On July 23, Union Finance Minister Nirmala Sitharaman announced the facilitation of financial support of Rs.15,000 crore through multilateral development agencies for the development of Andhra Pradesh’s capital city of Amaravati this fiscal year while presenting the 2024-25 Union Budget. Claiming to address long-standing commitments under the 2014 Andhra Pradesh Reorganisation Act, Sitharaman promised to facilitate additional funds for developing the city in the coming years. The opposition is demanding that the amount be sanctioned as a grant allocation.
The buzz in Andhra Pradesh and its capital region of Amaravati these days is about real estate. Conversation among the elite almost always turns to prime property and probable investors. For these affluent people, the sky is the limit for what Amaravati could become in 10, 15, or 20 years. At the other end of the spectrum, small and marginal farmers who gave up their land for the capital city are heaving a sigh of relief that the value of the residential and commercial plots they had got as part of the land pooling settlements is likely to appreciate and that “future generations will be secure”.
Nara Chandrababu Naidu’s ascension to power in Andhra Pradesh on June 4 has revived his dream project as well as the aspirations of investors and fortune-seekers. In his first term as Chief Minister (2014-19) after the Andhra Pradesh Reorganisation Act of 2014, which led to the formation of Telangana and Andhra Pradesh, Naidu conceptualised Amaravati as a greenfield, liveable, environmentally sustainable people’s capital and identified its location between Vijayawada and Guntur on the banks of the river Krishna.
Amaravati was carved out of a land bank of 53,748 acres (1 acre = 0.4 hectare) from 29 villages of Guntur district. Of the total expanse, over 34,400 acres is fertile agricultural land (see Figure 1). The government claims that under the Land Pooling Scheme (LPS), farmers voluntarily gave their lands “in exchange for a predefined proportion of their land after development along with requisite infrastructure and other benefits”. In fact, absentee large landlords gave up land willingly and enthusiastically, but small farmers were apprehensive about their livelihood. The scale of land pooling (coerced and willing) led to much debate about the idea of Amaravati from the start.
Controversies soon followed about the choice of the site and the windfall gains set to be made by the dominant communities, mostly members of Naidu’s Kamma caste. These communities discovered that Amaravati could be a way to compensate for the loss of Hyderabad to Telangana following the bifurcation of Andhra Pradesh. According to the provisions of the Reorganisation Act, Hyderabad was to be the shared capital only for the first 10 years.
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“Interests of Kamma elites, who also form the major business class of the region, in the building of the new city, and their aspirations for the development of Andhra Pradesh are closely intertwined for historical reasons,” said Carol Upadhya, a social anthropologist and honorary visiting professor at the National Institute of Advanced Studies, Bengaluru. Upadhya has researched extensively on Amaravati.
According to her, the Amaravati plan embodies the dominant development imaginary of the elite of coastal Andhra, which centres on the creation of a world-class city that will serve as the State’s primary “engine of growth”. The spatial and social mobility of Kammas, who have settled across India and the world, creating strong transnational networks that link the region with global policy ideas and circuits of capital, contributed to the development of this imagination.
To serve this vision, Naidu ignored the recommendations of the K.C. Sivaramakrishnan expert committee, constituted by the Central government in 2014 to study the alternatives for a new capital for Andhra Pradesh. The committee was against “a single super capital city” and recommended a decentralised approach for capital functions to be held from Visakhapatnam, Rayalaseema, and Kalahasti–Nadikudi. It also recommended the “least possible dislocation to existing agriculture systems”.
Notably, the biggest opposition to Amaravati came from those protesting against the destruction of one of the most fertile belts in the region and the associated ecological damage. But Naidu paid no heed to the critics.
His dream project, modelled on Singapore, needed a blank canvas, time, and money. However, Naidu’s electoral loss in 2019, partly because of his fixation with the development of Amaravati and the neglect of the rest of the State, disrupted his plans.
Extent of neglect
According to Telugu Desam Party (TDP) activists, Y.S. Jagan Mohan Reddy, who succeeded Naidu, stalled Amaravati’s development and neglected even essential maintenance. The wild growth of vegetation in many places when Frontline visited the site and the stagnant water (up to 20 feet ( 1 foot = 0.3 m) in some places, according to an official) in piling foundations stand testimony to that neglect.
A multi-lane road that runs through the capital city also shows the extent of neglect; no signage, no street lights, and littered with debris in many places. While the National Institute of Design, SRM University, Amrita Vishwa Vidyapeetham, and Vellore Institute of Technology-Andhra Pradesh have set up campuses in Amaravati, the lack of infrastructure is a huge challenge to the students and others on campus.
