AP Report Full
AP Report Full
Leading the
transformation
February 2018
KPMG.com/in
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A day in Andhra Pradesh
~2,500
PMJDY accounts
opened daily 42.9K
under PMJDY9 tonnes foodgrains
produced1
9.0-9.5 MU
average solar 11,962
power generated APSRTC buses
(FY2017-18)8 on the road2
63 MW 2,925
power generated vehicles
from the 6,440 registered
tonnes of municipal
waste7
Projects are under construction'
USD400k
saved under
*Exchange rate of 1USD=INR65 has been used throughout the document for conversion purposes
1. AP socio-economic survey 2016-17 7. Andhra Pradesh first state in the country to become Open Defecation Free in urban areas, PIB, 30 April
2. AP socio-economic survey 2016-17 2016
3. After Energy Efficient Bulbs, Government Launches National Programmes for Smart Pumps for Farmers 8. Energy Department, Government of Andhra Pradesh
and Energy Efficient Fans, Press Information Bureau (PIB), 7 April 2016 9. Pradhan Mantri Jan Dhan Yojana (PMJDY), Progress Report, accessed on 13 February 2018
4. Andhra Pradesh tourism, Footfall Dashboard
5. Ministry of Shipping, Government of India
6. AP is power surplus from shortage of 22.5 mu per day, The Hindu BusinessLine, 14 April 2016
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The journey so far
Dec Oct
2014 Jan
2015 2016 Mar
2016
Capital Region
Development Foundation
stone for Andhra Private
Authority Act, 2014 Universities Pattiseema Lift
for development Pradesh's new
capital city Act for Irrigation Project –
of new capital in establishment Fastest built mega
Amaravati Amaravati was
laid. Amravati is and regulation irrigation project by
envisaged as of private inter-linking of two
world class universities rivers enters Limca
people’s capital Book of Records1
with a capability
of accommodating
10 million
population by
2035.
33,000 acres of
Land pooled
within 60 days of
launching the 2016
Land Pooling
Scheme (LPS)
2016
1. Pattiseema Lift Irrigation Project completed in record 1 year time; enters Limca Book of Records, India
Today Story, 25 March 2017
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Second state to achieve 100 per cent
electrification and become Power Surplus
(Installed Capacity 22,069.36 MW by 2017)
Jun
2016
Dec
2016
Aug
2017 Oct Dec
2017 2017
Lowest Transmission
& Distribution (T&D) Commissioning of World’s
losses in the country Largest single-location
solar park of 1,000 MW
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Andhra Pradesh: When the
rubber hits the road 1
Key achievements since the state's bifurcation in June 2014
1. Press Release on “Assessment of State Implementation of Business Reforms 2016” by DIPP and World
Bank, Nov 2016
RBI Bulletin, September 2016
Report by Investment Monitor FDI Intelligence, a division of The Financial Times
*Andhra Pradesh’s rank in the ease of doing business rankings in 2016 refers to the ‘Assessment of State Implementation of Business Reforms 2016’
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First state to announce Vizag ranked #3 #3 in limestone
construction of dredging among cleanest cities production
harbour, one of its kind in of India in Swachh in the country
the country Survekshan 2017
>10 per cent growth across Best national tourism State of the year
agriculture, manufacturing award by GoI award for 2017
and services sector by CNBC
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Foreword
Andhra Pradesh has had a commendable energy, to name a few. Andhra Pradesh also has
transformation story. From a new state in 2014 to many superlatives to its credit - Asia’s biggest
one of the fastest growing states in the country integrated control and command centre, first
with double-digit GSDP growth rate, Andhra state in the country to implement the Global
Pradesh has made considerable progress. Competitiveness Index (GCI), first state in South
India to offer 24x7 quality and reliable power to
Vision can be effectively achieved if backed up
industry – to name a few.
by robust policy environment, efficient action
plan and strong governance. Andhra Pradesh’s The state is steadily marching ahead to become
efforts are reflected in its robust and forward India’s ‘Sunrise State’ and we believe this
looking policy framework, development initiatives report by KPMG in India will provide you a
introduced to achieve the vision and transparent fair understanding of the state’s progress and
and efficient monitoring of the progress. investment potential, thereby presenting you an
opportunity for forging strong partnerships.
Leveraging on its strategic locational advantage,
Andhra Pradesh has focused on equitable As the state navigates its path to a higher growth
development by involving all districts in its trajectory, we hope this report will be a valuable
transformation journey. Investments are spread resource for companies – Indian and foreign
across the state and job opportunities are alike – to find ways in which they can share in the
emerging for people across all strata of society. dividend generated by the state’s growth, while
Andhra Pradesh has been ranked as the No. 1 making their own contribution to the economy’s
state in India on ease of doing business reforms transformation.
in 2016 by DIPP and the World Bank, which is
KPMG in India is committed to playing its role in
testimony to the conducive business environment
the state’s transformation.
prevailing in the state.
