Prime Minister Narendra Modi is visiting Andhra Pradesh on Friday, May 2, to ‘inaugurate’ the capital of Amaravati once again. It has been nine and a half years since he did it the first time. A lot has happened since then – the party in power in the state changed twice, the Telugu Desam Party (TDP) left and re-entered the National Democratic Alliance (NDA) coalition, and the capital was nearly shifted to Visakhapatnam (Vizag) before being emphatically returned to Amaravati.
However, the Bharatiya Janata Party (BJP), which has remained in power in the Union government throughout these turbulent years for Amaravati, is accused of doing little for the capital region by the Communist Party of India (Marxist)’s (CPI(M)) Andhra Pradesh unit.
The CPI(M) has been critical of former Chief Minister YS Jagan Mohan Reddy’s decision to set up three capitals, with the principal one shifting to Vizag from Amaravati. The party has accused both YSRCP and TDP of using the capital issue for political gain while refusing to take a stand against the BJP-led Union government and its alleged negligence of Andhra Pradesh.
While the YSR Congress Party (YSRCP) is widely blamed for stalling any urbanisation in Amaravati during its five-year rule from 2019 to 2024, CPI(M) state secretariat member Ch Baburao told TNM that the Union government must share the blame. He said the BJP and PM Modi failed to take a stand on the divisive issue of the region’s capital. They also failed to promote central public sector institutions in the state to boost employment and infrastructure.
“The Union government has provided minuscule funds for the Amaravati capital region since it was first announced. The people of Andhra Pradesh and its capital, Amaravati, need grants, not loans. Central institutions that were allotted land in the region have also been neglected. At least this time, PM Modi must make clear announcements of fund allocations and not just make empty promises. He must ensure work on central government institutions in Amaravati is completed within six months and fix the negligence shown towards the capital and the state so far,” said Baburao.
Baburao recently led a delegation of CPI(M) leaders who visited lands allotted for various Union government institutions in Thullur and Rayapudi villages of the Amaravati capital region. Their inspection found that there has been little progress in the construction of buildings.
Speaking to TNM, Babu Rao said, “Around 41 central government institutions were allotted over 300 acres of land in 2016-17. When we visited the lands (during the last week of April 2025), we saw that construction work had hardly progressed.”
He noted that only the compound wall was built for a Geological Survey of India (GSI) office, and only one floor had been constructed for the regional office of the Indira Gandhi National Open University (IGNOU).
Several public sector banks and other institutions had cancelled or not initiated agreements or had not been handed over the land, he said, with some of them having been apprehensive when things were up in the air under the YSRCP rule.
“If the Union government had focused on completing works, there would have been some infrastructure development and employment generation,” Baburao said.
No dedicated funds
On May 2, PM Modi will also lay the foundation for the permanent High Court, Assembly and other government buildings. The Andhra Pradesh Reorganisation Act, 2014, also holds the Union government responsible for providing funds for developing the state machinery in the capital.
Section 94(3) of the Act says that the “Central Government shall provide special financial support for the creation of essential facilities in the new capital of the successor State of Andhra Pradesh, including the Raj Bhawan, High Court, Government Secretariat, Legislative Assembly, Legislative Council, and such other essential infrastructure.”
However, no dedicated funds were allocated towards them, according to Baburao.
While Chandrababu Naidu took inspiration from cities such as Singapore to build Amaravati, the capital started as a makeshift one, with only a temporary Secretariat, High Court, Assembly and other important government buildings. The foundation for its first major permanent building, the Secretariat, was laid only towards the end of Chandrababu’s previous term. It was planned as a skyscraper with 40 to 50 floors, but the work stalled as the YSRCP came to power and relegated Amaravati to the background to favour Vizag.
With the TDP emerging as a key ally of the NDA after the 2024 general election, expectations for Amaravati soared. In the 2024 Union Budget, Rs 15,000 crore were promised for the development of Amaravati. But the bulk of the support was in the form of loans from multilateral development agencies such as the World Bank, facilitated by the Union government.
