The Andhra Pradesh government in south India yesterday announced a decentralised three-city capital for the state, effectively cancelling its plan for Amaravati, a high-tech city that was to be built from scratch with the support of Singapore companies.
Last November, the newly-elected Chief Minister Y. S. Jagan Mohan Reddy terminated a contract with a consortium of Singapore real estate companies on mutual agreement.
It was a strong sign that the state was back-pedalling on Amaravati.
Yesterday, the state Cabinet approved a "decentralised capital" plan: the coastal city of Vishakapatnam is set to be the executive capital, with administrative offices; Kurnool will be the judicial capital, with courts; and Amaravati will be the legislative capital, with the assembly and secretariat.
A three-city capital is unprecedented for any state in India. The three cities are also hundreds of kilometres away from each other.
Mr Reddy has long said that he stands for "equal development throughout the state" rather than in a few urban clusters.
There had been discussions over the location of the state's capital since 2015, when Andhra Pradesh was divided into two states - Telangana and Andhra Pradesh.
They were to share Hyderabad city as their capital until a new one was found.
The state's previous chief minister, Mr Chandrababu Naidu, had announced plans for a world-class capital by the Krishna River, which eventually replaced 29 agricultural villages.
Mr Naidu had acquired 90 per cent of the 15,617ha required for his project through an unusual pooling system, offering a developed plot in the future city as payment to each landowner.
The Singapore Government-backed consortium of Ascendas-Singbridge and Sembcorp Development was to establish some of the capital city's first infrastructure, invite companies to set up their corporate offices and build a financial district in Amaravati.
Although Mr Naidu had signed dozens of such agreements, only a secretariat and two universities were built.
The World Bank also withdrew its offer of US$300 million (S$404 million), citing irregularities.
Last May, Mr Naidu lost the state elections to his rival, Mr Reddy, who deemed the Amaravati idea impractical from the day he took his oath as Chief Minister.
In November, the much-feted Singapore deal was terminated.
Construction work stopped and land prices in the region crashed.
Yesterday's decision ends all speculation: Plans for the high-cost Amaravati, with its eight-lane highways and swanky tech companies, are finally off the table.
The Cabinet gave its nod to repeal the law that constituted the Amaravati capital region, and set up a regional development authority in its place.
The announcements were made after an hour-long Cabinet meeting, and based on the report of a high-power committee chaired by retired civil servant G. N. Rao and Boston Consulting Group.
The committee, formed by Mr Reddy soon after he was sworn in last May, analysed the feasibility of building a capital at Amaravati, and investigated alleged insider trading by the previous regime.
The government will now hand over the committee's report to the Lokayukta, the state's anti-corruption ombudsman.
Farmers from the Amaravati region protested outside the assembly following the news.
Mr Praveen Reddy, a 48-year-old farmer who had given 2.4ha of his land to the state in 2015 under the land-pooling system, said he was more confused than angry.
"That chief minister (Mr Naidu) said Amaravati is his baby and we'll build it lavishly. Singapore comes, the Indian prime minister lays the foundation stone, so we backed it.
"Now this Chief Minister says actually the old plan is unfeasible, so we'll have three small capitals. I wish they would make one good plan and stick to it," he said.
The Cabinet said it recognised farmers' worries.
It also announced that it will pay double the promised annuity of 2,500 to 5,000 rupees a month (S$48 to S$96) to those who gave up their lands for Amaravati city, and pay it for 15 years.
