One of the first announcements made by Chandrababu Naidu, who was sworn in as Andhra Pradesh chief minister, on June 12, 2024, was that the state would have only one capital Amaravati. A day before his oath-taking Naidu said: "In our government, there will be no games under the guise of three capitals. Our capital is Amaravati. Amaravati is the capital," 

The swearing-in of Naidu, supremo of the Telugu Desam Party (TDP), two-time CM of undivided Andhra (1995-1999 and 1999-2004), and one time CM (2014-2019) of the new state that had Telangana carved out of it, was high profile and attended by several important political figures, including Prime Minister Narendra Modi himself. Support of TDP, which has 16 seats in Lok Sabha, is crucial for the National Democratic Alliance (NDA) coalition government led by Modi (Naidu has been part of the NDA on earlier occasions as well). In the recently held AP assembly elections, TDP won 135 seats while the two allies – Jana Sena Party and BJP won 21 and 8 seats respectively in the 175-member assembly.

Revival of Amaravati project

During his earlier tenure as CM, Naidu had envisioned Amaravati - located between Vijayawada and Guntur - as a modern world-class capital, environment-friendly with world-class infrastructure facilities, with the involvement of Singapore and Japan and funding from several multilateral agencies. AP had lost Hyderabad to Telangana during the bifurcation of AP and this amongst other reasons was one of the crucial factors for Naidu’s thrust on Amaravati. Naidu in his tenure as CM of undivided AP had played a very important role in making Hyderabad, often referred to as ‘Cyberabad’, an IT hub. About 30,000 acres had been acquired, via land pooling, from farmers for the development of Amaravati.

Naidu's predecessor, YS Jaganmohan Reddy, also referred to as Jagan (CM from 2019-2024 and supremo of YSRCP), announced in December 2019 that three state capitals will be developed. While Amaravati would be the legislative capital, Vishakhapatnam would be the executive capital, and Kurnool would be the legal capital. Hyderabad which was serving as a joint capital of Telangana and AP, following the bifurcation in 2014, ceased to be the joint capital of both states on June 2, 2024.

As a result of the disinterest of the YSRCP government vis-à-vis Amaravati, several Singapore-based companies as well as multilateral bodies - IMF and World Bank -- pulled out of the project.

It is not just the TDP that criticized YS Jaganmohan Reddy’s decision to have three capitals, but farmers whose land had been acquired for the development of Amaravati during the earlier TDP dispensation. These farmers had set up a joint action committee to “Save Amaravati”. In March 2022, the Andhra Pradesh High Court directed the YSRCP government to develop Amaravati as the state capital, a decision the government challenged in the Supreme Court. where it remains pending.

Work on Amaravati has already begun with important state government departments getting into action. Apart from Naidu’s interest in the development of Amaravati, the fact that Hyderabad is no longer the joint capital of AP and Telangana will mean that the new TDP government will push Amaravati with greater vigour. After the election results, real estate prices in Amaravati have already soared and several infrastructure companies, which were involved in the development of the new capital have already established touch with the new government. During the previous TDP government, Rs.10,000 crore had been invested for the development of Amaravati – the total cost of development is estimated at Rs.40,000 crore.

Competitive federalism to the fore

Apart from his push for world-class infrastructure, Naidu is also likely to engage with foreign governments and multilateral agencies to revive the state’s economy. Given the economic challenges that AP is facing, Naidu, referred to as the ‘CEO of Andhra’, due to his business-like and result-oriented approach certainly faces an uphill task. The central and state governments will need to work together. 

A few points emerge from the recent results of the AP state election as well as the national election. First, while the YSCRP government focused a lot on welfare, Naidu’s reform and development-focused agenda appealed to young voters. Thus, it is important to have a balanced economic approach where welfare and development are not treated as antagonistic to each other. It is also important to understand that in the past three decades, voters have become more aware, aspirational, and demanding. Second, with Naidu likely to aggressively promote AP as an investment destination, ‘competitive federalism’ between southern Indian states  – especially Andhra Pradesh, Telangana, Karnataka and Tamil Nadu – would be interesting to observe. Third, Naidu is likely to reach out proactively to other countries and here the importance of para-diplomacy in changed times is likely to come to the fore. 

It is important for other states as well to reach out to the outside world for drawing FDI. While analysts and commentators always look at coalition politics and a strong role for states in economic and foreign policy as obstructionist, this belief is rather skewed. If India's states seek to compete with each other in a spirit of competitive federalism and use their political clout constructively for economic progress and welfare as several states have done there is nothing wrong.

(The writer is a New Delhi-based policy analyst associated with The OP Jindal Global University, Sonipat, India. Views are personal. He can be reached at tsmaini@jgu.edu.in)