An aerial view of Amaravati, the development of which was stalled after N. Chandrababu Naidu lost power in 2019. | Photo Credit: G.N. RAO
Government buildings have fared a little better. The Secretariat and the Legislative Assembly (built at a cost of Rs.600 crore) and the judicial complex, including the High Court (Rs.150 crore), have been operating from the interim government complex buildings in Amaravati since Naidu’s first term.
On July 3, the Andhra Pradesh Capital Region Development Authority (APCRDA) brought out a White Paper on Amaravati. According to it, the Jagan Reddy government had scaled down several projects, abandoned ongoing construction, and terminated contracts with private firms.
“We expect work to restart in the next few months. We will implement the original notified Master Plan in its entirety,” Bhaskar Katamneni, who was appointed the Commissioner of the APCRDA, told Frontline. Teams from IIT Madras and IIT Hyderabad have been asked to assess the structural integrity of the under-construction buildings.
The APCRDA issued a notification to acquire 1,575 acres of land in Rayapudi, Lingayapalem, Nelapadu, Kondama Rajupalem, and Sakhamuru villages for the government complex. The existing government buildings do not align with the grand designs drawn up by Fosters+Partners in the Master Plan and finalised in Naidu’s first term.
On June 29, the Master Plan was notified in the Gazette, and work has begun again. A tender for Rs.36 crore has been floated just to clear the undergrowth. Houses for MLAs, MLCs, judges, and government employees are under construction.
The White Paper touts the LPS as a successful model. However, glitzy PowerPoint presentations and Naidu’s track record of making Hyderabad a hi-tech city did not convince many farmers to give up their land. Naidu and his team of bureaucrats and party members used coercion and intimidation to make the unwilling farmers participate. Those who resisted were threatened with the Land Acquisition Act and lower compensation. A small group of Reddy farmers and those opposed to the TDP in some villages are yet to give up their land.
In an essay titled “Making of Amaravati—A Landscape of Speculation and Intimidation” in the Economic and Political Weekly in April 2016, Chigurupati Ramachandraiah, a retired professor of the Centre for Economic and Social Studies, said that property dealers pooled land privately. “Within a month [of the announcement of the capital city], the property dealers are known to have taken over 3,500 acres from farmers, involving more than Rs.4,000 crore (almost the entire amount paid in cash),” he wrote.
After the initial hiccups, most landed farmers warmed up to the idea of Amaravati. They realised that their fortunes were dependent on its success. They hoped to see their “sacrifice” yield results in 20 to 30 years. The younger generation of landowning families has largely shifted to other occupations and moved out of the region, and many farmers did not envision a future in agriculture, Upadhya told Frontline.
In anticipation of a demand for homes on rent, some invested in adding a floor or two to their existing houses. But when Amaravati became a mirage during Jagan’s tenure, most of these apartments lay vacant. With agricultural activity too at a standstill, this section of farmers suffered massive income losses.
Then there are the ecological concerns. The water table in some of the 29 villages along the Krishna riverbank is 15 to 20 feet deep. A portion of Amaravati is located in a flood-prone area. Officials, however, said that flood mitigation is included in the Master Plan. Environment experts and activists are still clearly unconvinced.
Jagan Reddy was opposed to the idea of Amaravati. The expert panels constituted during his term, including the G.N. Rao Committee, recommended that the State have three capitals. In January 2020, the AP Decentralisation and Inclusive Development of All Regions Bill (for three capitals) was passed in the Assembly. Amaravati was no longer the sole capital. According to Jagan’s plan, Amaravati was to be the legislative capital, Visakhapatnam the executive capital, and Kurnool the judicial capital.
Highlights
- N. Chandrababu Naidu’s ascension to power in Andhra Pradesh has revived his dream project of capital Amaravati.
- A White Paper on Amaravati says the Jagan Reddy government scaled down several projects, and abandoned ongoing construction.
- A big challenge for Naidu and the APCRDA will be to finance the Amaravati project and complete it on time.
Three-capital idea
The landed farmers launched a protest against the three-capital idea, which ended after 1,631 days, on June 12, after Naidu took office. The farmers moved the High Court, and the case is now in the Supreme Court. Gadde Butchi Tirupati, who is closely associated with the Amaravati farmers’ movement, explained how they pooled resources for the legal fees and held continuous demonstrations for years.
“Over a hundred cases were filed during Jagan’s term against farmers protesting peacefully. Police intimidation and harassment of farmers was the norm,” he said. The farmers hope that the current disposition will revoke the cases filed against them.
