Both Bangalore and Hyderabad have been on the world map since the 1990s. Bangalore is the Silicon Valley of India and Hyderabad became Cyberabad under former chief minister Chandrababu Naidu. Almost all foreign celebrities had these cities on their itinerary. Karnataka and Andhra were seen as hot and happening states. But recent events are casting a shadow on both places. Politics could be coming in the way of progress.
In December last year, a student movement in Hyderabad demanding a separate Telangana state turned violent. Life came to a standstill for several weeks. In January, the home minister P Chidambaram promised to start the process of separation. A five-member committee of experts was constituted, headed by former Supreme Court judge BN Srikrishna. There were protests from the coastal region, which has been against carving out the state. Peace has not returned to Andhra. There have been marches, protests and bandhs. In the midst of all this, recent by-elections in the Telangana region have clearly shown what the people want. They have elected Telangana Rashtrya Samithi (TRS) candidates with huge margins, wiping out both the ruling party Congress and the main opposition, the Telugu Desam Party. They obviously don?t want to settle for anything less than a separate Telangana.
These by-elections will have interesting political fallouts with some realignments taking place. But what about business? The bone of contention has always been the state capital, Hyderabad, which is in Telangana. It is a fully developed city with a spanking new airport and a spanking new road that connects the airport to the city in 20 minutes. Many IT companies were planning their expansion in Hyderabad since Bangalore has become over-crowded and has the infrastructure problems of a city that has grown rapidly. But the constant stoppage of work in Hyderabad is making them have second thoughts.
Hyderabad has grown with money coming from the coastal belt or from abroad. The city certainly is not seeing the kind of explosive growth it saw a few years ago. The Telangana problem exploded, coinciding with the global downturn. Both factors have contributed to the slowdown in the city. Apparently the TRS and the people of Telangana have no problem in Hyderabad being the capital for both states during a transition period of five to seven years. K Chandrasekhara Rao, the founder of TRS, has met industrialists and assured them that they will not face any problems if the state splits. He has assured the film industry too of his party?s support.
The investors from the coastal parts will prefer to put their money in Vizag and Vijayawada, which are developing quite well. They have a long coastal line. The area has huge gas reserves. It has three ports in Vizag, Kakinada and Krishnapatnam. Krishnapatnam also has a power plant coming up and is close to Chennai as well. The reason why nobody is taking any action is because of the uncertainty. Those who are already in Hyderabad do not necessarily want to move out even if the Telangana split happens. But what bothers them is the drift they see in decision making.
Former CM, YS Rajasekhara Reddy, was a strong leader who was completely against Telangana. According to political observers, the current CM, K Rosiah, was a good number two under YSR. But with so many vested interests against him, including YSR?s son Jaganmohan, he is finding the going tough.
The chief minister of Karnataka, BS Yeddyurappa, too, is mired in mining problems and the government is on a shaky ground. Only recently, Karnataka had pulled off a global investors? meet, which resulted in 361 MoUs that propose an investment of Rs 4.73 lakh crore in 413 projects. Some 52 of these projects calling for Rs 2.73 lakh crore are in the steel sector. Several steel giants?ArcelorMittal of Lakshmi Mittal, South Korean POSCO, JSW Steel and Brahmani Steels of Tourism Minister Janardhana Reddy?committed themselves to invest not less than Rs 1.8 lakh crore in the state as they want to put up steel plants in Karnataka. The state is iron ore rich, particularly the Bellary belt. A third of the country?s iron ore exports are from the Bellary district.
What has interrupted this achievement is the issue of illegal mining, which has blown up interrupting assembly proceedings. The rising iron ore prices had led to much illegal mining operations in Bellary district. The companies found by the Lokayukta to have been involved in illegal mining activities included those of Obulapuram Mining Company owned by brothers G Karunakara Reddy and G Janardhana Reddy. The report by the Lokayukta has pointed out serious violations and systemic corruption in mining in Bellary, including the encroachment of forest land and massive underpayment of royalties to the state. Justice Santosh Hegde, who heads the Lokayukta, resigned last month citing inaction by the state government to prosecute the ministers (the Reddy brothers and family members) involved in illegal mining activities but was persuaded by BJP leader LK Advani to withdraw his resignation. Yeddyurappa, under pressure to stop the illegal mining in the state, has banned iron ore exports from ten minor ports in the state. Transport of iron ore has also been stopped.
The Federation of Indian Mineral Industries has termed the government?s orders illegal and has threatened to take legal action if the government refuses to withdraw them. The Centre is seriously considering an increase in export tariffs and limiting mining only to captive iron and steel production units. Steel manufacturers want captive mines. Not only will there be value addition, but also better employment for the locals. The Bellary belt, in spite of hectic mining activity, is one of the most backward districts of Karnataka.
The political upheavals in these states are not making investors and industry flee and go elsewhere. The IT industry in both places has not taken any drastic decisions. But what business wants is a stable and strong government. Their future plans and expansion depends on their sense of confidence in governance. Unfortunately, both Karnataka and Andhra are currently suffering from weak leadership.
sushila.ravindranath@expressindia.com