Is Amaravati just a City on paper? The new capital Andhra Pradesh had more to its story than debate, rhetoric and political bias. As the new government at the helm aggressively pursues the three capital proposal, here is the deep dive into what happened at Amaravati over last five to six years.
Post bifurcation, the State of Andhra Pradesh inherited the debts worth Rs.1,30,654.35 crore. The State government also constituted an expert committee to study the possible locations for the capital. Following the review report, On 3 September 2014, the then Chief Minister N. Chandrababu Naidu announced in the State Assembly “To locate the capital city in a central place of the State, around Vijayawada, and to go for the decentralized development of the State with 3 mega cities and 14 smart cities. It is proposed to go for a land pooling system to be worked out by a cabinet subcommittee.”
Keeping the debts in mind, the State government came up with a self – finance plan to exploit the available resources to create wealth and provide employment to reduce the burden on the fiscal deficit state. The State government created APCRDA under Andhra Pradesh Capital Region Development Authority Act 2014 and came into effect from 30 December 2014. APCRDA is created for land procurement, infrastructure development, financing the city, and capital region planning and development including the capital city.
The capital region was initially 7,068 sq.km and subsequently increased to 8352sq.km vide GO MS 207, MA&UD(M2) dt. 22.09.2015. The inclusion of Reserve Forests within this area brings the region extent to 8603.sq. km, covering major parts of Krishna, Guntur districts. The Amaravati capital city was notified in 217.23 sq km (53,748 Ac) in the Guntur district.
Amaravati Finance Plan
Amaravati city is designed with the objective of being the “Happiest City in the World” with 3.5 Million population and 1.5 Million jobs by 2050. 35 billion dollars was the estimated GDP by the year 2050. The State government planned to spend Rs. 58,000 crores for developing the Amaravati’s infrastructure till 2034. The government planned to develop Amaravati with 9 thematic cities such as financial city, government city, justice city, knowledge city, medical city, sports city, health city, electronic city, and tourism city. Various land allotments have been made for the same.
The city was envisioned to have world – class, sustainable and smart infrastructure. The estimated amount required for the development of the capital is Rs. 1.09 lakh crores with the required social infrastructure. The project’s financing plan for Project Amaravati Phase-1 has been approved through GO MS No. 50 MA&UD Dept. dt 05.02.2019. The estimated cost for developing the infrastructure in phase – 1 of the project is Rs. 51,687 crores, whereas the cost of the other works is Rs. 1,150 crores. Rs. 37,112 crores will be sourced through debt financing.
Innovative Partnership Model
Procuring the land for the capital region is one of the biggest tasks for the government. The State government entered into an innovative partnership model with the farmers. Under this model, the government had made people partners of the development. Under the land pooling scheme, 26,839 farmers came forward as partners contributing their land. Under this partnership model, not only the State government but also the families of the 26,839 farmers who gave up their land would work towards developing the city.
Public Private Partnerships (PPP)
The State government planned to take up several projects under PPP. Under PPP the government has allocated 1,293.42 acres of land to 130 organisations, consisting of government and private sectors. 60,000 jobs have been committed through the land allotments.
The State government reserved 5020 acres of the land for the commercial monetization. Out of which 3709 acres are to be monetized during the years up to FY 2036 -37. Around 3254 acres of the land has been reserved for economic development.
The government had planned to fund the projects through various sources such as grants from GoAP, grants from the Government of India (GOI) as per section 94 (3) of the AP Reorganization Act. The State government issues Detailed Project Reports (DPR) for Rs.62,623 Cr have been submitted to NITI Aayog for their consideration for providing special financial support under Section 94(3) of the AP Reorganization Act.
Till 2019, GOI released the grants worth Rs. 1,500 crores against the Utility Certificates (UC) submitted by GoAP worth Rs. 1,632.48 crores. Upon the submission of UC, NITI AYOG recommended Union Ministry of Finance to release of Rs. 333 crores per annum for FY 17-18, 18-19, and 19-20. On 8th June 2018, a specific recommendation for 666 crores for two years is made to the Ministry of Finance, which is yet to be released by GOI.
The financial plan included support from the Government of AP for equity in the capex and for working capital management for seven financial years for APCRDA, for an annual amount up to Rs.1,800 cr. For the period up to FY 2026 totalling to Rs.12,600 Cr. The initial support from Government is to be treated as a loan and CRDA to utilize commercial lands to repay the loan to Government in its later phase of development.
The State government partnered with several multilateral agencies for funding such as the World Bank, financial institutions like HUDCO, scheduled commercial banks. Market borrowings through bonds are being explored to execute the project on time.
In the year 2018, the State government issued Amaravati bonds to raise the funds for building the capital. The bonds were listed on the Bombay Stock Exchange (BSE). The AP Capital Regional Authority floated the bonds worth Rs. 2,000 crores. The issue was oversubscribed by 1.53 times.
The following table shows the funding sources approved through G.O MS No 50.
|Funding Agencies||Amount Expected (Rs Crores)|
|Consortium of Banks (Andhra Bank, Vijaya Bank & Indian Bank)||2060|
|Amravati Bonds 2018||2000|
|World Bank (Multilateral agencies) Tranche – 1||$ 500 Mn (Rs 3603.5 Cr) (1 USD = 72.07 INR)|
|Scheduled Commercial Banks Tranche -1||10,000|
|World Bank (Multilateral agencies) Tranche -2||$ 500 Mn (Rs 3603.5 Cr) (1 USD = 72.07 INR)|
|Scheduled Commercial Banks Tranche – 2||14,070|
|Public placement bonds||500|
|Equity component of support from GoAP||6629|
Under N. Chandrababu Naidu the State government made good progress in the construction of the capital. From the formation of APCRDA till 25 May 2019, Rs. 8445 crores have been utilized on the development of the capital city and Rs. 816.11 crores have been utilized on the development of the capital region.
The following are the status of the completion of the projects:
|All in services (AIS) Housing- By NCCL(Nagarjuna construction company limited)||95% of the works completed|
|MLA/MLC housing by NCCL(Nagarjuna construction company limited)||95% of the works completed|
|Non-Gazetted Officers Housing By L&T (Larsen & Turbro)||90% of the works are completed|
|Gazetted Officer’s Type 1 Housing by SPCL||80% of the works completed|
|Gazetted Officer’s Type 2 Housing by SPCL||80% of the works are completed|
|Group D Housing by SPCL||90% of the works are completed|
|Judicial Complex by L&T||Construction of the Judicial complex is completed 100% and currently, the High court is functioning from there.|
|HOD & Secretariat: – SPCL, L&T, NCCL||20 % of the construction activities are completed. Currently, temporary secretariat buildings are completed and functioning full fledged|
|Project Office- APRDCA by PRECA||50% of the construction has been completed|
|Judges and Ministers Bungalows by BSR||50% of the construction has been completed|
|Principal secretary and secretary bungalows by KMV||40% of the construction has been completed|
|Happy nest bungalows by SPCL||Construction is yet to be started|
|Amaravati IT Park||Construction is yet to be started|