Andhra Pradesh Chief Minister N Chandrababu Naidu needs Rs 25,000 Cr per year for next three years, to make the fairy tale of the Capital City of Amaravati into a reality. However, pooling up capital for the new capital standing as the main hurdle as unless the government suitably rewards prospective investors it is not in a position to pool up the funds.
Hyderabad: A strategic meeting of the Andhra Pradesh Capital Region Development Authority (APCRDA) chaired by Chief Minister N Chandrababu Naidu was told that the state government requires Rs 25,000 Cr per year for next three years to make its dream of constructing Amaravati on Global Standards.
Representatives from the state government’s strategic partner and a multinational management consulting firm McKinsey & Company in their presentation have pegged the total cost of the seed capital of Amaravati at Rs 70,000 Cr. And, “each year the government should ensure an inflow of a minimum of Rs 25,000 Cr investments for next three years to complete the first phase of the capital city in next three years time,” was what was briefed to the chief minister in the presentation said a senior official from the state municipal administration and urban development department. The presentation has also included in it various ways and means to attract investments, and how funds were pooled in similar situations elsewhere in other parts of the world.
However, the main hitch for the government was that though it was ready to go for a Public Private Partnership (PPP) mode to attract investments, at the same time, it can not follow the method in case of constructions in an area of 8 Km radius. Because, all constructions in the area belonging to the government and absolute ownership rights over all the constructions in the area rests with the government only.
Also, the state government will have to submit the plans of all the government structure coming up in the seed capital area to the Centre for reimbursement or for the release of funds as per the Andhra Pradesh Reorganisation Act, 2014. “The Union government has not yet made it clear as to what extent it would extend financial assistance to construction government buildings like High Court, Raj Bhavan, State Assembly Secretariat, Staff Housing and the like. On its part, the state government has sought around Rs 23,000 Cr for all this,” clarified a senior official from the state finance department. At the same time, going by the Singapore made draft plan for the seed capital, the total cost of the government builds were reportedly pegged at more than what the government has sought from the Centre. This means, “the remaining gap will have to borne by the state government,” the sources added.
Another way suggested to the government was, to go ahead with the construction of government buildings with funds from the prospective investors. But, in lieu of the same, the government will have to provide them lands and lease rights over large tracts of lands. To explore this option, the state government had already amended an existing rule relating to leasing out the government lands for 33 years and extended the maximum lease period for government lands up to 99 years.
A clear picture on the funding pattern to take up construction of government buildings is expected to emerge by the end of this January, after Chief Minister N Chandrababu Naidu’s meeting with Prime Minister Narendra Modi, to discuss the report submitted by the NITI Ayog on the package to be given to the state as per the Andhra Pradesh Reorganisation Act. Until then the state government may not initiate any action on construction of the seed capital area, the sources added.
