Professional Documents
Culture Documents
PGP TERM - VI
Submitted by
GROUP - 10
INTRODUCTION
1.1 Amaravati:
Amaravati is the proposed capital city of Andhra Pradesh, a state in India. The state of Telangana
was bifurcated from Andhra Pradesh in 2014. The city is being built from scratch on a
33,000-acre site along the banks of the Krishna river, near the cities of Vijayawada and Guntur.
The city’s name is derived from the ancient Buddhist town of Amaravathi, which is located
nearby. The vision for Amaravati is to create a world-class, green, smart and sustainable city that
will serve as a model for the future of urban development in India and beyond. The city’s master
plan, designed by a consortium of international experts, incorporates nine thematic cities, such as
sports city, justice city, finance city, etc., and features a grid pattern road network, underground
utilities, integrated transport systems, waterfront development, iconic structures, and extensive
green spaces.
The estimated budget for building Amaravati was around 1.09 lakh crore, which is being raised
from various sources, such as land monetization, bonds, loans, grants, and public-private
partnerships. The estimated budget has gone through various revisions . The state government
has also adopted an innovative land pooling scheme, where farmers voluntarily gave up their
land in exchange for developed plots in the new city, thus avoiding the need for land acquisition
and compensation. According to the Centre for Financial Accountability, the total project cost is
envisioned to be $715 million, of which the World Bank and the Asian Infrastructure Investment
Bank (AIIB) were supposed to provide $300 million each through investment project financing1.
However, both the World Bank and the AIIB withdrew their funding in 2019, citing various
reasons, such as lack of transparency, social and environmental concerns, and change of
government in AP4.
The AP government has raised funds from other sources, such as HUDCO, Amaravati Bonds,
land monetisation, and land auctions. The total amount of funds raised is estimated to be over Rs.
60,000 crores. The AP government has spent the funds on various infrastructure projects, such as
road network, power grid, water supply, government complex, iconic bridge, sports hub, and
educational institutions. The costs of some of the major projects are mentioned in the draft
development plan of Amaravati, but the total expenditure is not specified.
The AP government expects to generate revenue from various sources, such as tourism,
industrial development, commercial leasing, and taxes. The projected amount of revenue is not
given, but some of the potential benefits are highlighted in the Amaravati master plan by Foster
Partners, the design firm hired to create the new capital city..
The budgeting of the Amaravati project is still an ongoing and uncertain process, as the project is
facing many legal, political, and financial hurdles. The future of the project depends on the
outcome of the court cases, the decisions of the central and state governments, and the
availability of funds and resources.
The construction of Amaravati began in 2015 and is expected to be completed by 2029, with
different phases and milestones along the way. The first phase, which covers the basic
infrastructure and the government complex, is slated to be finished by 2022. The second phase,
which includes the development of various institutions, industries, and residential areas, is
targeted to be done by 2024. The third and final phase, which involves the completion of the
remaining projects and the beautification of the city, is aimed to be achieved by 2029. Amaravati
is not just a capital city, but a symbol of the aspirations and ambitions of the people of Andhra
Pradesh, who are determined to overcome the challenges of bifurcation and create a new identity
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and destiny for themselves. Amaravati is also a testament to the visionary leadership of the
state’s chief minister, N. Chandrababu Naidu, who has been instrumental in conceptualizing,
planning, and executing this mega project, with the support of various stakeholders and partners.
Amaravati is poised to become one of the most livable, prosperous, and dynamic cities in the
world, and a source of pride and inspiration for the nation.
Under the AP Reorganisation Act 2014, the Andhra Pradesh Capital Region Development
Authority (APCRDA) has submitted Detailed Project Reports (DPRs) for the construction of
government buildings, including the Secretariat, High Court, Legislative Assembly, and other
essential infrastructure in Amaravati. The Government of India has already released a grant of Rs
1500 Cr to the Government of Andhra Pradesh and is expected to release an additional Rs 1000
Cr. A loan of Rs.1275 crores was sanctioned by HUDCO on 6th December, 2017 to fund priority
roads projects against asset mortgage. Several commercial banks, including Andhra Bank, Indian
Bank, and Vijaya Bank, have offered short-term funding for various development works in the
capital city. The financing for Land Pooling Scheme (LPS) layouts is being planned with a mix
of loans from commercial banks and HUDCO. The World Bank withdrew its funding for the
Amaravati Smart City project on July 18, 2019. The Indian government had withdrawn its
request for financing the project, which led to the World Bank’s decision123. The World Bank
had planned to provide a loan of $300 million for the project1. The decision to withdraw the loan
application was taken since the Indian and Andhra Pradesh government did not want a foreign
agency conducting an inquiry into any alleged irregularities by the previous government.