The reconstituted residential and commercial plots that the landed farmers received were also tied up in legal knots during Jagan’s term. They could neither sell it nor hope for its value to appreciate because of the lack of development. Across the capital, several restaurants and small hotels that had cropped up had to shut down over the years. These and the many abandoned real estate offices are expected to come back to life soon.
While the government claims that Amaravati will be an “inclusive people’s capital”, it was unequal from the beginning. Immediately after the land pooling, the government blocked all agricultural activities. This forced tenant farmers and agricultural labourers to scramble for fresh sources of income. Most people found jobs as security guards, housekeepers, and farm workers in neighbouring villages. Landless farmers and labourers got a paltry sum of Rs. 2,500 a month for 10 years as part of the land pooling settlement. Annuity payouts, too, were stuck in legal quagmires during Jagan’s term.
A replica of the capital. Naidu conceptualised Amaravati as an environmentally sustainable people’s capital and identified its location between Vijayawada and Guntur on the banks of the river Krishna. | Photo Credit: G.N. RAO
However, according to the APCRDA’s Amaravati Progress Report of 2019, they were given training as plumbers, AC and mobile technicians, beauticians, two-wheeler mechanics, gardeners, and so on. The demand and avenues for these are still nascent.
“It is going to be tough, for the hyper-modern capital is designed for the very advanced tech sector. The least the government can do is create separate skilling and employment avenues for the cultivators/workers of the 29 villages. They cannot wash their hands of with ‘any job’; providing dignified jobs should be a parallel initiative, and a sine qua non,” said Gutta Rohith, the State secretary of the Human Rights Forum.
Despite the loss of agriculture and infrastructure, over one lakh people live in the 29 villages that make up Amaravati. Many villages have haphazard layouts, muddy roads, and little infrastructure. Whether these habitations will be allowed to evolve gradually or face eventual erasure to serve the global city is another concern.
Municipal Administration and Urban Development Minister and TDP leader P. Narayana, Naidu, his son Nara Lokesh, and the realtor brothers Lingamaneni Rajashekar and Lingamaneni Ramesh are accused in a case relating to the Amaravati Inner Ring Road and Master Plan alignments. The allegations are that the alignments were changed to increase the value of land held by the kin of the accused. The Crime Investigation Department (CID) filed a charge sheet in February 2024.
The CID is investigating Naidu, Narayana, and others in connection with an assigned land scam case too, the evidence for which was presented to the Anti-Corruption Bureau court on March 11. Assigned lands are those that the government assigns to the landless poor, and the CID said that benamis bought lands from poor SCs, STs, and BCs at low rates by frightening them into believing that the government would exclude them from land pooling advantages. The cases might eventually get shelved, and the irregularities flagged will remain unaddressed.
Financial constraints
A bigger challenge for Naidu and the APCRDA will be to finance the Amaravati project and complete it on time. In 2019, the total project cost was estimated at Rs.51,687 crore (see Figure 2). The Centre committed to provide Rs.2,500 crore for initial infrastructure work, according to the Reorganisation Act. Of this, Rs.1,500 crore was released in May 2019. The APCRDA has mobilised Rs.5,106 crore. It aims to raise Rs.2,000 crore through bonds.
During Naidu’s first term, the government explored funding Amaravati through multilateral agencies and scheduled commercial banks. On July 15, 2019, the World Bank cancelled a proposed $300 million grant for the Amaravati Sustainable Infrastructure and Institutional Development Project stating that the government (led by Jagan) had withdrawn the request. Days later, co-financier Asian Infrastructure Investment Bank pulled out of the project ($200 million proposed funding). The government and the APCRDA are once again exploring their options.
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The alliance manifesto of the TDP and the JanaSena Party emphasised the “development of all areas while continuing construction of the public capital Amaravati”. The State’s capabilities may be stretched thin owing to other major projects (such as Polavaram) and commitments. The outstanding debt of Rs.4.28 lakh crore by December 2023 is a cause for concern, too.
Meanwhile, even as officials shied away from giving a definitive timeline for Amaravati, Narayana announced a two-and-a-half-year deadline for the completion of the project. Most stakeholders believe it will take at least 4-5 years to develop the core buildings and associated infrastructure in the Master Plan.
Naidu has stated that he will be working on removing all hurdles, legal and otherwise, to Amaravati and towards boosting investors’ confidence. He said the previous government’s neglect had stagnated property prices and wealth creation prospects. There are also concerns about the fate of Amaravati if the TDP does not return to power.
However, there are many issues that go beyond politics. As Rohith notes: “The government, as much as it can, should curb the heavy speculation on land that took place during the first term. Capital is not just a real estate venture. Neither should it be construed as one. Infrastructure provisioning and employment generation should be the primary goals.”
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