I am happy to note that the state has attracted
strategic investments in various sectors such
as auto, electronics, textiles, pharmaceuticals,
aerospace and defence, minerals, renewable
Nilaya Varma
Arun M. Kumar Partner and Head
Chairman and CEO Government and Healthcare
KPMG in India KPMG in India
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Among the world’s most
ambitious infrastructure
building programmes
3 smart cities
6 operational ports
8 proposed ports
6 operational airports
6 proposed airports
2 industrial corridors
1 potential Coastal Economic Zone
44 new industrial clusters
9 thrust sectors
300 industrial parks
1,000,000-acre GIS-enabled land bank
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Table of
contents
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Andhra Pradesh - Strong fundamentals, unprecedented growth 01
Transforming into ‘sunrise state’: Moving the needle 07
Focus sectors 29
Way forward 67
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1
Andhra Pradesh -
Strong fundamentals,
unprecedented
growth
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2
400
300
200
100 2026
0
AP India AP India AP India
Age
Male Female All
Male Female
70+
14.5% of
population
Workforce participation rates per 1000 population 60-69
- Urban (2011-12)
50-59
40-49
59.0% of
600 30-39 population
500
20-29
WFPR
400
300
10-19
200 26.5% of
100 0-9 population
0
AP India AP India AP India 15% 10% 5% 0% 5% 10% 15%
01. Sunrise Andhra Pradesh Vision 2029, Vision Management Unit INNOVATION APSDPS, Planning Depart-
ment, Government of Andhra Pradesh, July 2017
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3
14
% GDP/GSDP Growth
2014-15 2015-16 2016-17 2017-18 11.61 11.72
12 10.95 11.04
0.00
-0.50 -0.1% 10
-1.00 -0.8% -0.7% 7.93 7.11
-1.50 8
-1.4% 5.7 6.3
-2.00 6
-2.50
-3.00 -2.74% 4
-3.50 -3.00%
-3.36% 2
-4.00
-4.50 -4.15% 0
2015-16 2016-17 2017-18 2017-18
(Q1) (Q2)
GVA estimates for Andhra Pradesh at constant prices (2011-12) | Consistent double digit growth
across sectors
90
80 11.03% 10.16% 10.64% 76.6
CAGR CAGR CAGR 68.9
70
GVA (USD billion)
62.6
60
50
40 35.2
31.9
28.7
30
21.4 20.1
20 17.3 18.7 16.5 18.2
10
0
Agriculture Industries Services Total GVA
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4
Nearly 30 per cent increase in per capita income over the last four years, suggesting
improvement in the standard of living of people in the state
2000
1800
1600
1400
1200
USD
1000
800
600
400
200
0
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
(SRE) (FRE) (AE)
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5
Power generation
• Third state after Gujarat and Punjab to achieve 100
per cent electrification of households.
• 24X7 reliable and quality power across the
industrial commercial and domestic sectors
• Total installed capacity - 22,257.10 MW (as on
31.01.2018) and per capita consumption03
• An investment of INR200 billion (USD3.07 billion)
has been proposed over the next five years to
strengthen the transmission and distribution
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6
04
Key investments
Over the last 3.5 years, more than INR1,315 billion (USD20.25 billion)
committed investments have gone into production across sectors
with additional INR3,142 billion (USD48.34 billion) presently in
advanced stages
Major investors include - • World’s largest food, snack, and beverage
corporation
• World’s largest contract manufacturer of mobile
phones • One of the world’s top 10 pharmaceutical
companies
• South Korea’s second largest motor vehicle
manufacturer • World’s largest monocrystalline silicon producer
• Spanish manufacturing company principally • American food manufacturing multinational
involved in the fabrication of wind turbines and company
construction of wind farms • India’s largest biopharmaceutical company
• Japanese commercial vehicles and diesel engine • American multinational confectionery, food, and
manufacturing company headquartered in Tokyo beverage company
• World leader in renewable energy solutions • India’s most trusted generic pharmaceutical
includes products under wind energy & solar manufacturing brand.
energy
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7
Transforming into
‘sunrise state’:
Moving the needle
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8
The newly formed state of Andhra Pradesh in 2014 a journey of massive transformation that started
came saddled with post-bifurcation issues. One with a series of dynamic adjustments and strategic
of the biggest challenges was the then capital alignment of initiatives that were identified for
city, Hyderabad, the major source of revenue for socio-economic development. Consequently, the
united Andhra was now in Telangana. The state was state embarked towards tranforming itself into a
suddenly faced with the harsh reality of rebuilding happy, inclusive, responsible, globally competitive
itself - right from developing new infrastructure, and innovation-driven society through structural
recognising a new capital city, forming a legislative transformation. By sustaining an inclusive double-
assembly and a secretariat to generating enough digit economic growth, the state aims to become
revenue to survive as an independent state. one amongst the three best states in India by 2022,
achieve the status of a developed state by 2029, and
The state started its transformational journey with
that of a leading global investment destination by
a major handicap in terms of smaller resource base
2050.
with higher population ratio. Reconstruction of the
state was also hobbled by the devastation wreaked ‘Vision 2029’ accelerated Andhra Pradesh’s
by natural disasters. As per the state’s budget transformational journey. Since the bifurcation, the
speech 2015-16, the estimated loss on account of state has recorded considerable progress in terms
Hudhud cyclone was INR715 billion (USD11 billion)01. of the objective of achieving inclusive growth and
Deficit of nearly 36 per cent01 in rainfall resulted development. Since June 2014, the overall size of
in massive drought in the state, thereby further the economy has grown from INR5,264.7 billion
deepening the impact of state bifurcation. Among (USD80.9 billion) to INR6,993 billion (USD107.6
the many noticeable challenges were a myriad of billion), in 2016-17. The Agriculture sector grew at 8.7
unseen issues and hurdles staring at the new state per cent (at constant prices) as compared to 2014-15,
of Andhra Pradesh. while the Manufacturing sector grew at 11 per cent.
The Services sector grew at 11.4 per cent, compared
Deepening debt burden forced the state to continue
to 11.5 per cent in 2014-1502.
to borrow in order to meet its revenue expenditures.
The state requested the 14th Finance Commission The state’s efforts in transformation, successful
for a grant of INR1.0 trillion (USD15.42 billion) for engagement of the private sector and active
capital construction and INR412.53 billion (USD6.35 participation of the people of Andhra Pradesh has
billion) for other critical infrastructure requirements. led to a growth of 11.61 per cent during the year
However, only INR221.13 billion (USD3.4 billion) was 2016-1703. In the first half of FY2017-18, the state
granted as revenue deficit grant and INR18.23 billion registered a growth rate of 11.37 per cent, ahead of
(USD280.46 million) towards disaster management01. the national growth rate of 5.8 per cent04.
