Grand vision for India’s smart cities is slowly taking shape

Alongside the River Krishna sits Amaravati, an ancient Buddhist pilgrimage site that until recently was home to thousands of acres of fertile farms growing bananas, sugar cane, cotton, rice, spices and vegetables.

But if all goes to plan, Amaravati — which means “abode of immortals” in Sanskrit — will be transformed into India’s most cutting-edge city by the middle of this century. Its planners are dreaming big: the new Amaravati will have an eco-friendly transport system that includes water taxis, electric vehicles and even a possible hyperloop, if the sealed-tube train system championed by Elon Musk ever gets off the ground.

It will be cycle-friendly and walkable, with Amaravati’s expected 3.5m residents able to find most of life’s daily necessities within a 15-minute walk. The master plan for the 217 sq km city features a central area designed by British architecture firm Foster + Partners. Running the length of this 1,350-acre focal point will be a green space inspired by New York’s Central Park. The total cost of transforming Amaravati into the new capital of Andhra Pradesh State could run as high as Rs1tn ($14bn).

The vision for Amaravati is to create a “smart city” — a futuristic alternative to the country’s current urban areas, where slums, traffic congestion and alarmingly high pollution levels are all too common. Fourteen of the 20 most polluted cities in the world are in India, according to the World Health Organization.

To tackle this issue, the government of Prime Minister Narendra Modi identified about 100 cities to be developed under a smart cities programme launched in June 2015, with the twin aims of improving living standards and boosting economic growth.

“India’s second growth story starts from Amaravati,” Sreedhar Cherukuri, commissioner of the Andhra Pradesh Capital Region Development Authority, told the Nikkei Asian Review.

The gleaming Amaravati depicted in Foster + Partners’ renderings is years, perhaps decades, away. First comes the dirty work of installing sewers, water treatment and roads, and then building government offices — all of which is expected to cost Rs500bn over the next four to five years, APCRDA estimates.

A Singaporean consortium made up of Ascendas-Singbridge and Sembcorp is the master developer of the city’s 1,691-acre “start-up” area. This area, made up of developments for business, commercial and residential use, is intended to act as a magnet to draw the first inhabitants and investment into Amaravati.

Officials are hopeful of securing a $1bn loan from the World Bank to develop Amaravati, which is expected to employ 1.5m people by 2050 and have a gross regional product of $35bn.

In addition to the World Bank and the national and state governments, other funding sources include domestic lenders such as the Housing and Urban Development Corp, state-run commercial banks such as Andhra Bank, Indian Bank and Vijaya Bank, public-private partnerships and bond issuances.

“We have entered into [memorandums of understanding] with various commercial banks to the tune of around Rs100bn,” said V Rama Manohara Rao, APCRDA special commissioner.

A Rs12.75bn loan from India’s Housing and Urban Development Corp was sanctioned in December 2017 to fund tier 1 infrastructure in Amaravati. The national government has released a grant of Rs15bn for the construction of state administration complexes and other essential infrastructure, and is expected to provide another Rs10bn, according to a recent APCRDA report.

Once basic infrastructure is in place, land prices in Amaravati are expected to rise, meaning “land monetisation will continue to be a key source of funding”, according to the report. There are concerns about raising the large funding needed for the capital city, but APCRDA officials say the financing is being managed “very efficiently” and that the necessary funds have already been secured for short-term projects over the next two to three years. For long-term, long-gestation projects, the officials say they are looking for funds with longer tenure and lower interest rates, which they are confident of securing as development picks up and investors’ confidence in the project increases.

Mr Modi laid the foundation stone for the new Amaravati in October 2015. Its champions say it will be a “happy city” made up of 27 self-sufficient townships, each with its own places of work, religious sites, shopping areas and schools. “Within a 15-minute walk you’ll get 95 per cent of all your daily requirements, including your workspace,” Mr Cherukuri said.

Real-time monitoring is expected to feature prominently in Prime Minister Narendra Modi’s smart cities initiative. But critics say Mr Modi’s smart city project is already suffering from diminishing ambitions, while others claim the Amaravati project has short-changed the farmers who owned the land. Nisar Khan, an assistant professor of architecture at the New Delhi-based Jamia Millia Islamia University, said the original “smart” concept called for the construction of 100 new cities, but this has been reduced to retrofitting existing cities — with a few exceptions like Amaravati.

“The original idea of the introduction of 100 new smart cities could have actually taken pressure away from the existing cities. That could have reduced population and pollution in existing cities,” he said, pointing to northern Chandigarh, the Le Corbusier-designed city built from scratch in the 1950s. “What is largely lacking in the smart city program is the national planning.”

Amaravati’s journey from agricultural land to future smart city began with a difficult, and controversial, plan to persuade farmers to give up their plots. The developers used a voluntary land pooling scheme, or LPS, in which farmers hand over their land in exchange for residential and commercial plots that are smaller but much more valuable. As of March, more than 33,500 acres had been pooled from about 27,000 farmers.

