AP moves capital city, govt faces space shortage, high real estate

Chief Minister24indiaews

The fund-starved Andhra Pradesh government is faced with yet another large expenditure. This time, it is in the form of transportation, relocation and hiring of rental accommodation for government offices, apart from the state secretariat. Of course, making of the temporary secretariat, and creating facilities and eventually building a permanent state headquarters and other offices are a much heavier burden waiting in the works.
Meanwhile, private real-estate owners and landlords are waiting in the wings to grab the opportunity to make a killing.
Though the AP Reorganisation Act 2014 has provided for using Hyderabad as the common capital for 10 years from the day of formation of Telangana, the Chandrababu Naidu administration has chosen to move out of Hyderabad as soon as possible owing to a variety of reasons.In fact, the government could have availed itself of the opportunity available at hand to make permanent arrangements, and moved before 2018 or a year later. At least, the burden of rentals and making interiors in hired premises could have been avoided.As the decision to move out is made, the state government will have to locate offices of 115 directorates and commissionerates, apart from the 32 departments in the Secretariat with over 15,000 employees. The political administration is hell-bent on moving the administration by 27 June, though the employees are of the view that it may not be possible.
“Untold understanding”
Andhra Pradesh Non-Gazetted Officers (APNGO) Association president P Ashok Babu told Firstpost that the government had already issued instructions and department-wise communications were sent out asking them to make arrangements to move to a suitable location in Vijayawada-Guntur.
While the official communique would say that, practically it is not possible. It could be an “untold and unwritten understanding” between the government and the staff that they could shift their base before 31 August. “Nothing is officially announced that the deadline is moved to 31 August,” he said.
Since the government building complexes are not ready yet and may take a much longer time, the government has decided to house the directorates and commissionerates in private buildings. A committee consisting of Special Chief Secretaries B Sam Bob and Ajeya Kallam and Principal Secretary KS Jawahar Reddy estimated that the government would require at least five million square ft of space for relocating the government establishments.
According to estimates, roughly four lakh square ft would become available for temporarily housing the Secretariat at Velagapudi where a structure is being built by Larsen & Toubro and Shapoorji Pallonji groups. The existing government offices in Guntur and Vijayawada are estimated to have six lakh sq ft of space.
Shortage of 40 lakh sq. ft
Now, the government will fall short of four million sq. ft. The committee allowed the directorates and commissionerates to find offices at a rental value of Rs 25 per sq ft a month, according to Special Chief Secretary B Sam Bob. If the premises are not sufficient, they will have to choose alternate buildings. Access, availability of water and other amenities and collateral challenges too need to be factored in finalising a building for accommodating government offices. If a building is located in a commercial locality, the head of the department concerned should approach the committee for clearance of rental value. The committee set an upper limit of Rs 35 per sq. ft.
However, the value we are talking now is only rental cost. If the rental works out to an average of Rs 30 or Rs 32, the total 40 lakh square feet space would levy a burden of close to Rs 150 crore on the exchequer. The transportation of furniture, files, hardware and other stuff of a whole government is surely an arduous task. When asked if it comes to Rs 500 crore in all, Bob said: “We haven’t estimated it yet. But, for sure, it is a costly affair.”
While finding accommodation in the new capital region is in itself a challenging task for the government departments, the making of interiors for the staff to sit and work compounds the challenge. Electricity, HVAC (high-voltage air-conditioning) systems and plumbing facilities will have to be set up, which will cost Rs 200 crore or more. Most premises available are bare shells sans any done-up interiors.
To add, the government has allowed a three-year lease agreement as no landlord gives his premises on rent for short-term period of one year or less. And the expenditure incurred on the interiors would go to waste, unless an office stays put in a premises for a minimum period of three years.
This apart, the advance rental amount to be paid for the offices – even if it is estimated at a bare minimum of three months — works out to Rs 40 crore a year. Though this is said to be refundable, usually it gets adjusted towards the end, for there would be an annual increment in the rental as per the agreements.
With a view to making up for the income tax to be paid by the landlords, they are hiking the price within the ceiling, at some places “in connivance” with some officials. Though this can be brushed as a cynical view, the possibility of such a “transparent deal” is very high.
“Designed to jack up real estate prices”
Prof. Chigurupati Ramachandraiah, urban planner and economist with Centre for Economic and Social Studies, is suspicious of the process. He told Firstpost that it was designed to help increase local real estate and have the unsold spaces also gain demand. The heads of the departments have been allowed to enter into lease agreements. There is fundamentally something amiss. Instead, the government could have built its own structures and some 4,000 to 5,000 apartment dwellings too to house officials.
The crux of the shifting is not just the fund crunch, but the financial implications each employee would have to manage for herself or himself. An important act of ‘arm-twisting’ of employees by the state government is that it has rid itself off the burden of paying travel and transportation allowance (TTA) to the “transferred” staff from Hyderabad to the new location.
The state used a trick here. It had given an opportunity to every employee working in the directorates and commissionerates (the government staffers other than those working in the secretariat) in Hyderabad to exercise an option: willing to work in the new capital or ready to be transferred anywhere in the truncated state. As most – or almost all of them – have chosen to work in the new Capital region, it amounted to a “request transfer” for which the government is not obliged to and need not pay the TTA and other shifting allowances. When asked, Ashok Babu confirmed this.
Aside from this, the employees are supposed to pass through the same rigmarole as the government in finding private buildings for rent. Paying three months’ rent in advance, finding facilities, including school or college for their wards, is definitely hurting them, but they have little option in this.
Though the committee had explored other options for space and suggested it to the government, it was overruled for obvious reasons.
If the Andhra Pradesh government had taken some more time to move the state capital, it could have constructed new buildings for the staggering amount it will have to shell out to hire private premises and make them work-ready.

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