AMARAVATI

Background

1. Post-Bifurcation Need:

o After the bifurcation of Andhra Pradesh in 2014, the state was left without a capital
city. The government decided to establish Amaravati as the new capital.

2. Strategic Location:

o Amaravati was chosen for its central location within Andhra Pradesh, making it
accessible from various parts of the state.

3. Government Resolution:

o The Andhra Pradesh State Assembly passed a resolution on September 3, 2014, to

establish Amaravati as the capital city.

Location

1. Geographical Position:

o Amaravati is centrally located within the state of Andhra Pradesh, India.

o It is situated on the southern banks of the Krishna River, which provides a scenic
and strategic location for the capital city.

2. Accessibility:

o The central location makes Amaravati accessible from various parts of Andhra
Pradesh.

o Proximity to major cities like Vijayawada and Guntur enhances its connectivity
and accessibility.

3. Strategic Importance:

o The location was chosen to ensure balanced regional development and to serve as
a central hub for administrative, economic, and cultural activities.

Features

1. Master Planning:

o The Andhra Pradesh government signed an MoU with the Government of

Singapore, which prepared three master plans:

▪ Capital Region Concept Master Plan

▪ Capital City Master Plan

▪ Seed Capital Area Detailed Master Plan

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 2. Land Pooling Model:

o The largest land pooling initiative in the world, involving voluntary contribution of
34,400.15 acres by 29,966 farmers.

o Farmers were compensated with returnable plots (residential and commercial),

annuity payments, and various social benefits.

3. Infrastructure Development:

o Extensive infrastructure projects, including trunk roads, utilities, village

infrastructure, and high-value rerouting.

o The Amaravati Government Complex (AGC) designed to house state-of-the-art

buildings like the Legislature, High Court, and Secretariat.

4. Social Benefits:

o Farmers received various social benefits, including loan waivers, skill

development programs, free healthcare, and pensions for landless families.

5. Sustainability:

o Emphasis on sustainable development practices and efficient resource

management.

o Integration of green spaces, water management systems, and eco-friendly

infrastructure.

6. Economic and Social Infrastructure:

o Development of high-tech and knowledge-based industries to create jobs and

drive economic growth.

o Provision of world-class amenities and services to enhance the quality of life for
residents.

Vision

1. Pioneer Smart City:

o Amaravati aims to be India's first smart city with advanced technology and
infrastructure.

o Implementation of smart solutions for governance, transportation, utilities, and

public services.

2. World-Class Standards:

o Ensuring high-quality living standards and amenities.

o Development of modern residential, commercial, and recreational spaces.

3. Economic Powerhouse:

o Focusing on high-tech and knowledge-based industries to create jobs and drive

economic growth.

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 o Attracting national and international investments to boost the local economy.

4. Sustainability:

o Promoting sustainable living practices and efficient resource management.

o Integration of renewable energy sources, waste management systems, and green

building practices.

5. Rich Heritage:

o Reflecting the cultural and historical heritage of the region.

o Preservation and promotion of local traditions, arts, and crafts.

6. Unique Identity:

o Showcasing a distinct identity that sets Amaravati apart from other cities.

o Development of iconic landmarks and architectural marvels.

7. Inclusive Growth:

o Ensuring that the benefits of development reach all sections of society.

o Provision of affordable housing, healthcare, education, and social services.

8. Global Competitiveness:

o Positioning Amaravati as a globally competitive city.

o Attracting talent, businesses, and tourists from around the world.

Planning and Development

1. Master Plans:

o The Andhra Pradesh government signed a Memorandum of Understanding (MoU)

with the Government of Singapore in December 2014.

o Singapore provided three master plans free of cost:

▪ Capital Region Concept Master Plan

▪ Capital City Master Plan

▪ Seed Capital Area Detailed Master Plan

2. Land Pooling Model:

o The largest land pooling initiative in the world, involving voluntary contribution of
34,400.15 acres by 29,966 farmers.

o Farmers were compensated with returnable plots (residential and commercial),

annuity payments, and various social benefits.

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 3. Infrastructure Development:

o Extensive infrastructure projects, including trunk roads, utilities, village

infrastructure, and high-value rerouting.

o The Amaravati Government Complex (AGC) designed to house state-of-the-art

buildings like the Legislature, High Court, and Secretariat.

4. Social Benefits:

o Farmers received various social benefits, including loan waivers, skill

development programs, free healthcare, and pensions for landless families.

5. Sustainability:

o Emphasis on sustainable development practices and efficient resource

management.

o Integration of green spaces, water management systems, and eco-friendly

infrastructure.