Aspect Information
Initial Estimated Budget ₹1.09 lakh crore
Funding Sources
Government of India 2500 crores
Short Term Lending through HUDCO &
Commercial banks 1275 crores
phase. This phase, which makes up roughly 39% of the entire Amaravati Capital City Area, is
expected to generate 350,000 jobs in the public, private, and industrial domains.
Key Projects:
● Barrage with a well-defined flow regime of the Krishna river and strong bunds that have
withstood historic flood discharges of around 12 lakh cusecs
● Minimal loss of agricultural production
● Electricity: Ninety percent of the sample communities had access to electricity, according
to the survey.
● Drinking water: Hand pumps and piped water supplies are the major ways that the
villages get their drinking water from the ground and the water quality is in allowable
bound
● Sanitation facilities: Based on the communities' state of sanitation, a large number of
homes have access to built-in toilets.
● Education: There is an elementary school in every village. The majority of the schools
are situated between two and five kilometers away from the hamlet and are reachable by
kaccha roads
● Climate: A significant factor in determining the climate is the monsoon. All year round,
the relative humidity is often high. There is a 50°C maximum temperature
● Water resources: The Buckingham, Ryves, Krishna Main, Nizampatnam, Krishna West
Bank, and Commamur irrigation canals are among the network
● Geological Formation:The area's primary soil types are clay loamy, red soil, black cotton,
and alluvial soil
Amaravati's employment projections are deeply intertwined with its adoption of speculative
urbanism, a development strategy that focuses on attracting private investment and fostering
economic growth through large-scale urban projects. This approach envisions the city as a hub of
innovation, commerce, and culture, with employment opportunities spanning various sectors.
Under the speculative urbanism framework, Amaravati aims to position itself as an attractive
destination for businesses, residents, and investors by leveraging its strategic location, natural
resources, and planned infrastructure. The employment projections outlined in the city's master
plan reflect this vision, with ambitious targets set across key sectors:
● Government Sector: The plan anticipates a significant number of jobs in the government
sector, reflecting the city's role as the new capital of Andhra Pradesh. Initial projections
indicate the creation of 46,096 government jobs, with incremental employment expected
in later phases.
● IT/ITES (Information Technology/Information Technology Enabled Services):
Recognizing the potential of the IT industry to drive economic growth, Amaravati plans
to establish a robust IT ecosystem. The city aims to create 51,062 jobs in phase one, with
exponential growth projected in subsequent phases, reaching up to 1,56,542 jobs.
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Location Quotient
Phase 1 (10
Employment years)
Government 2.5286
IT/ITES 0.4293
Corporate complex 0.9415
Financial hub 4.3431
Start-up/innovation hub 7.1639
Industrial sectors 0.5968
Government sector employment value is greater than one which indicates that the government
will provide employment opportunities to encourage youth in the state. In addition to
employment projections, speculative urbanism in Amaravati encompasses various other
elements:
● Social Inclusion: Efforts to promote social inclusivity and equitable access to economic
opportunities are emphasized, fostering a cohesive and diverse community
Landowners could choose to transfer their land to the government for the purpose of developing
Andhra Pradesh's new capital city under this voluntary land purchase scheme (LPS). They would
get reconstituted commercial and residential plots inside the new capital region in exchange.
Depending on whether the land is classified as "dry" or "wet," these plots' sizes would vary. The
landowner would receive 1,000 square yards of residential space and 200 square yards of
commercial space for every acre of "dry" land. The landowner would receive 1,000 square yards
for residential use and 300 square yards for commercial use for every acre of "wet" land.
Additionally, for ten years, landowners would get an annual payment of 30,000 rupees for one
acre of "dry" land or 50,000 rupees for one acre of "wet" land. "Assigned land" is a different
classification of landholdings recognised by the Land Pooling Scheme. This land was given by
previous governments to landless poor people who fall under the SC, ST, and OBC categories so
they could cultivate it. The same amount of money, but smaller reconstituted plots, are to be
given to the owners of assigned land as compensation. The majority of the allotted land in the
new capital region has now been taken over by the government; however, very few assigned
landholders have received compensation as a result of the government's inability to identify the
true deed holders. In addition, the government promised to provide households without land with
2,500 rupees per month for ten years. This was because landless agriculturalists, including tenant
farmers and agricultural workers, would lose their source of income if agricultural land was
transferred to the government under the LPS. (Refer to Appendix [1])
In the context of Amaravati's development, agrarian urbanism refers to the complex process of
converting rural areas into urban areas while maintaining important agricultural features.