Undettered by the challenges, the state of Andhra Adopting efficient fiscal management and prudence,
Pradesh, under the leadership of Hon’ble Chief mobilisation and effective deployment of investment,
Minister, Chandrababu Naidu, committed itself to the state has made considerable progress in
01. Government of Andhra Pradesh, Budget Speech 2015-16 03. AP socio-economic survey 2016-17
02. Government of Andhra Pradesh, Budget Speech 2015-16 04. A.P. registers 11.37% growth rate in first half of current fiscal, The Hindu, 8 December 2017
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9
Amaravati: The
people’s capital of
Andhra Pradesh
The first step towards the transformation was
taken by laying down the foundation of Andhra
Pradesh’s new capital city in Amaravati. Amaravati
is envisioned to be a world-class capital region that
will have the capability to accommodate a population
of nearly 3.5 million people by 205006. The city
will be positioned as a global economic hub and a
top destination for people, investments and jobs,
endowed with the world’s best infrastructure.
Key features of the city:
• The seed capital covers an area of 6.84 sq.km,
while core capital and capital regions span over an
area of 217 sq.km and 8,603 sq.km respectively;
Thullur, Tadepalli and Mangalagiri mandals form
core capital area.
• Amaravati is planned around 9 cities with smart
city features and walk-to-work concept.
05. The AP Growth Story: How the State considerably improved its revenue after bifurcation, The NEWS
Minute, 20 March 2017
06. Andhra Pradesh Capital Region Development Authority, accessed on 12 February 2018
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10
Media city
• Media and creative
industries
Sports city • World class
1,679 Ha Government
city production facilities
1,093 Ha Finance city • Broadcasting
2,091 Ha
• Films
• Publishing
• Gaming
Media city Tourism city • Mobile
2,067 Ha Justice city 4,716 Ha
• Advertising
1,339 Ha
• Residential, hotels,
retail, F&B
Knowledge city
3,459 Ha
Sports city
• International sports
Health city stadiums
2,647 Ha
• Velodrome
• Indoor sports area
Electronic city • Aquatic centre
2,663 Ha
• Sports village
• Sports academics
• Sports mall
• Residential, hotels,
retail, F&B
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11
07. Birth of a new Capital: All you need to know about Amaravati, a ‘futuristic world-class city’, FirstPost, 08. Andhra Pradesh Capital Region Development Authority, accessed on 12 February 2018
8 February 2018
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12
Inclusive growth
After the state’s reorganisation in June 2014, Andhra Irrigation
Pradesh faced a host of development related • Net irrigated area, a major supporting factor of
challenges. Three years down the line, the state has food production, widened to 2.4 million Ha
emerged as one of the fastest growing economies
in India maintaining a double digit growth rate. • Pattiseema Lift Irrigation Scheme linking rivers
The state is leveraging sustainable and inclusive Godavari and Krishna became the country’s
measures to realise its vision of becoming a leading first and fastest river-linking project to provide
state in development and happiness by 2029. The necessary water for irrigation to farmers
Government has adopted a development framework • Use of technology - Real time monitoring of
that is aligned to the Sustainable Development Goals water levels using piezometers was introduced
(SDG) – through which various social indicators such for proactive drought mitigation. Results of the
as poverty rate, food security, sustainable agriculture, real-time monitoring are transmitted to the Chief
health and well-being, quality education, gender Minister’s CORE dashboard
equality, water and sanitation etc. are regularly
• Innovative measures such as sprinkling/drip
monitored. The SDG framework, built on the tenets
irrigation, polynets/shadenets augured well for the
of inclusiveness, forms the guiding agenda for the
state in bringing down the impact of drought on
state’s development initiatives.
crop yield.
09. Andhra Pradesh Sustainable Development Goals, 2016-17 Department, Government of Andhra Pradesh, July 2017
10. A.P Economic Survey, 2016-17 12. Andhra Pradesh Sustainable Development Goals, 2016-17
11. Sunrise Andhra Pradesh Vision 2029, Vision Management Unit INNOVATION APSDPS, Planning
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13
13. AP Economic Survey, 2016-17, 2015-16 and 2014-15, Vision 2029 Annual Report 2017
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14
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15
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16
17. Delhi – Mumbai Industrial Corridor (DMIC), Visakhapatnam – Chennai Industrial Corridor (VCIC), Chen- 18. DIPP
nai – Bengaluru Industrial Corridor (CBIC), Bengaluru – Mumbai Economic Corridor (BMEC), Amritsar
– Kolkata Industrial Corridor
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17
VCIC Node
Airports
Proposed Ports
Ramky Pharma City VISAKHAPATNAM NODE
Existing Ports (Nakkapalli & Atchutapuram – 6,847 acres)
Atchutapuram SEZ VISAKHAPATNAM
VISAKHAPATNAM (97 MMTPA)
GANGAVARAM (55 MMTPA)
VIJAYAWADA
DONAKONDA
MACHILIPATNAM NODE (12,145 acres)
MACHILIPATNAM (150 MMTPA)
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18
Developing
Chennai Bengaluru Industrial robust
Corridor (CBIC) industrial infrastructure
ORVAKAL NODE
(~7,800 acres to be identified)
CBIC Node
Existing Ports
ORVAKAL
DAGADARTHI
PUTTAPARTHI
KRISHNAPATNAM NODE
(10,480 acres)
HINDUPUR NODE
(~10,700 acres to be identified) BENGALURU CHENNAI
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19
13. AP Economic Survey, 2016-17, 2015-16 and 2014-15, Vision 2029 Annual Report 2017
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20
Key initiatives:
• Real-Time Governance Centre (RTGC) inaugurated • Implemented a ‘People Hub’ which is designed as
at AP Secretariat. It is Asia’s biggest integrated a state-wide single source of data on people
control and command centre. 13 district centers
• Other RTG initiatives across sectors include:
are being setup along the primary RTGC
–– Real-time ground water monitoring using
• ‘People First’ campaign – Call centre based real
sensors,
time monitoring of all welfare schemes
–– Real-time weather monitoring using sensors,
• e-Pragati, a state-wide Enterprise Architecture, is
–– Real-time reservoir monitoring through sensors
the largest eGovernance programme approved by
and drone technology,
any state in India. It covers 33 departments, 315
agencies & around 745 services –– Health – CC Cams using sensors for laboratory
equipment,
• Fibergrid with 25,000 kms of fiber has been
–– e-Aushadhi
laid across the entire state to provide network
connectivity to entire State. Connectivity through –– NTR Bharosa using biometric/ iris devices,
fibergrid enables real-time monitoring –– Real-time monitoring of Street Lights using
sensors
• Innovative and citizen centric e-governance
projects such as Mee Seva, Mee Kosam, Mee –– Police – CC Cams
Bhoomi, to ensure improved delivery of services –– Revenue – Mobile application
and faster grievance redressal of citizens –– Rural development using mobile application.
