The World Bank website Thursday showed the status of Amaravati Sustainable Infrastructure and Institutional Development Project as 'dropped'.
However, Andhra Pradesh Capital Region Development Authority (APCRDA), which is the implementing agency for the project, said it had not received any official communication from the World Bank about dropping the project.
The total project cost was $715 million and the state government in 2016 had sought the entire funding from the World Bank. However, it committed $300 million.
The World Bank is reported to have taken the decision following complaint by farmers and people's organizations. They said that development of Amaravati will affect their livelihood and impact the environment.
The development came one-and-half month after YSR Congress Party (YSRCP) came to power in the state.
Amaravati is the brainchild of N. Chandrababu Naidu, who suffered crushing defeat in the recent elections.
After forming first government in residuary state of Andhra Pradesh following bifurcation of united Andhra Pradesh in 2014, Naidu had announced developing Amaravati near Vijayawada as the new state capital. The Singapore government had prepared the master plan for the same.
Under Naidu's ambitious plans the capital city is to come up in areas of 217 sq km. Under the first phase from 2015 to 2025, the state capital was to be built at a cost of nearly Rs 50,000 crore while the subsequent two phases were estimated to cost over Rs 1 lakh crore.
Naidu's government had claimed that farmers voluntarily came forward to give 33,000 acres under an innovative land pooling system to develop the state capital. He had also succeeded in launching the works to the tune of Rs.35,000 crore over last two years.
After taking over as the new chief minister in May, Y. S. Jagan Mohan Reddy had alleged that there was a big land scam in Amaravati to benefit then chief minister and those close to him. He had declared that the government will get the irregularities in land acquisition and awarding works for various projects thoroughly probed.
( With inputs from IANS )