Will Amaravati become new greenfield IT capital of AP? Experts say Krishna River to bring sustainability and tourism

The Chief Minister of Andhra Pradesh, N Chandrababu Naidu, announced on June 11, a day before his oath-taking ceremony, that Amaravati would be the capital of Andhra Pradesh. Several sectors in the city are expected to witness significant growth and development. Experts and industry leaders shared their insights on the promising future of Amaravati with LiveMint.

Notably, the Information Technology (IT) and tourism sectors are expected to see the highest growth. Experts opined that the government’s immediate priority will be to develop facilities to support the migration of government employees and their families.

The city’s topographical position is expected to provide an impetus to develop a self-sustainable, planned, green city.

Adil Zaidi, EY India Partner and Economic Development Advisory Leader, emphasised the city’s potential. He said, “Nestled on the banks of the Krishna River, Amaravati City holds immense economic promise for Andhra Pradesh. It is important to recognise that Amaravati is being developed as a greenfield capital city, which means it will be at the forefront of modern urban planning and sustainability. The city’s design incorporates smart city features, which is a sector that will witness tremendous growth. Smart city technology not only enhances the quality of life for residents but also attracts businesses that value innovation and sustainability.”

Zaidi further highlighted the IT sector’s potential. “The Information Technology sector is poised to flourish in Amaravati, bolstered by the state government’s commitment to creating a robust digital infrastructure. Development of IT parks and dedicated spaces for startups and established tech companies can lead to a surge in employment opportunities and a vibrant ecosystem for tech innovation in the city,” Zaidi opined.

He also pointed out the educational sector’s growth prospects. “With plans to develop world-class educational institutions and research centres, Amaravati can position itself as a knowledge hub. This will have long-term benefits for various industries, including technology, healthcare, and engineering in terms of skilled workforce.”

Tejinder Gupta, Partner at Grant Thornton Bharat, shared insights on Amaravati’s master plan. Gupta claimed, “Amaravati, nestled in Andhra Pradesh, stands at the threshold of a significant economic resurgence, underpinned by strategic investments and meticulous planning. The city’s master plan, delineating nine theme cities tailored to specific industries and services, forms the cornerstone of its developmental blueprint.”

Gupta also highlighted the agricultural sector. “Amaravati’s fertile land and favourable climate make it ideal for cultivating rice, cotton, and various fruits. By investing in organic farming and precision agriculture, Amaravati can capitalise on the food processing industry’s projected growth,” Gupta opined.

Regarding tourism, Gupta noted, “Tourism in Amaravati has significant potential, with an estimated annual growth rate of 10% in Andhra Pradesh. Investment in hospitality infrastructure will enhance the tourist experience, boosting the local economy and job creation.”

Premchand Chandrasekharan, Partner at Avalon Consulting, discussed the immediate impact on various sectors. “Following the announcement of Amaravati as the capital, the government’s immediate priority will be to develop facilities to support the migration of government employees and their families. This will drive growth in real estate, retail, hospitality, education, and healthcare sectors.”

What is the role of water bodies in Amaravati city’s development?

As the water crisis in Bengaluru worsened, many tech professionals in India’s Silicon Valley started temporarily relocating to their hometowns. The shift underscored the urban distress caused by the acute water shortage, making life in the city increasingly unsustainable. The tech workforce in Bengaluru is increasingly seeking refuge in their home cities to escape the escalating crisis.

As the Silicon City battles with water scarcity, Amaravati seems to have it in abundance. This could trigger an industry migration to Amaravati.

“Renewable energy is a cornerstone of Amaravati’s development strategy, aimed at reducing its carbon footprint and creating opportunities for sustainable businesses. The city’s planned transportation network, including high-speed rail connectivity, will further facilitate seamless mobility of goods and people, thereby boosting economic activities in logistics and related sectors,” said, Anil Kumar, Sr Vice President, Water, Urban and Hydropower, Rodic Consultants.

Water is one of the important components for the growth of any city, and Amaravati has a reliable water source. As per Kumar, an integrated water resource management plan is in place for the city’s complete development.

G Hari Babu, President of NAREDCO, discussed the role of water resources: “The idea of the entire city is to see this city survive sustainably for the next 150 years. The Bham Dam, Upper Wardha Dam, and Malkhed Dam will ensure that the new capital has a steady supply of water for the next 100 years, supporting the infrastructure in Amravati.”

Babu emphasised the sustainability of Amravati’s water resources: “When we are talking about water, we have three sources, three dams over there. Now Polavaram is under construction. From Polavaram, we can draw about 75 TMC of water to Krishna Barrage and Prakashan Barrage. If there is a shortage there, we have the Nagar Sagar project, where we have 300 TMC water, which can also release some water to Prakasham Barrage for the purpose of drinking.”

He added, “There is a Pulichandra project, where 48 TMC is loaded, and that also serves this purpose. That means three dams, two rivers, and the three dams give Amaravati water. So this is the only city where there will be no water shortage at any time in the next 100 years.”

Amaravati City’s sustainable capacity

Charith Konda, Energy Specialist at the Institute for Energy Economics and Financial Analysis (IEEFA), emphasised the sustainable development aspect. “Amaravati is conceived as a sustainable smart city from the outset. The planners aim to source 35% of its electricity from renewable energy and anticipate that water bodies and vegetation will cover 30% of the area.”

Amaravati’s real estate growth potential

Shrinivas Rao, CEO of Vestian, elaborated on the real estate prospects. “Amaravati is likely to be developed as a greenfield capital city. The city will witness significant physical and social infrastructure development, resulting in the construction of several commercial buildings for government offices. This will lead to increased real estate activities, with the sector experiencing growth followed by small and medium-scale businesses.”

Vimal Nadar, Senior Director & Head of Research at Colliers India, emphasised the planned infrastructure: “Economic and real estate activity is set to receive a major fillip in the next few years. Planned infrastructure development in the form of internal roads, flyovers, and intra-city commute modes can support the envisaged construction of administrative and legislative buildings in the capital region.”

Ravi Teja Gupta, Founder of Guptaji Invests, said, “A lot of money, estimated between $23 billion to $35 billion, is expected to flow into real estate, especially from people and businesses in Telangana and those with roots in Andhra Pradesh who live abroad.”

Abhishek Bhadra, Head of Research at Magicbricks, observed that the city is expected to attract investments from corporations and businesses, as well as government infrastructure and development initiatives.

“Amaravati is set to become a smart city, with EMS, solar panels, and enhanced public transportation, including metro and buses, planned for the next two years. Digital infrastructure will be developed, and to prepare the capital, the Secretariat and their housing will also be relocated. Additionally, waterways will be developed, and Vizag will benefit from an IFSC and SEZs,” said, Siddhartha Rastogi, COO, Ambit Investment Advisors Pvt Ltd.

L Srinath Reddy, Managing Director of Raminfo Ltd, noted the revival in the construction sector. He expects Amaravati City to be transformed into various themed cities like ‘Health City’ and ‘Sports City’ and become a ‘Futuristic City.’