Bloomberg coverage of construction plans in Amaravati
One Man's Plan to Build Singapore in India Sends Land Soaring
In a country where it can take a decade just to acquire enough land to build a factory, Naidu’s plan is daring. This will not just be a new city, but one to rival Singapore: a gleaming high-tech metropolis epitomizing Prime Minister Narendra Modi’s vision of a stronger, economically vibrant India.
If realized, it would be India’s most ambitious piece of urban planning since independence: an oasis of canals and water taxis, manufacturing hubs, universities and skyscrapers.
To build a new Singapore, Naidu, 65, turned to the Singaporeans. A master plan was developed in cooperation with the island-state’s government. An initial core area with government buildings should be completed by 2019, said P. Narayana, Andhra Pradesh’s minister of urban development.
The surrounding metropolis would eventually cover some 212 square kilometers (82 square miles), and extend to a developed region larger than the U.S. state of Delaware.
It’s not much time to build a new metropolis anywhere, let alone in India. But Naidu is a man with a track record of economic success in the rough-and-tumble world of provincial politics.
During a previous stint as chief minister from 1995 to 2004, he spearheaded the creation of a high-tech corridor in Hyderabad, persuading Bill Gates to build a Microsoft Corp. research and development center there. At the same time, Naidu oversaw the fight against a bloody insurgency by Maoist rebels.
After losing Hyderabad’s hub of pharmaceutical and information-technology companies, Naidu was elected back to the top post in Andhra Pradesh in 2014 to lead a state that’s now 70 percent rural and projected to have a $1.1 billion revenue deficit, compared with a surplus before the split.
"As a matter of fact, we don’t have resources,” he says in a meeting room at Andhra Pradesh’s state offices in New Delhi. “We are having so many problems."
He says he’s considering different models for financing, but waves away questions on the details of of how much it will cost and how he will raise the cash.
Naidu is implementing a novel plan to acquire land, typically the biggest headache in an Indian development program. He’s secured more than 31,000 acres from farmers -- an area bigger than Manhattan -- with, essentially, a promise to trust him and you’ll be rewarded later.
In exchange for each acre, the Andhra Pradesh government pays villagers up to 50,000 rupees ($770) a year with 10 percent annual increases for a decade, and guarantees it’ll return about a third of the property, outfitted with basic infrastructure like sewage.
While the approach probably saved the government a couple of billion dollars, it’s still not clear how Naidu will raise enough funds, said S. Ananth, an adjunct faculty professor at the Institute for Development and Research in Banking Technology, which was established by India’s central bank.
“That’s the unanswered question: Where are they going to mobilize the huge amounts of money?" he said. “I think their headaches are just starting because there’s so much expectation.”
The land development and basic infrastructure for the capital city alone will cost about 250 billion rupees (more than $3.8 billion), said Srikant Nagulapalli, commissioner of the Andhra Pradesh Capital Region Development Authority. The federal government has agreed to provide financial support for essential buildings like a High Court and legislative assembly. So far, that funding has come to 18.5 billion rupees. Nagulapalli says he isn’t worried. "The banks and financial institutions as well as the government’s own budgetary resources -- all these will be sufficient," he said.
The villagers of Uddandarayunipalem are counting on that reputation. And profiting from it. Land in the area that sold for as little as 1 million rupees per acre last year is now going for as much as 15 times that.
"There are people who are giving all of their land to the government," Srinivas said. "Others are selling right now because the prices are rising: They’re putting their money in the bank."
Nearby, Nageswara Rao, 30, stands on the roof of his house, looking at a line of palm trees in front of the spot where farmland was bulldozed for Modi’s helicopter pad.
Rao’s family has a lot riding on the assurances of Modi and Naidu. His family put 19 acres into the land pool, everything except their house.
"The government will develop a great city,” he said. “We’re expecting this."
