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Presenting her seventh consecutive Budget, Union Finance Minister Nirmala Sitharaman on July 23 announced a special financial support package of ₹15,000 crore for development of Andhra Pradesh’s new capital city during the financial year 2024-25.
“Recognizing the state’s need for a capital, we will facilitate special financial support through multilateral development agencies. In the current financial year ₹15,000 crore will be arranged, with additional amounts in future years,” Sitharaman said during her Budget speech.
The idea of Amaravati as Andhra Pradesh’s capital was Chief Minister Chandrababu Naidu’s brainchild, floated during his first chief ministerial term between 2014-19. Naidu’s Telugu Desam Party is currently an important ally in the BJP-led coalition government at the Centre.
Sitharaman emphasized that the Modi government has made concerted efforts to fulfill the commitments in the Andhra Pradesh Reorganisation Act, 2014. She added that the government is fully committed to financing and early completion of the Polavaram Irrigation Project, which is a lifeline for Andhra Pradesh and its farmers.
Funds will be provided for essential infrastructure such as water, power, railways and roads in Kopparthy node on the Visakhapatnam-Chennai Industrial Corridor and Orvakal node on Hyderabad-Bengaluru Industrial Corridor, she outlined.
Lastly, grants for backward regions of Rayalaseema, Prakasam and North Coastal Andhra will also be made available as stated in the Act, Sitharaman said.
Also Read: Budget 2024: Focus on digitisation of land records, Urban development gets a leg up
In a post-budget press conference, Sitharaman expressed concern over the delay in establishing Andhra’s capital. “Ten years passed without a capital city in the state. As per the Act, there should have been a capital. I am not getting into who didn’t do it. The Centre is committed to building the capital city,” she emphasized.
Regarding the nature of the ₹15,000 crore fund, Sitharaman clarified that it would be facilitated as a loan from the World Bank, with discussions pending on counterpart funding arrangements between the state and the Centre.
Centre’s assistance likely to boost real estate sector in Andhra Pradesh
“The first phase of Amaravati’s development requires ₹50,000 crore over a period of three years. Almost one-thirds of the amount will come from the Centre during the first year. I’m expecting a similar amount will be provided in the next two years as well,” said G Hari Babu, National President of NAREDCO.
A lot of banks, central government agencies and hospitality players have already taken up land parcels in the city, Babu added.
Infrastructural development activity in and around Amaravati is expected to benefit a host of ancillary industries, including the real estate sector in Andhra Pradesh, experts said. “Mega allocation for the Hyderabad-Bengaluru industrial corridor and Vizag-Chennai corridor will boost growth along these corridors and consequently boost real estate growth there,” said Anuj Puri, Chairman – ANAROCK Group.
Others agreed. “This will drive significant momentum in construction and real estate over the next few years across asset classes, mainly commercial and residential,” said Vimal Nadar, Senior Director and Head of Research, Colliers India. He added that announcements related to the Polavaram project have the potential to translate into a wide range of real estate developmental activities across the state.
Amaravati’s real estate market has been in the news ever since CM Naidu’s TDP returned to power in the state assembly and became an important partner in the coalition government at the Centre in June. Property prices in the greenfield city shot up by as much as 60-100% amid heightened expectations of a revival in Amaravati’s progress.
Earlier, sectoral experts who spoke to HT.com said that prices of new developments across asset classes are likely to rise as the execution of the masterplan to develop the greenfield capital city progresses. However, since a sharp price rise has already taken place, further appreciation may be moderated for land assets, they added.
“This support from the Centre will go a long way towards rebuilding Andhra Pradesh,” Naidu wrote in a post on X, thanking members of the newly re-elected Modi government for the announcements made in Budget 2024-25.
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