• Chief Minister’s Office Realtime Executive (CORE)
Dashboard and AePDS have been cited by the
Niti Aayog as replicable best practices for other
governments in India to emulate
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21
Source: Sunrise Andhra Pradesh Vision 2029, Vision Management Unit INNOVATION APSDPS, Planning
Department, Government of Andhra Pradesh, July 2017
13. AP Economic Survey, 2016-17, 2015-16 and 2014-15, Vision 2029 Annual Report 2017
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22
14. AP Socio Economic Survey 2016-17 and Sunrise Andhra Pradesh Vision 2029, Vision Management Unit
INNOVATION APSDPS, Planning Department, Government of Andhra Pradesh, July 2017
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23
Impact assessment
Institutions
6.13
Infrastructure
7 6.69
Innovation
5.8 6
5 Macro-economic
4 environment
Business 6.84
sophistication 3
5.8
2
1 AP 2016-17
Market size Health and
AP 2015-16
7 0 primary education
6.89 Best score 2016-17
Goods market
Financial market
efficiency
development
Labour market 5.78
5.7
efficiency
5.8
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24
Switzerland 5.81 1
Singapore 5.72 2
Germany 5.57 5
Japan 5.48 8
Malaysia 5.16 25
China 4.95 28
Thailand 4.64 34
Kuwait 4.53 38
India 4.52 39
Brazil 4.06 81
AP India
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Robust policy environment through • GIS-enabled large industrial • First state in South India to
industrial and sector-specific land bank; online process for offer 24x7 quality and reliable
policies, with best-in-class policy application, processing and power to industry and second
instruments and fiscal incentives. payments state to achieve 100 percent
Lower prices for industrial land electrification
• Industrial development policy •
• Ports: Second longest coastline • Focus on industrial corridors for • Steps undertaken to provide
(974 km) in India, 14 notified development; Visakhapatnam industrial water supply in
ports of which 6 are operative – Chennai Industrial Corridor Hindupur (Anantapur district),
ports with deep draft capable (VCIC) and Chennai–Bengaluru Orvakal (Kurnool district) and
of handling the largest of Industrial Corridor (CBIC) industrial clusters in Chittoor
vessels • Under VCIC, master plans for district
• Airports: Five operational Visakhapatnam (7,680 acres) and • Connecting to water sources
airports; New Greenfield Srikalahasti – Yerpedu (11,000 such as Gandikota reservoir
International Airport at acres) nodes completed; Under Veligallu reservoir, Kandaleru
Bhogapuram (Vizianagaram CBIC, Krishnapatnam (15,975 reservoir, and Srisailam
district), Dagadarthi (Nellore acres) node being developed foreshore
district) and domestic Airport at • Proposed Coastal Employment • 10 TMC of water planned across
Orvakal (Kurnool district). Zone (CEZ) near Krishnapatnam industrial clusters to support
• Road network – 46,962 km • Electronics Manufacturing industrial development
(6,401 km of national highways Clusters (EMC) in Tirupati,
running through the state) Anantapur, Visakhapatnam
• Railway - 7,040 track km of • Ultra mega food park in Kurnool,
network mega food park at Mallavalli
• Inland water transport - 888 km (Krishna district)
national waterway • MSME parks to be developed in
175 assembly constituencies
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Focus
sectors
The Andhra story has just started. Strong
commitment to development, robust infrastructure,
stable social ecosystem and international visibility,
Andhra Pradesh has enormous potential to become
a global business hub.
The ‘Sunrise Andhra Pradesh Vision 2029’ sets an
ambitious target for economic growth for the state -
sustained double digit growth rate of 12 per cent,
with a 1 per cent increase in productivity.
Understanding that growth targets cannot be
achieved only through growth in agriculture, the
state has aggressively worked on industrial growth
through adequate policy and governance framework.
Consequently, the Industrial Development Policy
2015-20 was formulated, which aims to foster
innovation and create employment opportunities
across identified priority sectors. Andhra of the
future envisions holistic growth across all the focus
sectors of the state.
Developments over the last four years have also led
to the emergence of investment opportunities in
other areas along with identified focus sectors.
The following section presents Andhra Pradesh’s
strengths, achievements and investment
opportunities across some of the key sectors.
