One Man's Plan to Build Singapore in India Sends Land Soaring

One Man's Plan to Build Singapore in India
  • New state capital would be India's most ambitious city project
  • Banana growers watch land prices jump 15-fold in a year

A short man with frayed clothes and hands made rough from long years of farming, K. Subba Rao stands under the sun in his village in southern India, as the creases on his weathered face break into a sly grin. "I’m going to be a rich man," he says.

Amid banana plantations and cotton patches in Uddandarayunipalem, it seems like everyone’s convinced they’ve hit the jackpot. Other farmers chime in with shouts of "Shopping Malls!", "Apartments!", "Jobs!"

Bulldozing a banana field
Bulldozing a banana field
Photographer: Dhiraj Singh/Bloomberg

Their optimism is fueled by a decision to split what was India’s fifth-most-populous state of Andhra Pradesh last year. In the division, the state lost both its old provincial capital of Hyderabad and the lion’s share of the economy.

So Andhra Pradesh needed a new capital. And Chief Minister N. Chandrababu Naidu wants to build it around farmer Rao’s banana trees.

In a country where it can take a decade just to acquire enough land to build a factory, Naidu’s plan is daring. This will not just be a new city, but one to rival Singapore: a gleaming high-tech metropolis epitomizing Prime Minister Narendra Modi’s vision of a stronger, economically vibrant India.

If realized, it would be India’s most ambitious piece of urban planning since independence: an oasis of canals and water taxis, manufacturing hubs, universities and skyscrapers.

Deadline Looming

Modi’s critics say such plans are more soaring rhetoric and nationalism, than soaring towers. But this city comes with a real deadline.

N. Chandrababu Naidu
N. Chandrababu Naidu
Photographer: Dhiraj Singh/Bloomberg

Andhra Pradesh’s state government -- offices, ministries, staff and facilities -- still mostly operates out of Hyderabad, now in a neighboring state. That arrangement ends in nine years.

To build a new Singapore, Naidu, 65, turned to the Singaporeans. A master plan was developed in cooperation with the island-state’s government. An initial core area with government buildings should be completed by 2019, said P. Narayana, Andhra Pradesh’s minister of urban development.

The surrounding metropolis would eventually cover some 212 square kilometers (82 square miles), and extend to a developed region larger than the U.S. state of Delaware.

Economic Revolution

"They were very keen to position this new capital city as a pioneer smart city for India," said Wong Heang Fine, group chief executive officer at Surbana Jurong Private Ltd., the Singaporean firm that developed the plan.

At a ceremony in October to bless the city -- named Amaravati after an ancient capital and a setting in Hindu mythology -- Modi arrived in a grey Indian Air Force helicopter to assure the crowd that "in the coming days, Andhra Pradesh will lead a new economic revolution."

It’s not much time to build a new metropolis anywhere, let alone in India. But Naidu is a man with a track record of economic success in the rough-and-tumble world of provincial politics.

Farmers work a field
Farmers work a field
Photographer: Dhiraj Singh/Bloomberg

During a previous stint as chief minister from 1995 to 2004, he spearheaded the creation of a high-tech corridor in Hyderabad, persuading Bill Gates to build a Microsoft Corp. research and development center there. At the same time, Naidu oversaw the fight against a bloody insurgency by Maoist rebels.

Money Shortage

His new challenge is to build a city with no land and little money to buy it.

After losing Hyderabad’s hub of pharmaceutical and information-technology companies, Naidu was elected back to the top post in Andhra Pradesh in 2014 to lead a state that’s now 70 percent rural and projected to have a $1.1 billion revenue deficit, compared with a surplus before the split.

"As a matter of fact, we don’t have resources,” he says in a meeting room at Andhra Pradesh’s state offices in New Delhi. “We are having so many problems."

He says he’s considering different models for financing, but waves away questions on the details of of how much it will cost and how he will raise the cash.

“This is our pride, India’s pride: We are building a capital,” he says, after aides arranged the room so that a black and gold statue of Buddha would flank Naidu during the televised interview.

Trust Me

It’s not just political rhetoric. Naidu is implementing a novel plan to acquire land, typically the biggest headache in an Indian development program. He’s secured more than 31,000 acres from farmers -- an area bigger than Manhattan -- with, essentially, a promise to trust him and you’ll be rewarded later.

Workers constructing a road
Workers constructing a road
Photographer: Dhiraj Singh/Bloomberg

In exchange for each acre, the Andhra Pradesh government pays villagers up to 50,000 rupees ($770) a year with 10 percent annual increases for a decade, and guarantees it’ll return about a third of the property, outfitted with basic infrastructure like sewage.

While the approach probably saved the government a couple of billion dollars, it’s still not clear how Naidu will raise enough funds, said S. Ananth, an adjunct faculty professor at the Institute for Development and Research in Banking Technology, which was established by India’s central bank.

Headaches Coming

“That’s the unanswered question: Where are they going to mobilize the huge amounts of money?" he said. “I think their headaches are just starting because there’s so much expectation.”

The land development and basic infrastructure for the capital city alone will cost about 250 billion rupees (more than $3.8 billion), said Srikant Nagulapalli, commissioner of the Andhra Pradesh Capital Region Development Authority. The federal government has agreed to provide financial support for essential buildings like a High Court and legislative assembly. So far, that funding has come to 18.5 billion rupees.

The new capital
The new capital
Source: Governments of Singapore/Andhra Pradesh

Nagulapalli says he isn’t worried.

"The banks and financial institutions as well as the government’s own budgetary resources -- all these will be sufficient," he said.

Naidu preferred to emphasize the importance of the project for India and the significance of Modi’s visit, on the “auspicious” Hindu holiday of Dussehra, which celebrates the epic victory of Lord Rama over the 10-headed demon king Ravana.

Bomb Attack

Naidu has had his own battles. During his previous time as chief minister a 2003 attack by Maoists destroyed his car with a bomb fashioned from land mines. A photograph of him, splattered in blood and dazed but standing, was carried by Indian newspapers the following day.

Farmer Nageswara Rao
Farmer Nageswara Rao
Photographer: Dhiraj Singh/Bloomberg

The villagers of Uddandarayunipalem are counting on that reputation. And profiting from it. Land in the area that sold for as little as 1 million rupees per acre last year is now going for as much as 15 times that.

Ten minutes down the road, K. Srinivas, 23, runs "A to Z Communications," a small shop he opened four months ago selling mobile phones and real estate. His business partner who handles land matters, Venkat Yangaladas, is 26 and previously made flower decorations for a living.

Yangaladas, with a gold necklace around his neck, estimates he’s made 500,000 rupees in the past year, more than six times the per capita income of the district where he lives.

All In

"There are people who are giving all of their land to the government," Srinivas said. "Others are selling right now because the prices are rising: They’re putting their money in the bank."

Nearby, Nageswara Rao, 30, stands on the roof of his house, looking at a line of palm trees in front of the spot where farmland was bulldozed for Modi’s helicopter pad.

Rao’s family has a lot riding on the assurances of Modi and Naidu. His family put 19 acres into the land pool, everything except their house.

"The government will develop a great city,” he said. “We’re expecting this."

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