the $940 million project. “With their help, we are facing more hardship,” said Dr Chandra Shekhar, a senior official of the Mumbai Metropolitan Region Development Authority (MMRDA), “They don’t understand our policies. It’s a blessing. They are stopping our cause rather than helping us. We are planning to withdraw from the World Bank and we will go to other sources of funding. We don’t require their assistance. We cannot dance to the tune of these people.”

The Mumbai Urban Transport Project (MUTP) is designed to improve road and rail links in the congested city of 17 million people to which 1,500 new migrants workers flood daily in quest of work. An estimated 6.4 million passengers jam the city’s creaking suburban rail system every day. The project to upgrade the lines and stations was launched with a great fanfare in 2002 and is due for completion in 2008. Officials in Maharashtra state have been at loggerheads with the World Bank over the relocation of more than 17,000 households from squalid shanty towns alongside railway tracks to high-rise blocks elsewhere in the city.

About 14,000 households have already been moved but the World Bank halted funding because of problems for resettled families at their new homes.

The Bank had extended a $463 million loan for the MUTP. The suspension affects the $150 million roads component of the loan and an additional credit of $79 million for resettlement costs. Shekhar said the World Bank demands for resettlement would hit the city’s coffers too hard. He claimed that the families were receiving water — but not at the levels demanded by the World Bank. He added the authorities could not provide ‘five star’ facilities. “Nothing in this world is perfect. All the people are getting water. You can’t just stop a project until you supply water.” He said the state had already been paid most of the World Bank loan but will now seek funding at lower rates of interest to complete the project. “For us, the World Bank is very expensive with interest at nine percent. Other financial institutions are ready to give us loans at three to four per cent,” he said.

Sumir Lal, WB spokesman in India, said it had yet to hear from the state’s authorities about the suspension. “It’s absolutely their decision over where they want the funding from. If they do want the funding from us, the basic policies on these resettlements will still have to be implemented.”