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Agriculture Horticulture
• Growth rate of 11.61 per cent as compared to • First in mango and papaya production
7.11 per cent in India (FY2016-17) • Largest producer of lemon, tomato, chilli and
• Second largest producer of paddy and maize turmeric
• Second largest producer of raw silk • Contributes ~46 per cent to India’s chilli
production
Schemes at a glance
• 3.557 million SHCs set as target • 94,796 MTs (91 per cent) Seed
SHCs distribution target per yr. micronutrients distributed • Seed subsidy worth INR4.0935
• 1.011 million (28 per cent) SHCs • 1.057 million ha (102 per billion (USD62.9 million)
distributed so far in second cycle, cent) area covered to rectify extended to farmers during
first phase micronutrient deficiencies in FY2017-18
• AP first in India for second different crops in FY2017-18 • 7,18,000 Qtls (63 per cent)
consecutive time in soil analysis • Enhancement of INR7.2 billion • Kharif seed distributed in
and soil health card distribution (USD111 million) in farmers’ FY2017-18
during FY2016-17 income
• 3,18,000 Qtls (88 per cent)
• Micronutrients worth INR865
• Rabi seed distributed
million (USD13.3 million)
supplied on 100 per cent
Fertilizers
subsidy
• 1,57,000 MTs reduction in
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03. Sunrise Andhra Pradesh, ‘Achieving Sustainable Development Goals 2030 – Baseline, Targets and 06. Andhra Pradesh plans to scale up zero budget farming with UN-backed SIFF, The Economic Times, 25
Strategy’ January 2018
04. AP to set up 1000 Custom Hiring Centers, The Hindu, 20 January 2017 07. Andhra Pradesh Agriculture Budget 2017-18
05. Sunrise Andhra Pradesh, ‘Achieving Sustainable Development Goals 2030 – Baseline, Targets and
Strategy’
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Major achievements
• Introduction of ‘Seed Act’ to standardise quality • Establishment of freshwater fish brood banks
of seeds and certified seed nurseries
––A mega seed park in Kurnool to set-up world • Building of air cargo facilities for promoting
class laboratories, seed processing facilities, exports of fish
R&D centres and facilities with international
quality to export the seed11
• Develop itself as a major ‘horticulture hub’ with
net sown area upto 35 per cent over the next
three years12 - INR2 billion (USD37.04 million)
outlay for horticulture
• Fisheries and livestock are major growth engines
of state’s economy
• Mechanise 60 to 70 per cent of farming and
allied activities as against the current 20 per
cent13
• Set-up 1,000 CHCs – opportunity for
organisations dealing in manufacturing
agricultural machinery/farm equipment14
• Plan to scale up ZBNF to six million farm-lands
across the state through farmer outreach15
• Increase horticulture acreage from 4 million
acres to 10 million acres over the next six years
• Introduce micro-irrigation with precision irrigation
techniques in horticulture
08. Collector’s Conference, 19 January 2018 12. Andhra Pradesh Agriculture Budget 2017-18
09. Annual Report 2016-17, Planning Department, Andhra Pradesh 13. AP to set up 1000 Custom Hiring Centers, The Hindu, 20 January 2017
10. AP Food Processing Society, Department of Industries & Commerce (FP), Government of Andhra 14. AP to set up 1000 Custom Hiring Centers, The Hindu, 20 January 2017
Pradesh – accessed on 12 February 2018 15. Andhra Pradesh plans to scale up zero budget farming with UN-backed SIFF , Economic Times, 25
11. Will develop State as seed capital, says Naidu, Economic Times, 10 October 2017 January 2018
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Case studies
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Energy
Sector overview
22,298 13.91%
CAGR: 8.7%
9.82%
8,307
MW
Source: http://www.cea.nic.in/reports/monthly/installedcapacity/2017/installed_capacity-03.pdf
1,105
kWh
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Case study18
• The state was facing severe energy deficit • For agricultural consumers seven hours power
(22 MU per day) at the time of formation in is being supplied which is to be increased to
June 2014 nine hours in a phased manner
• The GoAP invested to double the installed • 100 per cent household electrification was
capacity over the last 3.5 years. The energy met achieved on 8 June 2016
has increased from 43,810 MU during 2013-14
• Reduction in power purchase cost (From
to 54,257 MU* during 2016-17, registering an
INR4.35/unit in 2015-16 to INR3.80/unit in
increase of 8.7 per cent annually. The peak
2017-18) helped in achieving much needed
demand has increased from 6,549 MW to
affordability
8,000 MW, registering an increase of 22 per
cent. • So far, 6,554 MW capacity RE power projects
*http://www.cea.nic.in/reports/monthly/powersupply/2017/psp_energy-03.pd have been installed in the state which includes
3,820 MW of wind power and 2,145 MW of
• Currently, 24x7 power is being supplied to all solar power.
consumers in the state including rural areas Source: http://nredcap.in/PDFs/Tenders/RE_Status_31_01_2018.pdf
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32
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Intermediate
School education Collegiate education Technical education
education
• 61,528 schools • 3,264 junior colleges • 287 degree colleges • 1,360 professional
colleges
• Enrolment - 6.85 • Enrolment -5,40,000 • Enrolment - 1,85,000.
million. (first year). • 3,131 polytechnical
colleges
• Enrolment - 4,00,000.
33. Sustainable Development Goals Status Report 2017 & Way Forward, Planning Department, Government
of Andhra Pradesh
Andhra Pradesh State Skill Development Corporation
AP Socio-Economic Survey 2016-17
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Case study
e-KGBV
• Andhra Pradesh is the first state in the
country to introduce digital class rooms in
all 352 KGBVs and also proposed to provide
intermediate education in at least one KGBV
per district from the academic year 2017-18
• 13 KGBVs are proposed for upgradation as
junior colleges in the first phase
• Solar power systems were provided in 65 KGBV
schools in remote/agency areas towards self-
sufficiency in power generation
• NCC units are proposed for all KGBVs during
this year to build up self confidence among
KGBV girls
• ‘Magic English Second Language Learners
Programme’ in KGBV schools is a two-year
immersive English language programme
aimed to rapidly improve the English speaking
proficiency of children from predominantly
non-English environments in collaboration with
Karadipath organisation with support from
UNICEF.