The Union government’s actual share is reportedly only Rs 1,400 crore (about 9%), while the remaining Rs 13,600 crore is in the form of equal loans from the World Bank and Asian Development Bank (ADB).
Soon after YSRCP came to power in 2019, the World Bank had dropped a USD 300 million loan to Amaravati, saying the Government of India had withdrawn its request to finance the proposed Amaravati Sustainable Infrastructure and Institutional Development Project.
The burden of building a capital
With TDP returning to power, Union government-mediated World Bank funds are also back. In December 2024, the World Bank approved a loan of USD 800 million (over Rs 6,700 crore) for Amaravati, its share of the Rs 15,000 crore promised by the Union government.
The TDP says it will cost Rs 1 lakh crore to develop Amaravati in the next two and a half years. On May 2 alone, PM Modi will lay the foundation stone for and inaugurate projects worth Rs 58,000 crore.
On multiple occasions, the CM and his Minister for Municipal Administration and Urban Development (MAUD), P Narayana, have called the city a ‘self-financing’ or self-sustaining project. Narayana has said that once the land value increases, the government plans to auction off land to repay loans.
But with the Union government not committing to support the state with loan repayments, Baburao said these loans could end up being a burden on common people.
Andhra Pradesh Congress chief YS Sharmila, who was briefly placed under house arrest in Vijayawada on April 30 ahead of PM Modi’s visit, has also said that the people of the state “reject debt.”
“We do not want debts. We do not want that burden on our future generations. The Union government should provide Rs 1.50 lakh crore unconditionally over three years for the construction of the capital. Modi should make this announcement,” she said on May 1.
Baburao also demanded that the Prime Minister announce grants from the Union government instead of loans when he relaunches Amaravati.
Extension of special category status
In 2014, before the NDA came to power in the Union government, the BJP had said that it would extend special category status for Andhra Pradesh to ten years and not just the five years promised by the then UPA government. It has since reneged on its promise.
Baburao said that TDP must continue to demand special category status for Andhra Pradesh, which would entail additional financial support from the Union government and tax concessions to attract industries.
“We need industries in the capital region. The state government recently offered TCS land at 99 paise to attract them to Vizag. If we have special category status, industries will come anyway without such incentives. It is necessary to speed up industrialisation and employment generation in the state,” Baburao said.
Chandrababu Naidu had walked out of the NDA in 2018 over the denial of special category status. He lost the 2019 AP election and returned to power in 2024 after returning to the NDA fold.
Through his tenure as CM, YS Jagan visited PM Modi several times, requesting special category status each time. The Union government did not yield to both parties.
Legal status to Amaravati as capital
Baburao noted that when the YSRCP stalled development work in Amaravati and proposed to shift the capital to Vizag, PM Modi refused to intervene, with the Union government repeatedly stating that the state government was free to choose its capital.
Opposition parties like CPI(M) and Congress are now demanding that the Union government grant legal status to Amaravati as the capital to avoid the past from repeating itself.
The Chandrababu government, meanwhile, has doubled down on acquiring land for Amaravati. In its previous term, under the Land Pooling Scheme, the TDP government had pooled around 34,000 acres from farmers and landowners in the region. In return, it promised developed plots with urban infrastructure, with a much higher real estate value.
Now, Minister Narayana has hinted at pooling even more land for the proposed international airport.
“Many of those who already gave land say they haven’t seen returns in 10 years – neither the development nor the real estate prices expected. The government must ensure justice for those who have pooled their land in the first phase before initiating a similar scheme again.
“It’s not just about landowners; tenant farmers and landless labourers are also worried because after the first phase of land pooling, they lost their livelihood as the villages where they worked became part of the capital region. Some of them started working in villages a little further away, which the government is now eyeing in the second phase of land pooling for the airport. If the land in these villages is also pooled for urbanisation, they will further lose employment,” he said.