Agricultural land had to be transformed into residential areas and urban infrastructure, and
remnants of the previous agrarian landscape had to be incorporated into the overall urban design.
This change did not, however, come without difficulties. Tensions and conflicts arose over land
acquisition, compensation, and the uprooting of rural communities.
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Agrarian urbanism impacted many facets of the Amaravati development project. First of all, as
farmers fought to preserve their land rights and interests, the purchase of land for urban
development frequently resulted in disagreements over compensation and relocation. Second, to
demonstrate the integration of rural and urban features, Amaravati's spatial planning and design
included features like agricultural zones, green spaces, and water bodies in addition to urban
infrastructure. Thirdly, social structures and communities were impacted by the shift from rural
to urban areas, which led to conflicts between various caste groups over resource access and land
ownership. Agrarian urbanism also resulted in a shift in land values and the emergence of new
economic sectors in Amaravati, which had an impact on employment trends and means of
subsistence.
The dynamics of mobilization surrounding the development of Amaravati, the capital city of
Andhra Pradesh, have been significantly impacted by agrarian urbanism. This phenomenon,
which is characterized by the conversion of rural landscapes into urban centers through
initiatives like land acquisition, infrastructure development, and urban planning, symbolizes the
convergence of agrarian and urban spaces. This shift from rural to urban areas in Amaravati has
prompted diverse mobilization efforts from a range of stakeholders, all of whom are trying to
safeguard their rights, preserve their interests, and influence the course of development. Agrarian
urbanism has also increased caste tensions already present and sparked mobilization along caste
lines. Marginalized communities and dominant caste groups have come together to demand their
rights to land, resources, and recompense.
(Chandrababu(2014-19, how real estate has done, prices, projects, investment made),
Jagan(2019-23 how real estate has done, prices, projects , investment made, how land pooling
has impacted as the projects has been stopped in the midway- farmer’s protest, projects getting
scraped ) and (2023-recent)capital city, development of Amaravati,current state of real estate )
The period between 2014 and 2018 in Amaravati, Andhra Pradesh, witnessed a dramatic boom in
the real estate sector. Here's a breakdown of the key developments:
1. Land Acquisition and Price Surge:
(i) Aggressive Land Acquisition: The Andhra Pradesh government, led by the Telugu
Desam Party (TDP), embarked on a large-scale land acquisition program for the planned
capital city. This led to a significant increase in land prices, with reports of 500-1000%
growth in some areas.
(ii) Investment Frenzy: The promise of a new capital city fueled a frenzy of investment
activity. Real estate developers, construction companies, and individual investors flocked
to Amaravathi, anticipating high returns.
(iii) Project Announcements: Numerous residential and commercial projects were
announced, spanning luxury apartments, malls, hotels, and townships. This further
boosted market sentiment and land prices. (Refer to Appendix [2])
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2. Infrastructure Development:
(i) Government Initiatives: The government prioritized infrastructure development to
support the new city. Major projects included roads, bridges, a new airport, and water
supply systems.
(ii) Improved Connectivity: These infrastructure projects aimed to improve connectivity
between Amaravathi and other major cities in Andhra Pradesh.
(iii) Smart City Vision: The government envisioned Amaravathi as a smart city, attracting
further investments and advancements in technology and sustainability.
3. Market Dynamics:
(i) High Demand: The initial buzz and development plans created high demand for
properties in Amaravathi. Investors were willing to pay premium prices, anticipating
future appreciation.
(ii) Limited Supply: Due to ongoing land acquisition and development restrictions, the
initial supply of developed land was limited, further pushing up prices.
(iii) Speculative Investments: Many investors bought land with a speculative motive,
hoping for quick profits upon further development.
4. Projects:
Government Infrastructure Commercial Industrial Residential
Buildings Projects Projects Projects Projects
5. Investments made:
(i) Land Acquisition: Estimates suggest the Andhra Pradesh government spent anywhere
between ₹1 lakh crore (₹1 trillion) and ₹2 lakh crore (₹2 trillion) on land acquisition for
the capital city region.
(ii) Infrastructure Development: Projects like roads, bridges, and the airport received
allocations ranging from ₹50,000 crore (₹500 billion) to ₹1 lakh crore (₹1 trillion).
