VIJAYAWADA: Indicating that construction of a megacity like Amaravati is highly risky financially for the already-burdened State exchequer, the Boston Consulting Group (BCG) proposed that the State’s economy would significantly be better if a similar investment is made on four major irrigation projects. The BCG substantiated its argument by taking up case studies of development of major global cities, including greenfield ones, like Shenzen (China), Navi Mumbai (India), Masdar City (UAE), Dubai, Singapore and others over the last 50-70 years. According to Secretary (planning) GSRKR Vijay Kumar, the BCG weighed the opportunity cost of Amaravati mega-city against that of four infrastructure projects — Polavaram, Bollapalli Reservoir, Uttarandhra Sujala Sravanthi and Rayalaseema Canal Widening – in its case study.
The study showed that the impact on Gross State Domestic Product (GSDP) of investment of Rs 1.3 lakh crore on the four infrastructure projects would be around Rs 1.5 lakh crore to Rs 2 lakh crore, while it would be Rs 80,000 crore to Rs 1.2 lakh crore if Rs 1.1 lakh crore is invested on Amaravati. The study noted that the time for the same would be less than five years for the irrigation projects, while it would be 30-40 years for Amaravati, indicating that the former was a low-risk investment compared to highly risky Amaravati, Kumar explained.
The BCG further cited that mega-city investments were risky as only two out of the 32 greenfield cities built in the last 50 years achieved 50 per cent of the targeted (planned) development. “Except Shenzen in China and Navi Mumbai in India, none of the 30 cities achieved the targeted development. The two successful cities also met the targeted development only because of the spillover effect of saturated cities like HongKong and Mumbai,” the planning secretary said, citing BCG findings.
Furthermore, the consultancy studied how global cities like Dubai, Singapore and HongKong grew at less than seven per cent of compound annual growth rate (CAGR) over 40-60 years. Similarly, cities like Putrajaya (Malaysia), SJ Kotte (Sri Lanka), Naypyidaw (Myanmar), Abuja (Nigeria) and others have significantly fallen short of the targeted population growth. “In case of Amaravati, it was projected that the population would be 70 lakh in three years, while the present population is just 1.2 lakh. The CAGR of Amaravati was also projected to be 15-17 per cent in 25 years, as against the global average of two-seven per cent over 40-60 years, indicating that location of a capital does not necessarily provide economic momentum for a new city, he noted.
Even the land monetisation plan as envisaged in the master plan of Amaravati, for it to become self-financed city, may not be feasible as it would take a minimum of 10-15 years to generate Rs 1 lakh crore using 5,000 acres of land. “In that time, the BCG noted that Rs 8,000 crore to Rs 10,000 crore has to be spent annually for debt-servicing, Vijay Kumar elaborated.