Andhra Pradesh's capital dreams rekindled: The making of Amaravati

Dubbed a 'ghost town' until recently, the 2,300-year-old city is all set for a revival, giving the locals and industry a reason to cheer

Amaravati, nestled along the southern banks of the Krishna River in Andhra Pradesh, is in a festive mood. Across the 20-kilometre stretch from Vijayawada to the state’s futuristic capital, everything — from the lush green trees and harvest-ready fields to the buildings — points to one thing: the arrival of Amaravati 2.0. It is a kind of rebirth for the 2,300-year-old city, once the cradle of divine Buddhist culture and a seat of dynasties like the Ikshvakus, Pallavas, and Cholas. The city was dubbed a “ghost town” during the regime of the Yuvajana Sramika Rythu Congress Party (YSRCP).

 

Later this month, Prime Minister Narendra Modi is expected to relaunch construction on the Amaravati greenfield capital city, a move that gives renewed hope to locals and industry stakeholders who had given up on the project after the previous Y S Jagan Mohan Reddy government floated the three-capital theory. His idea was to have Visakhapatnam as the executive capital, and Amaravati and Kurnool as the legislative and judicial capitals, respectively. Roads and unfinished tall buildings, once overrun with wild shrubs and weeds until the Assembly elections in June 2024, have since been cleared. Bumpy roads have been reconstructed, and bylanes that looked deserted and haunting just 10 months ago are now vibrant once again. Massive cut-outs of Modi, Chief Minister (CM) N Chandrababu Naidu, Deputy CM Konidela Pawan Kalyan, and Minister Nara Lokesh line the city.

 

A senior government source told Business Standard that a lion’s share of the contracts for Amaravati’s development, estimated to cost around ₹64,910 crore in 2024, has already been awarded. “Various works related to trunk infrastructure, flood mitigation, neighbourhood development, government offices, and housing, amounting to ₹37,702 crore, have been awarded and are in the mobilisation stage,” the source said.

 

On the other hand, there is a sense of joy among locals, whose dreams are back on track. “The entire 50,000 acres had become a jungle over the past four years. We are eagerly waiting to welcome the PM. Amaravati will be a game changer for Andhra Pradesh. On the ground, we can see contractors ready to begin work. We also expect major investment announcements during the relaunch,” said Puvvada Sudhakara Rao, of the Amaravati Parirakshana Samithi Joint Action Committee (JAC).

 

A key indicator of this revival is the real estate sector, which is seeing a V-shaped recovery in prices. After falling to ₹8,000–20,000 per square yard during the YSRCP regime, prices have more than doubled, now ranging between ₹35,000 and ₹65,000 per square yard, depending on the location, Rao said.

 

According to government sources, funding is already in place, and further sources are being explored. The Union government has committed ₹15,000 crore in financial assistance to Amaravati so far in 2024 and has facilitated support from the World Bank and the Asian Development Bank to support $800 million each (agreements have been signed, with 25 per cent of the ₹13,700 crore total already scheduled for advance disbursal). HUDCO has signed a deal to provide a ₹11,000 crore loan, and discussions are in the pipeline with Germany’s KfW Development Bank for an ₹5,000 crore.

 

“Amaravati is set to become the index of Andhra Pradesh’s growth. The industry will develop rapidly once infrastructure is in place. The government has announced several policy measures to ease norms for industry and ensure the availability of incentives. This will become the next major destination for global majors in information technology and artificial intelligence. Startups are also gaining prominence, indicating Amaravati may become a future startup hub,” said Raja Sekhar Bahudodda, general secretary of the Andhra Pradesh Chambers of Commerce and Industry Federation (AP Chambers).

 

Last week, a delegation from the Singapore government visited Amaravati and assured support to revive its partnership, which got derailed during the YSRCP government’s tenure. Between 2014 and 2019, Singapore had played a key role in the development of the Amaravati greenfield capital. Already, around 130 government and public-sector offices have been allotted land in Amaravati to begin operations. In addition, public-private partnership (PPP) projects are being invited and scrutinised on a case-by-case basis for potential memoranda of understanding. The government has stated that the Amaravati project is expected to be completed within three years.

 

“A lot of time was lost for Amaravati due to political reasons. Andhra Pradesh Chief Minister N Chandrababu Naidu is known for attracting investors, and many investments are already taking place in and around the capital city. Farmers are also happy with the land pooling model. When he was the chief minister of undivided Andhra Pradesh, he brought in major players like Microsoft and other global corporations. The same model is now being replicated in Amaravati. Naidu will not waste time now,” said Rama Krishna Sangem, a veteran journalist and political analyst.