What next for Amaravati, the dream Andhra capital?

Andhra Pradesh, Telangana, Amaravati, Chandrababu Naidu, YSRCP, Jagan Mohan Reddy, Chief Minister, Capital, World Bank, Loan, the federal, english news website
The entrance of World Bank in Washington. Photo: iStock

Amid the cacophony of political blame-game in Andhra Pradesh over the World Bank’s decision to drop the loan proposal for the Amaravati capital city project, the key question remains: what next?

Will the dream project of the former Chief Minister N Chandrababu Naidu get a quiet burial? What is the way forward for the ambitious, ultra-modern riverfront capital that requires ₹55,000 crore to build?

Three clear indications are emerging now: 1) The YSR Congress Party government is acting in tandem with the Centre in deciding the future contours and scope of the project. It was the central government that moved an application with the World Bank, withdrawing its request for the ₹2,000 crore loan to finance the proposed Amaravati Sustainable Infrastructure and Institutional Development Project.


2) The immediate strategy of the new government, headed by YS Jagan Mohan Reddy, is to “unearth” the alleged irregularities in land pooling and awarding the contracts for the capital city works by the previous Telugu Desam Party (TDP) government. Already, a five-member cabinet sub-committee has been constituted to probe all major projects, including Amaravati, and key policy decisions of the previous regime. After scoring political brownie points with the rival party, the YSRCP government is expected to take a high moral ground and unveil its own modified vision of the capital city.

3) According to highly placed sources in the government, Amaravati will, in all probability, be retained as “functional capital” with administrative headquarters while a “cluster of hubs” would be developed across the state — north coastal, south coastal and Rayalaseema regions. However, the interests of the farmers, who had voluntarily given the land for the project, would be protected and their agreements with the previous government would be honoured.

As per the agreement, the farmers are paid an annual lease amount of ₹30,000 per acre for unirrigated land and ₹50,000 per acre for irrigated land for a period of 10 years, with a five per cent increment every year. This apart, the farmers were given developed plots of 1,000 square yard per acre. The government had pooled 34,075 acres from 28,148 land owners, spread over 29 villages in the fertile Vijayawada-Guntur region.

“The idea is to go for decentralised development across all regions instead of concentrating all the resources on one city. We don’t want to repeat the Hyderabad model where over six decades of overemphasis on the capital city has resulted in the neglect of other Telangana towns,” the official sources said.

A cluster of hubs like agriculture and agro-processing, automobile, ports, manufacturing, transport and minerals would be developed, drawing from the natural strengths of each region. “In this way, we will ensure equitable development. Otherwise, the backward Rayalaseema and north coastal regions will remain backward. What the previous regime did in the name of Amaravati was nothing but a real estate scam to benefit the cronies of the TDP leaders,” the sources said.

Expert committee rooted for cluster model

An expert committee, appointed by the central government in 2014, had recommended a cluster approach instead of an over-centralised city.

The five-member committee, headed by the former Urban Development Secretary KC Sivaramakrishnan, suggested nearly six options covering a string of small cities that could be developed as industrial, business and investment hubs.

The committee, which submitted its report to the Union Home Ministry in August, 2014, favoured decentralised development of a cluster of towns, covering the coastal and Rayalaseema regions, instead of replicating Hyderabad model.

However, the committee’s views ran contrary to the stated position of Chandrababu Naidu who envisioned the new capital city on the Vijayawada-Guntur stretch in the prosperous coastal region because of its locational advantage, fully developed infrastructure, good air, rail and road connectivity and strong backing by powerful political and industrial lobby.

The expert committee had opposed the location as it would involve acquisition of a vast stretch of fertile agriculture land, threatening food security in the long run. However, the committee made it clear that it was up to the political leadership to take a final call on the location of the new capital.

No to probe by WB

“The World Bank’s Board of Executive Directors has been informed that the proposed project is no longer under preparation following the government’s decision,” the World Bank’s lead external advisor (special projects) for India, Sudip Mozumdar, said of the decision to pull out of the project.

The World Bank had earlier sought to inspect the project works following complaints from certain NGOs and farmers’ organisations from the region regarding the alleged irregularities in the land pooling and the violation of environmental norms.

The new government is not agreeable to this because of the ongoing probe ordered by it. “It is natural that any sovereign country would not want a probe by a foreign agency. We ourselves have ordered a probe. We believe there were largescale irregularities. But we don’t want an international agency to do it,” the YSRCP MP and the government’s special representative in Delhi Vijayasai Reddy said.

Political blame game

The World Bank’s move to drop the loan proposal has triggered a political blame game by the YSRCP and TDP in the state. The ruling party MLA and government’s chief whip in the Assembly G Srikanth Reddy claimed that the World Bank had rejected the loan because of irregularities in the project.

“The bank authorities have come to know that the previous TDP government indulged in massive corruption in the land pooling and meted out gross injustice to dalit farmers who were assigned government plots and tenant farmers,” he alleged.

“Naidu brought a bad name to Andhra Pradesh at the international level with his illegal land dealings in Amaravati, which resulted in the World Bank opting out of the project,” he said.

Naidu reacted sharply to the allegations and blamed the Jagan Mohan Reddy government for the latest development. “The YSRCP leaders were behind the complaints lodged by some farmers with the World Bank. Now, no external funding agency will come forward to give loans for any project,” he claimed.

“Since the YSRCP came into power, work on Polavaram and Amaravati projects has completely stopped. They do not have the ability to finish the tasks. All they know is destruction. Because of this government’s decisions, investors are backing out and more youth are now unemployed,” the former chief minister said.

The ruling party leaders argue that the government will always have the option of approaching the World Bank with fresh proposals.

Civil society groups like the National Alliance of People’s Movements and the Working Group on International Financial Institutions have welcomed the withdrawal of the loan proposal. Their allegation is that the project would damage the floodplains of river Krishna, fertile farmlands and forests, displacing around 20,000 families.

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