34. AP Socio Economic Survey 2016-17, Planning Department of Government of Andhra Pradesh
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Established 31
labs in 40 engineering
institutions colleges
34 t-SDIs
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5 operational non-major ports; 1 major port and 3 non-major ports under development
Bhavanapadu
Meghavaram
Visakhapatnam
Gangavaram Port
Coal, Coke, Fertilizer & FRM, Iron Ore
Kakinada
SEZ Kakinada Deep Water Port
Coal, Fertilizer & FRM, Granite, Alumina, Sugar
Machilipatnam
Kakinada Anchorage Port Legend:
Vodarevu Rice, Cement
Operational Port
Rawa Port (Captive)
Crude Oil Under development
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Ports
• Among the ports on the East coast of India, the state’s ports have the highest draft and combined
capacity
• The state’s ports enable reduction of total transit time to 2 to 3 days compared to the West coast of
India for cargo movement from/to the East of India
Share of AP in the total cargo Total cargo handled at Andhra Pradesh ports
handled at Indian Ports - FY2018*
CAGR: 5.8%
23% GJ
40% 146.1
MH 116.50
62.9
58.5
AP
11% 58.0 83.2
TN
FY14 FY18*
13% Others
13% AP Major Ports AP Non-Major Ports
*Values pro-rated for FY18 based on traffic till December 2017 Source: Indian Ports Association, accessed on 12 February 2018
Source: Department of Ports, GoAP, accessed on 12 February 2018
Airports
• Five operational airports in Andhra Pradesh
• New Greenfield International Airports at Bhogapuram (Vizianagaram district), Dagadarthi (Nellore
district) and domestic airport at Orvakallu (Kurnool district)
• Robust intra-state connectivity with regular scheduled commercial flights
Air traffic movement at Andhra Pradesh Passenger traffic data on Andhra Pradesh
airports (in 000's) airports (in millions)
Air traffic movement (in 000's)
60 4.0
3.8
Passengers (in millions)
50 47
3.0 2.8
40 38
30 26 2.0
1.6
20
1.0
10
0 0.0
FY14-15 FY15-16 FY16-17 FY14-15 FY15-16 FY16-17
Source: Airports Authority of India, accessed on 12 February 2018 Source: Airports Authority of India, accessed on 12 February 2018
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Employment opportunity
Volume of cargo at Andhra Pradesh
airports (in 000's MT) • Every INR100 expenditure produces
benefits worth INR325 for the local
economy
6.00
• Every 100 direct jobs result in 610 new jobs
Cargo in 000's MT
4.62
created in the local economy
4.00
2.87 2.95
2.00
0.00
FY14-15 FY15-16 FY16-17
Source: Airports Authority of India, accessed on 12 February 2018 Source: International Civil Aviation Organization, accessed on 12 February 2018
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Ports
Key reforms/plans in place
• Andhra Pradesh Port Policy has been notified
in November 2015
• Inland vessel rules for the state have been
notified
• Constituted AP State Sagarmala Committee
• AP Maritime Board Bill submitted to GoI for
Presidential assent.
Major achievements
Future plans/potential
investment opportunities
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Airports
Key reforms/plans in place
Andhra Pradesh Civil Aviation Policy – 2015 was • Provide Viability Gap Funding (VGF) for
released by GoAP to support robust growth of underwriting seats in airlines for underserved
aviation sector in the state to sectors
• Proactively reduce the tax on Aviation Turbine • Provide Stamp Duty and Property Tax
Fuel (ATF) from 16 per cent to 1 per cent reimbursements for aircraft Maintenance, Repair
and Operations (MRO), air cargo infrastructure,
• Assist with land acquisition and pooling for airport
aviation education training.
development
• Provide incentives/reimbursements to encourage
development of airports and airlines to connect
the cities of Andhra Pradesh
Major achievements
• Passenger traffic growth is one of the highest • Capacity addition and airport expansion of
in India with passenger traffic recorded at 3.8 airports at Rajahmundry, Vijayawada, Tirupati and
million in FY2017-18 Vizag airport.
• Development works underway at Orvakallu
in Kurnool district at a cost of INR885 million
(USD13.77 million) on 1,010 acres on EPC basis
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25. Information Technology, Electronics and Communication department, GoAP – accessed on 12 February 2018
Andhra Pradesh Electronics and Information Technology Agency – accessed on 12 February 2018
Andhra Pradesh Innovation Society – accessed on 12 February 2018
Meeseva Official Portal - Government of Andhra Pradesh - accessed on 12 February 2018
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26. Information Technology, Electronics and Communication department, GoAP – accessed on 12 February 2018
Andhra Pradesh Electronics and Information Technology Agency – accessed on 12 February 2018
Andhra Pradesh Innovation Society – accessed on 12 February 2018
Andhra Pradesh State Fibernet Limited - accessed on 12 February 2018
AP State Skill Development Corporation- accessed on 12 February 2018
e-Pragathi, Information Technology, Electronics and Communication department, GoAP – accessed on 12 February 2018
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Case study
e-Pragati Authority has made rapid progress in • Core dashboard: Helps track the progress of
converting GoAP in to the first digitally transformed various government schemes across all 33
state government in India. The year 2016-17 was departments. The Core dashboard has 46 cards
declared as the ’Year of e-Pragati’ for bird’s eye view and operational view, tabular
views for 34 cards, links for 10 cards and
In order to ensure that government departments
analytics view for 2 cards.
are adequately equipped and facilitated with ICT
tools following actions were undertaken • Localisation: To increase the outreach of the
government online service delivery platform,
• Core platform: An integrated platform with
e-Pragati has undertaken a mammoth task of
exhaustive features and a components list
renovating existing government portals in the
which would be supported through four key
Telugu language. More than 130+ websites
functionalities
have been identified for translation into Telugu.
• ISB training programme: The authority signed
a MoU with Indian School of Business,
Hyderabad to conduct training programmes
01 Core platform
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Industries
Sector overview
Industry sector comprises mining and quarrying, in FY2016-17. Despite being a largely agrarian state,
manufacturing and construction. Industry sector Andhra Pradesh has shown tremendous progress
registered a growth rate of 10.05 per cent with in industrial development. Structural reforms
estimated GVA of INR1.31 trillion (USD20.8 billion). undertaken by the state have helped in accelerating
Manufacturing registered a double digit growth with industrial growth.
estimated GVA of INR508.62 billion (USD7.83 Billion)
Indusrial Gross Value Add (GVA) in Manufacturing Gross Value Add (GVA) in
USD billion (CAGR - 10.16%) USD billion (CAGR - 10.5%)
9
25
8
20 7
6
15 5
4
10
3
5 2
1
0 0
2014-15 2015-16 2016-17 2014-15 2015-16 2016-17
Year Year
Source: Andhra Pradesh Socio Economic Survey 2016-17 Source: Andhra Pradesh Socio Economic Survey 2016-17
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• Industrial Development Policy 2015-20 and six • Guarantee of service through ‘Public Service
industrial sectors (Aerospace and Defence, Delivery Guarantee’
Automobile and Auto component, Biotechnology,
• Online system for processing and sanction of
Food Processing, Textiles and MSME) policies in
industrial incentives
place providing best in class incentives
• Streamlined process for providing external
• SDP – Provides Industrial approvals covering
infrastructure to mega projects
19 departments, 15 spot approvals, 6 approvals
granted with a week, 8 approvals within 15 days • Online investment tracking for monitoring
and 17 approvals within 21days lifecycle of investments from DPR submission to
commercial production.
