Emotions run high as 5th largest state readies for painful division

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For some it’s a red letter day, for others a black blot — depending on which side of the bifurcation debate they’re on. So, while the streets of Telengana-designate erupted in joy following Parliament’s consent, Rayalaseema and Seemandhra, which will be the residual state of Andhra Pradesh after the bifurcation, saw widespread anger and protests.

Unlike other big states in the Indian Union that have been divided into smaller states without much ado, Telengana’s birth has been mired in contention and controversy with emotions running high both for and against separate statehood.

It’s been an acrimonious parting of ways for the country’s fifth largest state as its people, and its politicians, stand sharply divided on its division. Business leaders of the area, too, have been watching the situation from the sidelines.

Reacting strongly, Ayodhya Rami Reddy, chairman of Ramky Group, said: “Fundamentally, as a businessman, I think one strong state has been divided into two weak states. The infrastructure segment was already facing challenges and now there could be all the more delays and clarity issues.”

On the other hand, G V Prasad, chairman and CEO of Dr Reddy’s Laboratories, does not view it as a big deal. “For a while now, manufacturing units have been moving towards Vishakhapatnam. This is not because of Telangana, but due to lack of clearances from the pollution control board to set up sites around Hyderabad. I don’t see much of a hindrance as we do business all over the world,” he said.

The Andhra Pradesh arm of the CII felt that while the decision would bring clarity on the long-pending issue, there were still a number of questions that were yet to be answered by the central government relating to the division process. Distribution of resources like water and power among Telangana and Seemandhra were yet to decided, as were state government policies and tax benefits, said its state chairman B Ashok Reddy.

Another important issue is of Hyderabad being the joint capital of both states for 10 years. Post this period, which city will be Seemandhra’s capital may again become a bone of contention, which may impact the growth prospects of the new state in case that decision is not taken quickly, Reddy pointed out.

According to M Sreeram Murthy, chairman, industrial development committee, Fapcci, efforts should now be made to give a push to the manufacturing segment in Telangana, including Hyderabad. So far, IT services are the major contribution to the GDP and efforts should be made to bring in other segments. Some significant projects have already committed their investments and some big-ticket projects have been sanctioned in Rayalaseema and coastal Andhra regions, he said.

Hyderabad is the operational hub for over 1,200 IT firms employing over 3,50,000 people representing about 12 per cent of the Indian total. The city is home to almost all the top 500 IR companies. Hyderabad is also approved as the information technology investment region (ITIR) for promoting IT, ITeS, and electronic hardware manufacturing units towards generating an employment of Rs 15 lakh over the next 25 years. One more ITIR is being proposed for Visakhapatnam. AP has achieved revenues of Rs 64, 354 crore from the IT segment including export revenues of Rs 51,285 crore. It is currently providing employment for 3.27 lakh people and about 30,000 are added to the workforce on an annual basis. In this Visakhapatnam, the key city in the residual state of Andhra Pradesh, accounts for about Rs 1,600-1,800 IT revenues.

Realty analysts see a bright spot in the situation. “The real estate market has been witnessing slow sales due to the disturbances, but with clarity now emerging, prices will see an upward trend,” said Ganesh Vasudevan, CEO of IndiaProperty.com. Buyers in Hyderabad had been adopting a wait and watch attitude and realty price points were low in comparison, which could now rise 15 to 20 per cent over time, he said.

The prices in the other districts including those of the coastal Andhra and Rayalaseema have been growing at a faster pace riding on the lack of clarity. However, the growth in these parts will be slower now but the demand will continue to rise. The effort would be on creating land banks in anticipation of the new infrastructure activities, Vasudevan added.

According to C Ramachandraiah, social scientist and faculty at CESS, one of the lessons that governments need to learn from the Telangana tangle is that development has to be decentralised. In this case, all the economic and political activities were centered at Hyderabad and there was a need to alternative well developed cities as well.

“There is a vertical spilt across all segments and it is difficult to remain as one state. Even if it was not spilt in this session, it was imminent. Prolonged agitations will not help either the state or the regions. With Hyderabad as common capital for 10 years, there will be pressure in the newly carved out state to develop more cities covering both Rayalaseema and coastal Andhra Pradesh,” he said. Likewise, Telangana state too should look at developing other cities and the development should not be centred around Hyderabad alone, he said. “The two states might compete in attracting various industries. It will be a good sign. The effort should be on tapping investments and not on whipping up emotions,” he said.

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