6. Economic and Social Infrastructure:

o Development of high-tech and knowledge-based industries to create jobs and

drive economic growth.

o Provision of world-class amenities and services to enhance the quality of life for
residents.

Finances

1. Project Costs:

o Total Project Cost: Rs. 51,687 crore.

o Breakdown:

▪ Tier I Infrastructure: Rs. 19,769 crore (city-level roads, utilities, village

infrastructure, EHV rerouting).

▪ Tier II Infrastructure: Rs. 17,910 crore (last-mile connectivity, LPS

layouts).

▪ Amaravati Government Complex (AGC): Rs. 14,008 crore (including

essential infrastructure and BRTS).

2. Funding and Support:

o National and International Support:

▪ International Funding Agencies: World Bank, AIIB, JICA, KfW.

▪ National Funding Agencies: HUDCO, PSU banks.

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 ▪ Government of India: Provided capital gains exemption for land sales
and approved Rs. 2,500 crore in principle (Rs. 1,500 crore released).

3. Monetization of Land:

o Land Available for Monetization: 8,274 acres.

o Funds from land monetization were intended to be used for city construction and
infrastructure development.

Amaravati: The Destruction

The ambitious project of developing Amaravati as the new capital of Andhra Pradesh faced
significant setbacks and challenges following a change in state leadership in 2019.

Change in Leadership

1. New Administration:

o In 2019, Jagan Mohan Reddy came to power, leading to a shift in the state's
approach to the Amaravati project.

o The new administration's first act was the destruction of Praja Vedika, a
government building, without written orders or accountability.

2. Three Capitals Proposal:

o The new government announced a plan to establish three capitals for Andhra
Pradesh, contradicting earlier assurances during the elections.

o This proposal led to confusion and uncertainty regarding the future of Amaravati.

Halting Development

1. Stopping of Key Projects:

o All ongoing construction and development works in Amaravati were halted.

o The Land Acquisition (LA) notification for 1,197.30 acres was withdrawn.

2. Cancellation of Contracts:

o The contract with Norman + Foster, the Master Architect for the Amaravati
Government Complex (AGC), was canceled.

o It was ordered to limit civil works to Rs. 3,000 crore out of the balance works worth
Rs. 35,583.5 crore.

3. Funding Issues:

o The Minister for Municipal Administration & Urban Development (MA&UD)

complained to the World Bank, leading to the stoppage of a $300 million loan.

o The state government also complained to the Government of India (GoI), resulting
in the halting of a Rs. 1,000 crore grant.

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Impacts of the Destruction of Amaravati

The halting and subsequent destruction of the Amaravati project had far-reaching consequences
for the state of Andhra Pradesh.

Economic Impacts

1. Loss of Investor Confidence:

o The abrupt halt in development activities led to a significant loss of investor

confidence.

o 122 out of 130 land allottees lost confidence and did not start any activity, leading
to a freeze in potential investments.

2. Negative Credit Ratings:

o The credit ratings of Amaravati bonds were downgraded by major rating

agencies:

▪ Acuite Ratings: Downgraded from AA-(SO) to a lower rating.

▪ Brickwork Ratings: Downgraded from AA-(SO) to BB+ (CE).

▪ CRISIL Ratings: Downgraded from A+ (SO) to BB+ (CE).

3. Increased Costs:

o Unfinished buildings and infrastructure led to increased costs for completion and
maintenance.

o The cost of completing the infrastructure became enormous due to delays and
damage.

4. Property Value Depreciation:

o There was a sharp depreciation in property prices due to the uncertainty and
halted development.

o This negatively impacted landowners and potential investors.

5. Loss of Wealth Generation:

o The planned wealth generation through land monetization and economic activities
did not materialize.

o The multiplier effect on the economy was lost, leading to reduced economic
growth.

6. Job Losses:

o The halt in construction and development activities led to a loss of existing jobs.

o New job creation stopped, leading to increased unemployment and migration of

people to other states.

Social Impacts

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 1. Impact on Farmers:

o Annuity payments for 2,903 farmers were stopped.

o Pensions for 4,422 landless families were removed.

o Farmers who had contributed their land for the development of Amaravati started
peaceful demonstrations, which were met with violent methods by the
government.

2. Prolonged Protests:

o The protests by farmers continued for 1,631 days, ending on June 12, 2024.

o The prolonged protests highlighted the dissatisfaction and unrest among the
affected farmers and landowners.

3. Impact on Quality of Life:

o The halt in development led to unfinished infrastructure, affecting the quality of

life for residents.

o The planned social benefits, such as free healthcare, education, and skill
development programs, were not fully realized.

