Andhra Pradesh Eyes Luxury Hotels For Controversial Rushikonda Palace

A final call on the future of Rushikonda Palace in Andhra Pradesh's Visakhapatnam will soon be taken, with the Chandrababu Naidu government inclining toward using the palace for the hospitality and tourism sector.

The Cabinet sub-committee held a meeting in the state Secretariat on Wednesday, where senior tourism department officials briefed the committee on the status of the palace and possible options for its use. The committee was formed to study the issue and to ensure that the property serves public interest, does not become a financial burden on the state, and generates steady revenue for the government

The committee said it prefers a viable hospitality model, following international beach-front standards seen in places like the Maldives and Puducherry, while strictly adhering to environmental rules.

The committee was informed that several hospitality groups, including Taj Group, The Leela Palace, Atmosphere Core and FEMA, have come forward with proposals to convert the property into a luxury hotel. 

However, it was noted that the existing buildings at Rushikonda are not fully suitable for hotel operations in their present form. Some companies suggested that additional structures may be required to make the project commercially viable.

 Coastal Regulation Zone (CRZ) Restrictions A Major Challenge

One of the main hurdles is the CRZ norms. While the Rushikonda site spreads over 9 acres, construction is not permitted on 7 acres under CRZ rules. Only 2 acres are available for development. The committee discussed in detail how this limited land can be used effectively without violating environmental norms.

"Some investors initially asked for the entire 9 acres, but the government made it clear that this is not possible. The last two blocks of the palace will be retained for public use, such as an art gallery, cultural programmes and exhibitions,'' said State Finance Minister and subcommittee member Payyavula Keshav.

'White Elephant' And Political Controversy

Rushikonda Palace, a sea-facing complex built on the Rushikonda hill, is one of Andhra Pradesh's most talked-about political controversies. 

Constructed during the previous YSR Congress Party (YSRCP) government as a tourism project, the lavish construction soon drew criticism over its cost, purpose and environmental impact. The project, spread over nine acres of coastal land, involved multiple high-end buildings with luxury fittings.

TDP had alleged that public money running into hundreds of crores was spent on an extravagant complex that had little clarity on public use, and that the palace was meant for the personal or official use of the then Chief Minister YS Jagan Mohan Reddy, rather than for tourism.

After coming to power in 2024, the Chandrababu Naidu-led TDP government took a strong stand on the issue. Deputy Chief Minister Pawan Kalyan and other leaders personally visited the site and highlighted the extravagance. 

The Cabinet sub-committee has strongly criticised the previous government, stating that poor decisions had turned Rushikonda Palace into a "white elephant."

Next Step On December 28

The sub-committee will meet again on December 28 through an online meeting. The final proposals emerging from that discussion will be placed before the State Cabinet for approval.