India, Sept. 25 -- As the Andhra Pradesh government headed by chief minister N Chandrababu Naidu is coming out with more ambitious projects in Amaravati capital region, the cost of construction of the capital city is also shooting up enormously, leading to a mounting debt burden on the government, people familiar with the matter said.

On September 19, the state cabinet approved the decision of the AP Capital Region Development Authority (APCRDA), which is overseeing the capital construction, to set up a special purpose vehicle (SPV) to raise funds for the execution of large infrastructure projects and other developmental works in the capital city.

The fresh projects proposed by the APCRDA include development of a greenfield airport, set...