AP’s Jagan government prefers a compact capital city, unlike the grandiose plans of the previous Naidu regime.
Hyderabad: The World Bank, which is in talks with the Andhra Pradesh government to fund the development of the state’s capital city Amaravati, to the tune of around Rs 6,000 crore in five phases, has backed out after sensing the changed priorities of the newly elected Jagan Mohan Reddy-led YSR Congress government in the state. The Jagan government prefers a compact capital city, unlike the grandiose plans of the previous Naidu regime.
The World Bank board, which met in New York on Wednesday, examined the situation of the Amaravati sustainable capacity city development project proposal and decided to put on hold the release of $300 million which is equivalent to Rs 2,100 crore in the first phase. The bank also decided to opt out of the project in view of the changed (political) realities.
The bank’s decision was prompted by complaints from a large number of farmers who urged it not to lend to the capital city project as some of them had been evicted and displaced from their land. The bank also noticed the absence of interest on the part of the newly elected YSR Congress government to bear a portion (around 10%) of the total project cost as its share.
This decision of the World Bank board, which was announced on its website on Thursday, might influence several other lending agencies within and outside the country that have been approached by the state for raising funds for the construction of the capital city. The Chandrababu Naidu-led TDP government knocked on the doors of the World Bank and other agencies after the Centre refused to treat it as a national project.
The Naidu government pooled around 33,000 acres of land from farmers on the promise of developing that and sharing a portion with them for residential and commercial purposes along with a fixed annuity for the next 10 years. This has worked well with the farmers as their land prices have gone up, from Rs 15 lakh per acre to Rs 10 crore per acre inside five years.
However, a small number of farmers who opposed to part with their land have complained to the World Bank through an organisation called, “Working group of international financial institutions”, raising doubts over the method under which their land had been acquired in the land pooling. An inspection team of the World Bank visited these villages last December, but still wanted to go ahead with the loan plan.
Besides farmers, some environmentalists like Medha Patkar, among others, had opposed the capital city project and urged the World Bank not to lend to it. The World Bank called officials of the Capital Region Development Authority (CRDA) to the US and held several rounds of talks to find out the sustainability of the city plan and was satisfied with the answers furnished by the government, according to a former minister present there. Jagan, who took over as Chief Minister on 30 May, outlined his priorities, stating that all the projects that hadn’t yet commenced for less than 25% of its progress, would be put on hold until they were reviewed by his government. This has hit the Amaravati capital project, too, as 50 of its major buildings were still less than 10% of their completion.
The World Bank took note of the changed priorities of the new government, which is not keen on building a grandiose capital city, but to go for a compact city which can meet its administrative needs. The Naidu government made proposals to mobilise around Rs 35,000 crore for the capital city, though it couldn’t allocate enough funds to it. Jagan is not in a hurry to shell out this much money in a packed schedule.
This is reflected in the allocation of Rs 500 crore to the capital city project for 2019-20 in the budget presented by YSR Congress’ Finance Minister Buggana Rajendranath Reddy last week. Former Chief Minister Naidu dubbed this as a meagre allocation that cannot match the needs of the capital city construction. “This government has caused a loss of Rs 2 lakh crore to the Amaravati capital city farmers,” Naidu said.
Naidu’s calculation was based on the possible slump in the real estate market in and around Amaravati, which is located on the fertile land between Vijayawada and Guntur cities across River Krishna, from Rs 10 crore per acre before the elections to Rs 8 crore per acre now. Several business houses were in second thoughts over moving to Amaravati limits, claimed Naidu.
This was stoutly denied by AP Municipal Administration Minister Botsa Satyanarayana, who said that the allocation of Rs 500 core in the budget for this year was far more than Rs 232 crore spent by the Naidu government last year. “No one should have any doubts over our intentions to build a national level capital city of Amaravati,” he told this newspaper on phone from Amaravati on Friday.
Satyanarayana said that in the last four years, the TDP government had spent only around Rs 1,106 crore on the capital city works while the Centre had given another Rs 1,500 crore.
Satyanarayana was unable to specify by when the capital city project would be revived after the review, but indicated that it would pick up momentum within three to four months, possibly by November this year. The minister emphasised that the priority of the government was to make sure that there were no irregularities or injustice to farmers in the capital city project.