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HomeIndiaJagan govt dumps Naidu project to develop Singapore-like financial hub in Amaravati

Jagan govt dumps Naidu project to develop Singapore-like financial hub in Amaravati

Andhra govt has terminated Start-up Area Development Project in Amaravati. Partner Singapore says looking at other opportunities under Jagan.

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Hyderabad: Andhra Pradesh Chief Minister Y.S.R. Jagan Mohan Reddy has scrapped his predecessor N. Chandrababu Naidu’s grand proposal to develop a Singapore-like financial hub in the planned “world class capital” Amaravati.

On Monday, the state government terminated the Start-up Area Development Project, which was planned by Naidu alongside Singapore minister for trade relations, S. Iswaran, in 2017 to make Amaravati the growth engine of post-bifurcation Andhra Pradesh reeling under the loss of revenue rich Hyderabad.

The Singapore government, which was roped in by Naidu to execute the project, has now expressed interest in pursuing emerging opportunities in the state where Reddy is redrafting all infrastructure projects.

After taking the chief minister’s chair in May, Reddy has indicated the insignificance of Naidu’s plan in his new development agenda for the state. In its budget, his government allocated a paltry Rs 500 crore for Amaravati’s development. Consequently, the World Bank and Asian Infrastructure and Investment Bank backed out from funding infrastructure development in the new capital.

Reddy’s latest move comes at a time when a committee of experts he formed is reviewing the location of the capital, amid apprehensions in the state that Amaravati could be dumped altogether in favour of another spot or a decentralised capital structure could be adopted.

Despite the cost of of a “few millions of dollars” because of the termination of the Start-up Area Development Project, the Singapore ministry of trade and industry Tuesday said the “closure is based on mutual consent between the GoAP and the Singapore consortium”.
Further, Iswaran’s statement indicates the city-state’s keen interest to continue its partnership with AP under Reddy.

“We note that the newly elected government has decided not to proceed with the Startup area given its other priorities in the state. Companies recognise such risks when venturing into any overseas market and factor them into their investment decisions,” said Iswaran.

“In this instance, the Singapore companies have stated that the project has cost them a few million dollars, and that its closure does not impact their investment plans in India. Singapore companies remain interested in opportunities in AP and other Indian states because of the size and potential of the market,” added Iswaran.

The Singapore minister is a key figure in all consultations between AP and the city-state, and was a regular appearance alongside Naidu in Amaravati project events, including the 2017 agreement.

Also read: AP formation day is flashpoint between Jagan-Naidu, but in Andhra nobody agrees on a date

Why the Start-up Area Development Project

In his two terms as united Andhra Pradesh’s chief minister, from 1995 to 2004, N. Chandrababu Naidu played a pivotal role in the transformation of a sleepy Hyderabad into a globally recognised information technology hub.

Since he inherited a resource-strapped and truncated state in 2014 after bifurcation, Naidu tasked himself with making Amaravati another Hyderabad or even better — “Singapore like”, as he once stated.

So came about the partnership with Singapore — and the Start-up Area project to be developed by a city-state consortium in partnership with the Andhra government on a 58:42 per cent equity sharing basis.

The idea of Start-up Area Development Project, planned in an area of 1691 acres, could be compared with the Cyber Towers in Hyderabad, still a landmark that housed the early bird IT companies. It is now surrounded by global technology brands like Google, Microsoft, Facebook and Amazon.

The expanse around Cyber Towers in 1999 was identical to the Amaravati’s farms and villages. Now, it is prime real estate.

Designed to similarly act as Amaravati’s investment catalyst, the Startup Area Development Project was intended to create 2.5 lakh jobs, welcome 1.25 lakh families, garner tax revenue of about Rs 10,000 crore annually, and cumulatively contribute Rs 115,000 crore to the GSDP in 15 years by 2032.

The contract for this purpose was signed between the Singapore and Andhra Pradesh governments in May 2017 and a Singapore consortium of Ascendas-Singbridge and Sembcorp Development Ltd were engaged as master developers of the project.

A special purpose vehicle, Amaravati Development Partner (ADP), was formed with AP government’s Amaravati Development Corporation. Land was pooled from the farmers.

Reddy’s aversion for Amaravati

From the time Y.S.R. Jagan Mohan Reddy came to power in May, his administration has indicated a precarious future for the Naidu-initiated Amaravati projects.

Reddy named Alla Ramakrishna Reddy, a local MLA who trounced Naidu’s son Lokesh in assembly elections and was vocal against the capital project, the chairman of the Capital Region Development Authority (CRDA).

That wasn’t all. Municipal administration minister Botsa Satyanarayana went to the extent of saying that “flood prone” Amaravati was ill-suited to be the location of a grand capital.

The latest project termination order is based on reports by the new CRDA commissioner, Lakshmi Narasimham, who was brought in by Reddy in June to replacing Cherukuri Sreedhar. The Amaravati agreements were signed under Sreedhar during Naidu’s tenure.
Under Reddy, all the ongoing works on government buildings in Amaravati, like the secretariat, came to halt, and plans like the Start-up Area Development were kept in suspension.

This is in sharp contrast to the Naidu government’s rule.

Earlier, so much was the activity on Amaravati in association with Singapore that Naidu even provided the viability gap funding (VGF) for an airline operating service between Vijayawada and Singapore.

As a precursor to the now-dumped project, the service was cancelled as the Reddy government stopped the VGF in June.

Questioning Reddy over these moves, Naidu said last month, “Just because a grand capital like Amaravati would earn me global recognition, you are killing the golden goose I handed you. What would have been the fate of Hyderabad, an IT hub now, if your father (and former CM) YSR had discarded the development works I initiated?”

Reacting to the Jagan government’s latest decision, Naidu Tuesday said a “dream lies shattered today”.

“AP was brimming with hope when the Singaporean Govt signed up with us to co-participate in building Amaravati. The dream lies shattered today with them pulling out. Hope is lost. Investments are gone. Trust has disappeared. Andhra Pradesh is on the path of devastation,” he tweeted.

Also read: The Andhra capital battle — why Jagan demolished Naidu’s Rs 9 crore building in Amaravati


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