Any State government should have to take the approval of the Centre for getting loans from international bodies like the World Bank and the Asian Infrastructure and Investment Bank. The Chandrababu Naidu regime convinced the Modi government and got World Bank loan sanctioned for Amaravati Capital City project. But the Jagan Reddy government took a unilateral decision to change the modalities of Amaravati project without informing the Centre. The YCP government should have informed the Centre about its changed approach to Amaravati project but it displayed considerable arrogance by not doing it.
What more, when the World Bank team asked Jagan Reddy government to arrange for a visit to Capital City, Jagan Team told them about its decision to change the overall project proposals. Taking it as a sign of violation of the previous agreement, World Bank informed the Modi regime about this. Modi Team took this as an insult as it had to hear the bad news from World Bank rather than from the needy state of AP. Immediately, the Centre asked the World Bank to cancel the Amaravati project as the new government in the state is not at all interested in the AP Capital City. Analysts say that this will certainly make Modi regime to reject any future proposals from AP. Already, the PPAs issue has strained Centre-AP relations to some extent.