• Spot approvals for allocation of raw materials
such as coal and ethanol
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Case study29
Laying the red carpet for an investment of INR130 billion (USD2 billion) from South Korea’s oldest
motor vehicle manufacturer including associates and vendors
A South Korean auto major was exploring ways • Handed over around 587.84 acres of levelled
to enter the Indian market through a Greenfield land within three months
integrated car manufacturing facility. After
• Provisioning of external infrastructure facilities
evaluating several locations across the country,
at the selected site in a planned manner
Andhra Pradesh was selected to set up its
manufacturing facility. • Regular project monitoring under the leadership
of the Chief Minister
Actions taken by the state include
Proposed Outcomes
• Presenting the initial pitch presentation
showcasing the state’s best case scenario -- Production of 3,00,000 vehicles per annum
-- 4,000 direct and 7,000 indirect jobs
• Providing site options across various locations
with details of infrastructure facilities available -- Development of an ecosystem of automobile
component manufactures around Anantapur
• Addressing investor queries on aspects such
as policy framework, incentives and physical
infrastructure
Speed of execution
January 2019
April 2017 May 2017 (Target trial production)
(Signing of MoU) (Site levelling and land allotted)
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Irrigation
Sector overview
Andhra Pradesh has a cultivable area of 19.93 million acres out of which irrigation potential (IP) is created for
52 per cent area.
Energy savings to the tune of INR5 billion (USD76.9 million) in FY2017-18 through conjunctive usage of water.
Highest rise in ground water levels as compared to last 17 years.
Sustainable on-farm water use practices with over 20.83 per cent of area irrigated with micro irrigation.
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0.00
0.83 CAGR: 4.8% 2017-18
5.00
0.69
2016-17
10.00
15.00
20.00
As on March 2016 As on March 2017
• The state is blessed with major east flowing • Real-time monitoring of water resources
rivers and has the potential to tap water to through a web portal connected to water
ensure 100 per cent water-security resource assets of the state
• Effective governance mechanism backed • Well entrenched participatory irrigation
by world’s best practices like drone based management with over 80 per cent of area with
reporting, virtual reviews, machine learning, big Water User Associations
data analytics, geo-tagging of water assets and • Legislation for protection of water bodies and
IT enabled planning and monitoring methods framework for rain water harvesting
• Core dashboard developed to showcase entire
water resource information of all the sources for
effective planning and implementation of all the
projects
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Major achievements16
• Record 144 TMC water supplied to Rayalaseema in 2017-18 through various projects
• Around 3,12,000 acres ayacut is brought under micro irrigation taking the total to 1.985 million acres
Veligonda Filled with 16.95TMC of water for 96,961 acres irrigated under TGP in
reservoir the first time Kurnool District
Gorakallu 7.74 TMC of water is stored for the Facilitated supply of water to Gandikota
Reservoir first time through Owk Reserrvoir
• The state envisages implementation of latest • Special focus on mega projects such as
technologies in irrigation on a large scale for Polavaram to cater irrigation, industrial and
efficient use of irrigation water supplied and drinking water needs of state, and provide water
increased crop yield. security
• Various water conservation initiatives taken up • Emphasis on drone technologies and IT enabled
under schemes such as ‘Neeru-Chettu’, ‘Jala services for real-time monitoring
Samrakshna Udhyama Spoorthi’, ‘Panta Sanjeevini’
etc., to facilitate ground water levels reach
8 metres pre monsoon and 3 metres post
monsoon
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Case study
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Mining
Sector overview
Revenue accrued to the state exchequer has been growing at a CAGR of 26 per cent over the last three years.
5%
2.4
INR1,701/USD261.6
Minerals GVA
INR838/USD128.9 (Andhra Pradesh)
50.8 (USD billion)
FY2013-14 FY2016-17
Year
Source: Department of Mines and Geology, Government of Andhra Pradesh Source: Department of Source: Annual Report, Ministry of Mines, Govt of India, 2016-17
Mines and Geology, Government of Andhra Pradesh
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Andhra Pradesh’s
competitive advantage
• Andhra Pradesh becomes the fourth state to • Amendments have been made to the Andhra
successfully conduct the auction of a non-coal Pradesh Minor Mineral Concession rules to
mining lease rationalise the levy being collected from the
industry.
• The only state in the country to implement
Free Sand Policy for domestic consumption • Lease area restrictions have been introduced
to ensure a level playing field in the industry
• Computerised filing of applications and
monitoring of application status through • Mining Surveillance System has been
MeeSeva to ensure transparency and speedy implemented for major mineral leases in the
resolution of applications state
• Introduction of auto e-Transit passes for MDL • The introduction of automated e-Permit
holders has reduced manual intervention and has reduced manual intervention and has
has enhanced ease of doing business for enhanced ease of doing business
mineral dealers.
• Mineral Dealer License Rules 2017 has been
notified for online issue of license and e-Transit
pass.
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Tourism
Sector overview19
0.00 00
2014 2017 2014 2017
Year Year
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Major achievements20
• World Travel and Tourism Council recognised the • Emerging tourism destinations such as
policy with ’Policy Leadership’ award in 2015 Gandikota, Orvakal have attracted lot of attention
• About 150 projects worth INR100 billion • Vijayawada and Tirupati airports are accorded
(USD1.52 billion) and employment potential of international airport status thus enhancing
50,000 are in various stages of development. their prospects of being connected to many
INR33.8 billion (USD520 million) tourism international destinations
investments grounded21
• New airports in Rajahmundry, Kadapa are being
• Best National Tourism award 2017 by GoI connected with various cities in the country
under UDAN scheme which will provide tourists
• Best new hot spot destination 2017, at ITB Berlin
access to remote tourism destinations in the
• Domestic footfall have increased from 93 million state
in 2014 to 165 million in 201722. Top tourist
• Many innovative events such as Godavari Dance
destinations in the state are Tirupati/Tirumala,
and Lantern, Sounds on Sand, Amaravati Theatre
Visakhapatnam
Festival, Social Media Awards, Araku Balloon
• Foreign footfalls have increased from 66,000 in Festival, etc.