When the farmers handed over their land for Amaravati, one acre was worth Rs1.5m to Rs2m. APCRDA officials say the value has risen to between Rs30m and Rs40m, adding that farmers have the right to keep the developed land for as long as they wish. “After five years [the value of one acre] could touch Rs100m-Rs120m. So the benefit of development is going to the farmers first,” Mr Cherukuri said. Hundreds of farmers, however, are opposed to the project and refuse to give up their land, though they might eventually be forced to. Critics say the state government’s amendment to the 2013 Land Acquisition Act in effect removes provisions requiring the prior consent of farmers before land can be taken away. “So [as a farmer] you don’t have any choice at all,” said EAS Sarma, a civil rights activist and former senior bureaucrat, of the LPS. “It is not voluntary at all. In every village, senior police officers and revenue officers are intimidating people.”

Mr Sarma described many of those who have relinquished their land already as rich “absentee landlords” who live in cities outside Amaravati. “They don’t plough their land and this work is done by tenant farmers” who will suffer the most as they are not likely to receive much compensation under the LPS, he said. Mr Khan of Jamia Millia Islamia University echoed concerns over land acquisitions, saying it was important to “carefully identify” the location where smart cities are to be built. “We cannot take sites which are ecologically and agriculturally important,” he said. “In the case of Amaravati, perhaps it is the whims and fancies of politicians which are driving the new project.”

Authorities say it is impossible to achieve 100 per cent co-operation in a project of this magnitude, where thousands of farmers are affected. “Except for 400-500 people, all other people are on [the government’s] side,” Mr Cherukuri said. “I don’t see that’s an issue for the project.” In 2007, long before the smart cities mission was launched, Mr Modi, then chief minister of the western state of Gujarat, conceived the Gujarat International Finance Tec-City, or GIFT, a $12bn smart city located near the state capital Gandhinagar. The construction work for Mr Modi’s pet project, which is intended to be India’s answer to the financial hubs of Singapore and Hong Kong, is expected to be completed by 2025. Among buildings that have been completed are two 28-storey towers housing about 8,000 employees of various companies, including Tata Consultancy Services and Oracle. The India International Exchange has been operating from GIFT since January 2017.

GIFT — with a planned 5.7m sq m of official, commercial, residential and social facilities — is being built from scratch on barren Gujarat government-owned land, and has been designated as a model city for the Indian government’s smart city projects. “It can’t become a Singapore [or a Hong Kong] on an overnight basis, but directionally that’s where it is moving,” said Ajay Pandey, GIFT city managing director and group chief executive. “GIFT is not a destination, GIFT is a journey. You will never ever be able to say that everything is done . . . Now we have offices in place, we are pushing very hard for residences. Once you have residents staying here, the next challenge is to get the ecosystem around it such as shopping centers.”

Amaravati is not planned to be a financial centre but rather a capital city — with economic opportunities — to replace the current capital, Hyderabad. In 2014, a chunk was carved out of Andhra Pradesh to create a new state, Telangana.
The two states currently share Hyderabad as a capital, though the city is located within Telangana’s borders. Developing Amaravati has special significance for Nara Chandrababu Naidu, chief minister of Andhra Pradesh. Before the split, he helped transform Hyderabad into the thriving tech hub it is today. Now that Hyderabad falls outside the boundaries of Andhra Pradesh, the state government has moved ministries and government departments to an interim building in Amaravati. At the heart of the planned city is a government complex including the Legislature, the government Secretariat and the High Court building, which will have a stepped roof inspired by India’s ancient Buddhist stupas.

Chris Bubb, senior partner at Foster + Partners, said the distinctive Legislature building — with a dramatic spire reaching into the sky — is designed to be “an iconic, unique structure that symbolises Amaravati’s ambition to be a world-class sustainable city as well as a fitting architectural response to the rich cultural heritage of Andhra Pradesh”. “The spire of the building is a statement of the bold and rising aspirations of the people,” he said. The architects studied several world cities before coming up with the design. The capital complex at Amaravati was inspired by Washington, DC, while their studies of New York influenced the layout of the city’s large central green and urban grid. The plans were later adapted to suit its Indian setting.

India is urbanising at one of the fastest rates in the world, and it is estimated that by 2030 about half of the country’s total population of more than 1.25bn will live in cities, compared with the current 34 per cent. Sangeeta Prasad is chief executive of Mahindra Lifespace Developers, the real estate arm of the Mahindra Group engaged in creating new cities and industrial clusters. Ms Prasad said the group can collaborate in the government’s smart cities mission by offering technology solutions, electric vehicles, security and surveillance cameras. “There are opportunities galore,” she said, adding that Mahindra is ready to tap them. But India still has a long way to go when it comes to turning its cities smart. According to a McKinsey Global Institute report released in June, cities in Europe, North America, China and East Asia have the most developed technology bases, while those in Latin America, Africa and India lag behind. Nevertheless, opportunities such as Amaravati do not come along every day, and developers are keen to seize it. “We have an opportunity to create together with the state a new capital city,” said Benjamin Yap, chief executive of the Singaporean consortium involved in the project. “It’s a blank canvas. It’s not every day you go to a place and say, ‘I’m going to start building a new city.'”


This article was solely written and first published by Nikkei Asian Review. It may not necessarily represent the views of BNP Paribas.