Administrative and Governance Impacts

1. Legal Issues:

o The Hon'ble High Court ordered the government to develop Amaravati in a time-
bound manner, but these orders were not implemented.

o The legal battles and non-compliance with court orders further complicated the
situation.

2. Policy Reversals:

o The new administration's decision to propose three capitals for Andhra Pradesh
created confusion and uncertainty.

o The policy reversals and lack of clear direction negatively impacted the state's
governance and planning.

3. Brand Image:

o The brand image of Andhra Pradesh suffered due to the halted development and
negative publicity.

o The state's reputation as an investment destination was tarnished, affecting future

investment prospects.

Infrastructure Impacts

1. Unfinished Projects:

o Numerous infrastructure projects, including roads, utilities, and public buildings,

were left unfinished.

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 o The unfinished infrastructure led to increased costs for completion and
maintenance.

2. Damaged Infrastructure:

o Unfinished buildings and roads were damaged due to exposure to the elements
and lack of maintenance.

o The increased costs for repairing and completing the damaged infrastructure
added to the financial burden.

3. Stalled Development:

o The overall development of Amaravati was stalled, leading to a loss of momentum

and progress.

o The vision of creating a world-class capital city was derailed, affecting the state's
long-term development goals.

Amaravati: The Way Forward

Restoring Confidence

• Restart Construction: Resume halted projects to complete key infrastructure.

• Engage Stakeholders: Rebuild trust with farmers, landowners, and investors through
transparent communication.

• Legal Compliance: Adhere to court orders and legal requirements to maintain

credibility.

Financial Strategy

• Secure Funding: Re-establish connections with funding agencies and explore new
sources, including public-private partnerships (PPPs).

• Efficient Resource Management: Optimize resource use to minimize costs and

maximize impact.

• Monetization of Assets: Continue transparent monetization of land and assets to generate

development funds.

Infrastructure Development

• Complete Unfinished Projects: Prioritize high-impact projects like roads, utilities, and
public buildings.

• Sustainable Development: Integrate green practices and promote renewable energy.

• Modern Amenities: Develop residential, commercial, and recreational spaces with

world-class amenities.

Economic Revival

• Attract Investments: Create a favorable investment climate with incentives and ease of
doing business.

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 • Job Creation: Focus on jobs through construction and new industries; implement skill
development programs.

• Boost Economic Activity: Promote sectors like real estate, retail, hospitality, and
services.

Land Pooling Model in Amaravati

The land pooling model used for the development of Amaravati is one of the largest and most
innovative land acquisition strategies in the world.

Overview

1. Voluntary Contribution:

o The model involved the voluntary contribution of land by farmers.

o A total of 34,400.15 acres of land was pooled from 29,966 farmers.

2. Binding Agreement:

o Farmers and the Andhra Pradesh Capital Region Development Authority

(APCRDA) entered into a binding agreement to ensure mutual benefits.

Compensation and Benefits

1. Returnable Plots:

o For each acre of land contributed, farmers were given returnable plots:

▪ Dry Land: 1,000 sq. yards (Residential) + 250 sq. yards (Commercial)

▪ Wet Land: 1,000 sq. yards (Residential) + 450 sq. yards (Commercial)

2. Annuity Payments:

o Farmers were paid an annuity for 10 years:

▪ Dry Land: Rs. 30,000 per acre per year

▪ Wet Land: Rs. 50,000 per acre per year

o Annual increment of Rs. 3,000 per acre for dry land and Rs. 5,000 per acre for wet
land.

3. Social Benefits:

o Farmers received various social benefits, including:

▪ Loan waivers

▪ Skill development programs

▪ Free healthcare

▪ Free education

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 ▪ Anna Canteen (subsidized food)

▪ Sanitation facilities

4. Pensions for Landless Families:

o Landless families were provided pensions:

▪ Initially Rs. 2,500 per month, later increased to Rs. 5,000 per month.

Recognition and Impact

1. World Bank Case Study:

o The land pooling model used for Amaravati was recognized by the World Bank as
a case study for its innovative approach.

2. Largest Land Pooling Initiative:

o The model is considered the largest land pooling initiative in the world,
showcasing a successful collaboration between the government and farmers.

Challenges and Setbacks

1. Halted Development:

o The change in state leadership in 2019 led to halted development activities,

impacting the benefits promised to farmers.

o Annuity payments for 2,903 farmers were stopped, and pensions for 4,422 landless
families were removed.

2. Farmer Protests:

o Farmers who had contributed their land started peaceful demonstrations against
the halt in development.

o The government attempted to control the protests using violent methods, leading
to prolonged unrest.

3. Legal Issues:

o The Hon'ble High Court ordered the government to develop Amaravati in a time-
bound manner, but these orders were not implemented.

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