The World Bank is set to resume lending money for the crucial Mumbai Urban Transport Project (MUTP) but the funds will arrive beyond the timeframe that its President Paul Wolfowitz had assured or Finance Minister P. Chidambaram had asked for.

A Bank team reached Mumbai on Tuesday to assess the progress on resettling and rehabilitating people, especially shopkeepers at Santa Cruz, who were displaced because of the project.

“Discussions are still ongoing. These are complex issues but we believe that we are moving towards a solution,” said a World Bank spokesperson. He did not give a timeframe but ministry officials expect the clearance next week.

After disbursing $134 million, the Bank had suspended fresh disbursal of $229 million for MUTP on March 1 citing non-compliance by the Mumbai Metropolitan Region Development Authority of its policy on resettlement and rehabilitation of the dislocated. This unilateral decision drew a sharp remark by Chidambaram who conveyed the “strong feeling of Government of India” to the suspension and urged Wolfowitz to immediately resume loan disbursement.

On March 28, the Bank president acknowledged that MMRDA was making very good progress. “Giving the status of actions to be completed before lifting of suspension, he (Wolfowitz) has expressed hope that lifting of suspension could be possible by end-April,” said a Finance Ministry paper. A hopeful Chidambaram wrote to Wolfowitz on May 3 indicating “excellent” progress by the state in implementing the Bank’s R&R action plan and suggested that it should now be possible to lift the suspension.

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