The Andhra Pradesh Budget for 2025-26 has allocated Rs 13,862 crore to the Municipal Administration and Urban Development Department, increasing the amount by 21% from the previous year. It has also set aside Rs 836 crore as loan to the Andhra Pradesh Capital Region Development Authority (APCRDA).
Finance Minister Payyavula Keshav also announced that the government will set up a Ratan Tata Innovation Hub in Amaravati, “to promote innovation, create industrial systems, and mentor startups,” with an allocation of Rs 10 crore. This will be linked to five other zonal hubs, with each hub supported by a leading business group, facilitating technology and skill development in emerging sectors, he said.
While the state government has said in its Budget in Brief document that the development of Amaravati is expected to cost Rs 6,000 crore, Minister Keshav said in his Budget speech that Amaravati does not require any dedicated budget allocations.
“Today, we are not allocating a single rupee from the Budget for the construction of the capital works. But the capital works are about to begin. As our Chief Minister [Chandrababu Naidu] said, Amaravati has been proven to be a self-sustainable project. Amaravati is a project that earns its own financial resources,” he said.
However, allocations for the Amaravati Capital City Development Project have doubled to Rs 6,000 crore this year. In Budget 2024-25, Rs 3,000 crore was allocated to the project, with the revised estimate already standing at Rs 5,700 crore. While assistance for APCRDA went from Rs 1,053 crore last year to zero this year, the Budget has allocated Rs 836 crore for loans to the agency.
Speaking in the Assembly after the Budget speech, MLA Tenali Sravan Kumar who represents the Tadikonda constituency in the capital region, reiterated that Amaravati is a self-sustained project. He said that APCRDA and Amaravati Development Corporation (ADC) will fund the development of Amaravati and will clear any borrowings.
Recalling the Amaravati farmers and landowners’ agitation against the three capital proposals by the previous YSRCP government, Finance Minister Keshav said, “The capital is not for a particular region. Our government's goal is to make Amaravati a growth engine that contributes to the development of the state.” He said that Amaravati is as crucial for the growth of Andhra Pradesh’s economy, as Mumbai and Hyderabad are to their respective states.
Keshav said that with Prime Minister Narendra Modi’s support, the government is “working to develop Amaravati into an economic powerhouse on par with Mumbai and Hyderabad by providing world-class infrastructure, investment, and employment opportunities.”
He added that the Telugu Desam Party government has arranged funds for Amaravati through the Union government in collaboration with financial institutions such as the World Bank, Asian Development Bank, and Housing and Urban Development Corporation (HUDCO). “With this, Amaravati has become a self-financing capital city project without any help from the state budget,” Keshav said.
The Union Budget for 2024-25 promised to arrange funds worth Rs 15,000 crore to develop Amaravati as the state capital, through multilateral agencies such as the World Bank. In December 2024, the World Bank approved a USD 800 million (nearly Rs 7000 crore) loan for the Amaravati Integrated Urban Development Programme (AIUDP).
Allocations for the Capital Region Social Security Fund, through which pension is provided to landless families in the capital region, also went up this year to Rs 115 crore from Rs 104 crore last year.
The allocation for ‘land pooling’ went down to Rs 298 crore, from last year’s allocation of Rs 400 crore. When the TDP government came to power after the state bifurcation in 2014, it had pooled lands from farmers and landowners in villages comprising the Amaravati capital region, in exchange for developed plots with urban infrastructure. Until they receive the developed plots, those who gave up their lands are eligible for an annual compensation amount as per the Andhra Pradesh Capital City Land Pooling Scheme (Formulation and Implementation) Rules.
Keshav said that the TDP-led government has debunked the previous YSR Congress Party government’s stance that developing Amaravati as the sole capital was not financially viable.
Amaravati capital region development works had nearly stalled under the YSRCP government.