BANGALORE - The Andhra Pradesh government in south India on Monday (Jan 20) announced a decentralised three-city capital for the state, effectively cancelling the state's plan for Amaravati, a high-tech city that was to be built from scratch with the support of Singapore.

Last November, the newly-elected Chief Minister YS Jagan Mohan Reddy terminated a contract with a consortium of Singapore real estate companies on mutual agreement.

This was a strong sign that the state was back-pedalling on Amaravati.

On Monday, the state cabinet approved a "decentralised capital" plan with coastal Vishakapatnam as executive capital with administrative offices, Kurnool as the judicial capital with the courts, and Amaravati as the legislative capital, with the assembly and secretariat.

A three-city capital is unprecedented for any state in India.

The three towns are 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 held over the location of the state's capitalsince 2015, when Andhra Pradesh was divided into two states - Telangana and Andhra Pradesh.

They were to share Hyderabad city till Andhra Pradesh found a new capital.

The previous Chief Minister of Andhra Pradesh, Mr Chandrababu Naidu, had announced plans for a world-class capital by the river Krishna, which eventually replaced 29 agricultural villages.

Mr Naidu acquired 90 per cent of the 38,591 acres required for his project through a unique 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 set up some of the first infrastructure, invite companies to set up their corporate offices and build a financial district in Amaravati.

Mr Naidu signed dozens of such agreements, but on the ground, only a secretariat and two universities were built.

The World Bank also withdrew its offer of US$ 300 million ($404 million) citing irregularities.

In May 2019, 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.

Monday's decision ends all speculation: the high cost Amaravati, with its eight-lane highways and swanky tech companies, is 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 Mr G. N. Rao and Boston Consulting Group.

Constituted by Mr Reddy soon after he was sworn in last May, the Committee analysed the feasibility of constructing a new capital at Amaravati, and investigated alleged insider trading by the previous regime.

The government will now handover the Committee report to the Lokayukta, the state's anti-corruption ombudsman.

Farmers from the Amaravati region protested outside the assembly following the news on Monday.

Mr Praveen Reddy, a 48-year-old farmer who had given six acres of farmland 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," said the farmer.

The cabinet said it recognised farmers' worries.

It announced that it will pay double the promised annuity of 2,500 to 5,000 rupees a month ($38 to $95) to those who gave up their lands for Amaravati city, and pay it for 15 years.