Self-financing capital that could not take off

So-called dream of greenfield capital Amaravati was a failure mostly because the earlier Chief Minister could not make it irreversible as that was left incomplete in his term. Existing structures housing some government offices like Secretariat, Assembly and the High Court which accounted for some thousands of crores of public money may not serve the purpose completely.

The foundation stone laid at Uddandarayunipalem by the Prime Minister Narendra Modi on 22 October 2015, along with Vice President, SC Judge, Japanese Minister for Economy, Trade and Industry Yosuke Takagi and the Singaporean Minister for Trade and Industry, S Iswaran, remain a forgotten point in the chronology of AP capital.

The CM's office started functioning in April 2016 from Velagapudi village, might continue for some time to come. Interestingly Naidu's description of these permanent edifices as 'temporary' became true.

The capital city was planned to spread over 217 square km area with a total cost of Rs 55,300.43 crore to the Capital Region Development Authority (CRDA) out of which the State government's contribution is only Rs 12,600 crore (equity Rs 6,600.29 crore and supporting grant Rs 5,900.71 crore) spread over a period of 8 years from April 2018 to March 2026 (Rs 500 crore in 2018–19, Rs 1,800 crore per year for later six years and Rs 1,300 crore in 2025–26).

It was called self-financing city as its construction was planned by self-financing from loans and land selling with the State government's moral support. The Naidu regime refused to take loans from foreign/international banks. According to a detailed news article published by Eenadu, the contribution from the government is to be repaid by the CRDA after 2037.

It is claimed that ultimately the State or the Central governments will not be incurring any expenditure to construct this capital as that is wholly expected to be financed by the income accrued from the sale of land for various development schemes (Rs 17,100.51 crore), loans and the local taxes (Rs 14,600.41 crore by 2037) to the CRDA.

The State and Union governments are expected to earn Rs 12,000 crore per annum out of which the State Goods and Services Tax (State GST) alone is expected to be Rs 6,000 crore per annum. The CRDA was expecting a net surplus income of Rs 33,300 crore by 2037 after meeting the total expenditure.

A 177-page report of the CRDA in 2019 says that the Amaravati government complex which is dreamt to provide world-class facilities needed for the State government and its employees' accommodation is also part of the CRDA project.

It also contained a plan for the Bus Rapid Transit System (BRTS) in Amaravati to connect with the adjacent Vijayawada and Guntur cities by world-class road network. Both the Amaravati government complex and BRTS were supposed to incur an expenditure of Rs 14,000 crore.

Generally, the cities would boost up the economic growth contributing between 59% and 70% of GDP, which, with three capitals decision in Andhra Pradesh should lead to significant growth in urbanisation, leading to healthy economy.

With approval to the Andhra Pradesh Decentralisation and Equal Development of All Regions Act, Amravati slated to continue as the legislative capital; Visakhapatnam and Kurnool were added as the executive and judicial capitals, respectively.

The apprehension is that it would be a death blow to interests of thousands of farmers who gave up their substantive part of agricultural fields hoping to reap dividends of growth arising out of development new capital Amaravati. Tens of thousands of crores of investment is at stake now.

With three capital cities, the distances among them need to be counted.

Executive capital Visakhapatnam will house the Secretariat and the Raj Bhavan, is 700 km from Kurnool (Judicial capital), and 400 km from Amaravati. Amaravati and Kurnool are 370 km apart. It is estimated that to give a speech at the State legislature, the Governor will have to travel 400 km. With the State police headquarter at Mangalagiri, 14 km from Vijayawada, senior police officials will have to travel 400 km to be at the Secretariat.

And, given how often litigation matters require administrative and police staff to depose, bureaucrats posted in Visakhapatnam and police officers posted in Mangalagiri should be travelling some 700 and 330 km, respectively. Most of the State revenue might be spent on footing the travel bill.

Mysore (Karnataka) and Pune (Maharashtra) attracted IT industries, though they are not capital cities. Immediate fall out of the scrapping of the Amaravati project was walking out of World Bank and a Singapore-based consortium. Along with World Bank, the Asian Infrastructure Investment Bank (AIIB) also announced they would not fund the Amaravati project. Singapore also walked out.

Previous government tried the model of acquiring farmland for urbanisation to fetch high commercial value to the lands surrendered by the farmers. Around 28,000 farmers handed over 33,000 acres of land in the Mangalagiri-Guntur region expecting a return for annuity besides getting a portion of the surrendered land in a capital city having far greater value than their original plot. The State is supposed to pay them a monthly income for 10 years and allot a developed plot for every acre of land surrendered.

Earlier the government allotted lands to several Central corporations and private bodies at cost ranging from Rs 50 lakh to Rs 2 crore per acre. It was agreed to pay three times to the cost as compensation if agreement is not adhered to.

The compensation perhaps reaches the astronomical heights of Rs one lakh crore if all agreements with 23,000 farmers are enforced. All those 33,000 acres should be reconverted into agricultural lands and given back to the same farmers, which is another gigantic exercise.

It is reported that several thousands of crores of rupees worth Bills are pending with the Andhra Pradesh Capital Region Development Authority (APCRDA) which is now being scrapped. The land investors suffered most as real estate value in Amaravati have dropped by half, from Rs 40,000-45,000 per sq. yard to Rs 20,000-22,000. It is alleged that projects worth Rs 10,000 crore are suffering unexpected losses.

It is estimated that the government at present needs more than Rs 1 lakh crore to complete projects initiated by the earlier government. A project to create infrastructure for drinking water, power, roads, and drainage is awaiting the loan from AIIB.

A six-way arterial road connecting Amaravati to national highway 16, which is part of the Golden Quadrilateral from Kharagpur in West Bengal to Chennai needs huge funds. Once the Finance Minister said: "We don't have money to build a city. Our priority is to raise the standard of living, provide equitable development and create infrastructure for manufacturing".

Immediately after winning elections in 2019, Jagan Mohan Reddy explained that the State is left with a debt burden of Rs 2.57 lakh crore — up from Rs 97,000 crore in 2014. Every year, the State pays Rs 20,000 crore to service the debt and coupled with prepayment of the principal component, the outgo is Rs 40,000 crore.

The Chief Ministers and the ruling Party may change, but the government is a continuous institution, the decisions and agreements become irrevocable especially when it comes to issues like seat of capital and the contracts signed with owners or allottees of the land.

Though the parties to these contracts may not have a right to have the capital in Amaravati, they can certainly demand compensation for the losses they suffered due to change in the decision, beyond what was agreed to. The farmers who offered their agricultural fields were assured with the proper development of the capital.

They could have legally enforced their right to seek proper development. They are plunged into crisis because the seat of capital itself is changing, which means that there will no further development of the area as planned or agreed.

With these potential, legal and constitutional threats the 'three capitals' issue could be totally uncertain and dependent upon the outcome of the Judicial review by Andhra Pradesh High Court.

(The writer is former Central Information Commissioner and Professor at Bennett University)