Troubled economy

Published : Jan 29, 2010 00:00 IST

THE political unrest triggered by the Congress hasty announcement on the creation of a separate Telangana State is threatening to derail Andhra Pradeshs economy.

That the States finances will be under severe strain became evident from the Congress governments admission that by the end of the third quarter, revenue accruals and open market borrowings have fallen short of the targets by Rs.6,645 crore. Accruals from land transactions, registration of vehicles and commercial taxes have been so low that the States annual plan outlay is being scaled down.

The biggest casualty is the real estate sector, which burgeoned in the last decade thanks to the infrastructure boom in the State capital. Land prices have now fallen drastically. The Telugu film industry, reputed to be bigger than Bollywood in terms of the number of films produced, is in trouble following repeated attacks by pro-Telangana activists.

The spanking new international airport at Shamshabad near Hyderabad, which was built in a spirit of competition with the one that came up in Bangalore, the 12-km-long elevated road leading to the airport, the operation of several sea ports along the States 1,000-km-long coastline, and the rapid improvement of State and national highways had made Andhra Pradesh a preferred investment destination. But Brand Andhra Pradesh, assiduously built up by Telugu Desam Party president N. Chandrababu Naidu during his nine-year stint as Chief Minister and cultivated by his successor Dr Y.S. Rajasekhara Reddy, may lose its sheen unless political parties decide whether economic development or narrow sub-regional interests should get priority.

The image of Hyderabad as a hub of information technology, pharmaceuticals and other industries has already taken a beating. Alarm bells have started ringing in the IT and bulk drugs sectors.

With deadlines to meet and their offices forced to shut down following the agitation by pro-Telangana and unified Andhra activists, some IT companies have shifted their operations to hotel rooms. IT companies that have signed Service Level Agreements have to specify the response time for completion of the work. They will be in trouble if they do not deliver, said J.A. Chowdary, a long-standing spokesman of the IT industry.

In a desperate move, representatives of the IT sector in the State met Chief Minister K. Rosaiah and Telangana Rashtra Samithi president K. Chandrasekhara Rao to convey their concerns.

The IT sector in the State provides 2.3 lakh direct jobs and eight lakh indirect jobs and accounts for an annual turnover of Rs.31,000 crore, constituting 15 per cent of the total revenue generated by the sector nationally.

The Rosaiah government was embarrassed when the Confederation of Indian Industry (CII) resolved to shift the prestigious Partnership Summit scheduled to be held in Hyderabad to Chennai. No amount of persuasion would make the CII reverse its decision. The government is now planning an investment summit. We have lost an opportunity to sign memoranda of understanding for new ventures worth at least Rs.10,000 crore, Y. Harishchandra Prasad, the CIIs A.P. chapter president, said.

Chandrababu Naidu told Frontline: Most people do not have an idea of the persuasive efforts I put in to showcase Hyderabad as an investment destination in the health, biotechnology, tourism and pharmaceutical sectors. I held 30 meetings with the Prime Minister and other Central leaders to build an international airport in Hyderabad. It also took a dozen meetings to prevail upon the Centre to set up the Insurance Regulatory Development Authority here. The media have never appreciated these achievements. Look what is happening now.

Revenue from domestic and international tourism has been affected. To make it worse, the United States State Department has issued a travel advisory about the risks involved in travelling to the State.

S. Nagesh Kumar
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