The Cheat Sheet

Playing politics over Amaravati isn’t a capital idea

Venky Vembu | Updated on September 12, 2019 Published on September 12, 2019

When is politics ever a good idea?

That’s a debate for another day. My limited point relates to the ongoing efforts by the YS Jagan Mohan Reddy government in Andhra Pradesh to spike the decision by the earlier TDP government, headed by fromer CM N Chandrababu Naidu, to build a new capital city in Amaravati.

Is the project on or off?

A formal decision is still to be made, but the dark hints put out by the government that it will review the choice of Amaravati have already had a malefic effect.

How so?

The World Bank, which was to lend $300 million to the Amaravati project, has has pulled out, as has the Asian Infrastructure Investment Bank; a Singapore-based consortium, too, is awaiting word on the review of the Amaravati master plan.

Aren’t contractual obligations covered by sovereign guarantees?

Even if they are, it is folly to invest in a project when a State government has lost the political will to see it through. The investors sense this, which is why they are pulling out. All this is having a chilling effect on private construction firms, which are moving their men and machinery to other projects elsewhere. Real estate prices fell sharply, after the government said it would investigate “land scams” associated with the project.

But if there have been land scams...

That’s the thing about allegations: They are easy to make and hard to establish, particularly if they are rooted in political games. It’s a charge that can be levelled against the Jagan Mohan Reddy government tomorrow, if it decides to move the capital to another city.

I see what you mean.

The entire episode shows up the high cost of playing politics with mega-projects; that cost will be eventually borne by taxpayers. It also holds many teachable moments for all the parties involved.

Like what?

Jagan Mohan Reddy claims that the previous government was somewhat inefficient in the project implementation, and had not even notified Amaravati as the capital city. It further claims that the Chandrababu Naidu government hadn’t quite formalised finance arrangements, as a consequence of which it had had to slow down work even before the May 2019 elections.

Is this the experience in other parts of the world?

According to Vaddim Rossman, a Russian economics professor and author of Capital Cities: Varieties and Patterns of Development and Relocation, building new cities is always a long-gestation, inter-generational project, and it sometimes takes over 100 years for cities to come to life. The master plan for Washington, DC, was completed only about 100 years after the city was founded. Likewise, for generations, St Petersburg was so miserable to live and work in that it was branded a “brilliant mistake”; but it eventually went on to shape Russian identity in the 19th century, and is today Russia’s cultural capital.

But all such capital-city enterprises are vanity projects, aren’t they?

Some more than others, of course. In 2005, Myanmar’s military junta moved the capital from Yangon, a port city, to Naypyidaw, in the malaria-infested scrublands far inland. The move made little logistical sense — other than feeding the rulers’ vanity. But Rossman cautions against overgeneralisations. He argues that projects to build capital cities anew are not always self-serving: In most cases, they are meant to reconstitute the relationship between different regions, improve connectivity, and provide a stimulus to underdeveloped regions. Amaravati ticks all those boxes.

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Published on September 12, 2019
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  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
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