One man’s plan to build Singapore in India sends land prices soaring
Chandrababu Naidu's decision to build Andhra Pradesh's new capital Amaravati around the banana plantation has resulted in land prices jumping 15-fold in a year
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New Delhi: A short man with frayed clothes and hands made rough from long years of farming, K. Subba Rao stands under the sun in his village in southern India, as the creases on his weathered face break into a sly grin. āIām going to be a rich man," he says.
Amid banana plantations and cotton patches in Uddandarayunipalem, it seems like everyoneās convinced theyāve hit the jackpot. Other farmers chime in with shouts of āShopping Malls!", āApartments!", āJobs!"
Their optimism is fuelled by a decision to split what was Indiaās fifth-most-populous state of Andhra Pradesh last year. In the division, the state lost both its old provincial capital of Hyderabad and the lionās share of the economy.
So Andhra Pradesh needed a new capital. And chief minister N. Chandrababu Naidu wants to build it around farmer Raoās banana trees.
In a country where it can take a decade just to acquire enough land to build a factory, Naiduās 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 Modiās vision of a stronger, economically vibrant India.
If realized, it would be Indiaās most ambitious piece of urban planning since independence: an oasis of canals and water taxis, manufacturing hubs, universities and skyscrapers.
Deadline looming
Modiās critics say such plans are more soaring rhetoric and nationalism, than soaring towers. But this city comes with a real deadline.
Andhra Pradeshās state governmentāoffices, ministries, staff and facilitiesāstill mostly operates out of Hyderabad, now in a neighbouring state. That arrangement ends in nine years.
To build a new Singapore, Naidu, 65, turned to the Singaporeans. A master plan was developed in cooperation with the island-stateās government. An initial core area with government buildings should be completed by 2019, said P. Narayana, Andhra Pradeshās minister of urban development.
The surrounding metropolis would eventually cover some 212 square kilometers, and extend to a developed region larger than the US state of Delaware.
Economic revolution
āThey were very keen to position this new capital city as a pioneer smart city for India," said Wong Heang Fine, group chief executive officer at Surbana Jurong Private Ltd, the Singaporean firm that developed the plan.
At a ceremony in October to bless the cityānamed Amaravati after an ancient capital and a setting in Hindu mythologyāModi arrived in a grey Indian Air Force helicopter to assure the crowd that āin the coming days, Andhra Pradesh will lead a new economic revolution."
Itās 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.
Money shortage
His new challenge is to build a city with no land and little money to buy it.
After losing Hyderabadās hub of pharmaceutical and information-technology companies, Naidu was elected back to the top post in Andhra Pradesh in 2014 to lead a state thatās now 70% rural and projected to have a $1.1 billion revenue deficit, compared with a surplus before the split.
āAs a matter of fact, we donāt have resources," he says in a meeting room at Andhra Pradeshās state offices in New Delhi. āWe are having so many problems."
He says heās considering different models for financing, but waves away questions on the details of how much it will cost and how he will raise the cash.
āThis is our pride, Indiaās pride: We are building a capital," he says, after aides arranged the room so that a black and gold statue of Buddha would flank Naidu during the televised interview.
Trust me
Itās not just political rhetoric. Naidu is implementing a novel plan to acquire land, typically the biggest headache in an Indian development programme. Heās secured more than 31,000 acres from farmersāan area bigger than Manhattanāwith, essentially, a promise to trust him and youāll be rewarded later.
In exchange for each acre, the Andhra Pradesh government pays villagers up to ā¹ 50,000 rupees a year with 10% annual increases for a decade, and guarantees itāll 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, itās 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 Indiaās central bank.
Headaches coming
āThatās the unanswered question: Where are they going to mobilize the huge amounts of money?" he said. āI think their headaches are just starting because thereās so much expectation."
The land development and basic infrastructure for the capital city alone will cost about ā¹ 25,000 crore, 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 ā¹ 1,850 crore.
Nagulapalli says he isnāt worried.
āThe banks and financial institutions as well as the governmentās own budgetary resourcesāall these will be sufficient," he said.
Naidu preferred to emphasize the importance of the project for India and the significance of Modiās visit, on the āauspicious" Hindu holiday of Dussehra, which celebrates the epic victory of Lord Rama over the 10-headed demon king Ravana.
Bomb attack
Naidu has had his own battles. During his previous time as chief minister a 2003 attack by Maoists destroyed his car with a bomb fashioned from land mines. A photograph of him, splattered in blood and dazed but standing, was carried by newspapers the following day.
The villagers of Uddandarayunipalem are counting on that reputation. And profiting from it. Land in the area that sold for as little as ā¹ 10 lakh per acre last year is now going for as much as 15 times that.
Ten minutes down the road, K. Srinivas, 23, runs āA to Z Communications," a small shop he opened four months ago selling mobile phones and real estate. His business partner who handles land matters, Venkat Yangaladas, is 26 and previously made flower decorations for a living.
Yangaladas, with a gold necklace around his neck, estimates heās made ā¹ 500,000 in the past year, more than six times the per capita income of the district where he lives.
All in
āThere are people who are giving all of their land to the government," Srinivas said. āOthers are selling right now because the prices are rising: Theyāre 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 Modiās helicopter pad.
Raoās 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.
āThe government will develop a great city," he said. āWeāre expecting this." Bloomberg
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