Village as 'Class' and City as 'Mass'

There has been an exponential rise in land prices in Guntur, Krishna and West Godavari districts of Andhra Pradesh (AP) in 2014. Land prices have jumped manifold over the past year, depending on the location. The sharpest rise has been in the immediate vicinity of Thullur village.

However, real estate speculation has sobered due to a number of uncertainties. Speculators in the “capital villages” are sceptical of the state government’s ability to complete the necessary infrastructure before the next election. It does not help that the central government appears to be dragging its feet on the development of the AP capital.

But the villagers have noticed the speed with which problems are solved in the villages that have offered land under Land Pooling System (LPS). The AP Capital Region Development Agency (APCRDA) is working overtime at break-neck speed with 34 deputy collectors posted in the agency. Suddenly all the government departments have become extremely citizen friendly in delivery of various government services in the villages, especially those that offered their land to the government under LPS.

End of the Road for Agriculture

The completion of nearly 87 % of land pooling is likely to bring down the curtains on agriculture. The APCRDA has started paying a lease on the lands offered for the development of the capital and has announced that landowners will not be allowed to cultivate their lands after June. This does not apply to landowners who have submitted their objections to the LPS authorities, mostly in two villages. In other words, this season’s crop will be the last one.

Dying “Farm Fresh” Retail Opportunity

An influx of people visiting the new capital region over the past few months offered the occasional short-term business opportunity—a window that has now closed. Earlier, farmers were usually able to sell their offerings in about 2-3 hours. The difference in price between markets in the city and the village is usually 20%. Often tenant farmers, owners of orchards or those growing vegetables tried to sell a part of their produce directly. By mid-March, this short-term opportunity had more or less vanished due to the end of the crop and the steady decline in visitors to the region.

The farmer (in the photo above) has his own tale: he rues that he sold 0.87 acres two years ago for Rs 7 lakhs—land that is now worth nearly Rs 1.5 crores (or Rs15 million).

Increased Government Activity in the Capital Region

Various government agencies have increased their pace of work. The announcement by the chief minister that the Telugu new year will be celebrated in a village (Anantavaram) in the new capital region is witnessing a sudden spurt in government developmental works like laying new roads, clearing drains, etc.

Sobering Land and Real Estate Prices

Unlike in January, a visit to the villages in the vicinity of Thullur indicated that real estate speculation has now sobered. January and February were “dull” months for the business. In other areas surrounding Vijayawada City, rapidly declining land prices has had disastrous consequences including a suicide by a speculator. The government has been able to garner 33252 acres through LPS, which ended on 28 February 2015. Residents of Thullur point out that there has been a minor increase in the number of real estate transactions in March since the government has reportedly permitted those offering land under LPS to sell their share of the land. 

Often it seemed like as if the villages are about to revert to their previous slumber as a sleepy backwater. The sobering of land speculation has led to the more mundane agriculture related economic activities gaining precedence after a long time (picture below).

Increase in Consumption 

The benefits of the huge increase in land prices are visible in most of the villages. There is a visible increase in the number of four wheelers including expensive Sports Utility Vehicles (SUVs). Banks, financial institutions, showrooms dealing in motorcycles and other accessories have mushroomed in the capital villages in the past six months.

An interesting new trend that did not exist in previous land bubbles is the tendency among a large number of households who sold land to use the proceeds to buy new parcels of land in Guntur district or in the neighbouring districts. Consequently, this increased the demand and the price of land in Guntur and Krishna districts.

Bitterness on LPS?

There are two diametrically opposite views that are difficult to miss on a visit to the capital region. On one side, there is nothing but bitterness about the LPS and on the other side there is a great sense of pride. The pride and the economic reasons for that pride cannot be missed even in a casual conversation among some of the villages in vicinity of Thullur. As one large farmer in Thullur pointed out, “Our area is the new “class” area while Vijayawada and Guntur Cities are the “mass” areas. In the past, it was the other way round” (class denoting areas frequented by the elite and mass denoting areas lived in by the commoners). This pride is particularly discernible in areas around Thullur villages.

In the more fertile areas, referred to in local parlance as Jeerebu land, the bitterness manifested itself in various ways including banners protesting the LPS. The loss of fertile lands and the possibility of missing out on further capital appreciation for lands turned over for capital development are often the most important reasons for the bitterness. Supporters and opponents have been equally vocal.

Uncertainty is the Only Certainty

As the capital building gathers momentum, it is likely that the villages will change beyond recognition sooner rather than later. An overwhelming number of the small, informal businesses, agriculture and allied activities are likely to disappear and their place taken by new.

The impact of this change on households that are now engaged in such occupations remains uncertain and unknown. It is likely that there will be a large influx of new households, which will bring with them completely different economic and cultural practices into the region. The consequences are difficult to fathom at present but change is likely to go far beyond than expected by most observers today. A mistaken perception at present is that a place like the Vijayawada region is a “big village”, which will not change so easily. That view is unlikely to hold water beyond the very short-term.