(iii) Private Real Estate: Investments in luxury apartments, malls, and townships were
estimated to be in the range of ₹50,000 crore (₹500 billion) to ₹1 lakh crore (₹1 trillion).
The 2019-2020 period saw a dramatic downturn in Amaravati's real estate, transitioning from a
boom to a bust. Here's a breakdown of the key factors that contributed to this crash:
● Stalled Construction Activity: With investors pulling back and the future of development
uncertain, construction projects came to a standstill. This led to job losses, economic
hardship, and a deserted feel in many parts of Amaravati.
5. Investments:
● The uncertain policy landscape surrounding the capital city status discouraged many
large-scale investors from entering the market.
● Existing investors often adopted a wait-and-see approach, delaying or scaling back
planned investments.
● Some niche projects catering to specific needs (e.g., educational institutions, affordable
housing) might have attracted new investments during this period.
6. Types of Investments:
● Smaller investments with lower risk profiles seemed more prevalent during this period.
● Examples include investments in:
● Existing projects: Completion of partially constructed buildings or development within
already approved project boundaries.
● Niche segments: Affordable housing, educational infrastructure, healthcare facilities
catering to specific needs.
● Land banking: Long-term investments in land, anticipating future potential based on
developments in the legal battle.
7. Impact of land pooling:
● Displacement and Livelihood Loss: Thousands of farmers were displaced from their land,
leading to the disruption of their traditional livelihoods and social networks. Many
struggled to find alternative sources of income, particularly with the promised
compensation and support falling short of expectations.
● Unfair Compensation: Concerns arose regarding the adequacy and transparency of
compensation packages, with some farmers alleging they received significantly less than
the promised value of their land. Additionally, technicalities excluded many from
government compensation and pension schemes.
● Broken Promises: The initial promises of developed urban plots and job opportunities
within the capital city remain largely unfulfilled, leaving many farmers feeling cheated
and uncertain about their future.
● Reduced Land Value: While initial land values in the region did increase, the recent shift
in capital plans (3-capital model) and reduced scale of the Amaravati project resulted in a
significant drop in land value. This negatively impacted farmers who were hoping to
benefit from the promised appreciation.
● Limited Job Creation: The project initially created some construction jobs, but overall job
creation fell short of expectations, leaving many unemployed and struggling to make
ends meet.
● Economic Uncertainty: The uncertainty surrounding the future of Amaravati and the
3-capital model creates an unstable environment for businesses and investors, potentially
hindering economic growth and investment in the region.
8. Substitution Effect: The 2019 decision by the Andhra Pradesh government to
decentralize the state capital into three distinct centers – legislative in Amaravati,
executive in Visakhapatnam, and judicial in Kurnool – had significant ramifications for
the business landscape in Amaravati. While directly attributing company relocations
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solely to this policy is complex, there were certain companies who moved out around this
period:
● Kia Motors: In 2020, Kia Motors relocated its India headquarters from Amaravati to
Anantapur, citing delays in land allocation and infrastructure development. While the 3
Capitals plan may have influenced their decision, the absence of a robust auto
manufacturing ecosystem in Amaravati likely played a role.
● Lulu Group: The retail giant abandoned its hypermarket project in Amaravati in 2020.
While reasons were not officially disclosed, speculation linked it to uncertainty
surrounding Amaravati's future as the sole capital and potential shifts in the consumer
base.
● Leosphere Technologies: This IT firm shifted its headquarters from Amaravati to
Visakhapatnam in 2020, aiming for better access to talent and an established IT
ecosystem. The 3 Capitals plan may have contributed, but proximity to clients in
Visakhapatnam likely factored in.
CONCLUSION
Amaravati's real estate market has seen both periods of phenomenal growth and difficult
downturns. The first boom era brought significant investments and raised expectations because
of its aggressive land acquisition and ambitious development projects. But then came the bust
period, which was characterized by changes in politics, policy uncertainty, and economic
downturns. This resulted in falling land prices, a halt to construction, and investor anxiety.
Notwithstanding these obstacles, Amaravati's real estate market has room to grow and
prosper—that is, if governance remains stable, policy direction remains clear, and investor
confidence is restored. Going forward, Amaravati's real estate market will need to be revitalized
to realize its vision of being a thriving, sustainable city. This will require a proactive approach to
addressing land acquisition concerns, ensuring fair compensation, and creating a supportive
business environment.
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REFERENCES
APPENDIX