2014 to 2,71,000 in 2017. Top destinations are
Visakhapatnam, Puttaparathi and Tirupati
• Number of rooms available (3-star and above) in
the state have gone from about 6,000 in 2014 to
9,500 (projected) in FY2017-1823
20. Website of Andhra Pradesh Tourism Department – accessed on 12 February 2018 22. Website of Andhra Pradesh Tourism Department, Footfall dashboard – accessed on 12 February 2018
21. Andhra Pradesh Online Investment Tracker – accessed on 12 February 2018 23. Andhra Pradesh Tourism Authority – accessed on 12 February 2018
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64
Case study24
Upgradation of existing hotels and other amenities of APTDC through PPP model
• APTDC owns a number of hotels and other • Detailed financial models were prepared to
tourism amenities in the state. It is proposed to forecast revenues and select suitable financial
outsource operation and maintenance of these indicators for the projects
facilities to improve their efficiency and there
• PPP structuring was done for the identified
by enhance tourist experience in the state
properties and development obligations for
• In order to help identify private investors, private partners were chosen
assess market demand and propose
• A standardised bid process was adopted for
appropriate business models, a transaction
selection of qualified and experience private
advisor was brought onboard
partners
• Extensive consultations were held with a large
• As a result, close to 15 properties were
network of domestic and global investors to
outsourced with an investment potential of
assess market demand and propose suitable
INR1.5 billion (USD23.08 million)
PPP models for upgradation
• ‘As-is analysis’ of existing infrastructure was
conducted to identify potential aspects of
upgradation
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65
Amaravati
After bifurcation, the state was posed with another Singapore, Japan and China models were studied
challenge of finding a feasible location to set up its before the core capital master plan work was given
capital city. An expert committee was formed after to a Singapore firm, and the design to a Japanese
consultation with GoI to study possible locations for company.
the capital.
Amaravati is envisaged as ‘a smart, green,
Keeping in view public welfare, access to all, sustainable city,’ with zones consisting of a central
centrality to state’s geography, rail, road and airways business district, residential areas, green zones and
connectivity, proximity to ports such as Kakinada, waterbodies.
Machilipatnam, availability of water, existing
Amaravati is currently in fast paced execution mode.
infrastructure to kick-start development, Amaravati
was chosen as the location for the state’s capital city.
Andhra Pradesh Capital Region Development Covered
Covered Covered
Authority (APCRDA) was formed by passing a under seed
under capital under capital
legislation ‘AP Capital Region Development Act area of
region city
2014’ for end-to-end planning, coordination and Amaravati
development of the capital development area. 8,603 km2 217 km2
6.84 km2
New capital in Amaravati was envisioned as not only
an administrative hub but also as a global economic
Consented
hub. Amaravati also promises to be an aesthetically
land owners Projected Projected
appealing city with state-of-the-art architecture.
under Land GDP by 2050 employment
According to the city plans, Amaravati is designed
Pooling USD35 by 2050
to have four prominent gateways resembling the
scheme billion 1.5 million
entrance of historic temples and have city squares
designed on the lines of famous Trafalgar and the 26,839
Duke of York squares.
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66
Economic
Land Planning and design Construction
development
Major achievements
• Fastest completion of people centric city • Identified as one of the 30 cities by the Smart
planning Cities Mission under the smart cities challenge
by Ministry of Housing and Urban Affairs,
• Innovative city financing - First and largest
Government of India. The Amaravati Smart
ever Hybrid Annuity Model for development of
and Sustainable City Corporation Limited
urban integrated infrastructure; leveraging land
(ASSCCL) has been constituted to oversee its
monetisation for long-term financial sustainability
development.
• Transit government complex brought governance
to the doorstep of people, eight years ahead of
schedule
• Largest ever successful voluntary land pooling
showcases the participatory approach of the
government
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67
Progress made31
Following economic development initiatives has • National Biodiversity Museum assigned
been undertaken in Amaravati identified site for acceptance
• Integrated university with 200 acres of allotted • Leading banks and financial Institutions to come
land is constructed and classes for engineering up in the capital region
courses have commenced. It is expected to
• MICE Hub, convention center with 10,000
generate 8,000 employment opportunities
seating capacity is under planning.
• Indo-U.K. institute of health with 1,000 bedded
hospital and allied components. Foundation
Snapshot of progress made
stone laid.
• National Institute of Design has engaged
National Building Construction Corporation
(NBCC) for construction of its buildings
• Andhra Pradesh Human Resources Development
Institute (APHRDI), a HRD training Institute with
Universities Schools
1,500 trainees is in the pipeline
• 1,000 students Eight top schools
• Central Institute of Toll Design (CITD) is a tool
enrolled till date including India’s
design institute that has identified the site for
• Overall planned top seven, offering
development
strength of IB, ICSE and CBSE
• Integrated university in 200 acres with 5,200 2,00,000 curriculum board
students along with 750 bedded teaching students. schools.
hospital has already commenced engineering
courses in August 2017
• Integrated university in 200 acres with 4,700
students along with 1,500 bedded hospital is
under progress
• State headquarters of the Reserve Bank of
Hotels Hospitals
India (RBI) has been handed over the site for
development. 9 global hotel Leading global and
brands evinced domestic chains
• Medcity healthcare and research institute, large are creating world
interest in setting
healthcare project with 1500 bedded hospital class healthcare
3-,4- and 5-star
and allied institutions about to start construction ecosystem in
hotels.
at the designated site Amaravati.
• Boat training rescue institute and state office of
the India Navy have been assigned the site
• Several schools (national and international) have
been proposed
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68
Case study
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69
Way
forward
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70
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved
Acknowledgements
We acknowledge the efforts put in by the
following individuals in developing the paper:
• Sandeep Paidi
• Preeti Sitaram
• Priyanka Sharma
• Mahalakshmy Gopalswamy
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved
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