The writing on the wall for Andhra Pradesh CM

Two reports, in as many days, have given conflicting and confusing accounts about investing and doing business in the ‘sunshine’ state Andhra Pradesh. First, a report released by the Department of Industrial Policy and Promotion (DIPP) along with the World Bank ranked AP as No 1 in the ease of doing business in the country. It shared the honour with neighbouring Telangana State. Together, the Telugu states have displaced Gujarat from its peak position and relegated Modi’s land to the third position in the ease of doing business.

The second report, a research study, by the National Council for Applied Economic Research (NCAER), carried by the Times of India on Wednesday, says Andhra Pradesh is not so conducive as to expand businesses. The report is based on a survey done among industrialists in the state.

Sixty per cent of the respondents who took part in the survey said, according to the report, they didn’t want to expand their businesses in the next five years. Among the reasons they cited were: rampant corruption in the government; inadequate infrastructure; labour conditions and the prevailing political atmosphere.

The parameters on which the survey had been done and conclusions drawn were the five pillars of the State Investment Potential Index (N-SIPI). These are: labour; infrastructure; economic climate; political climate, including governance, and perceptions of good business climate. The survey had taken 21 states and one Union Territory into consideration and a state’s position was determined by a single score on investment potential.

According to the NCAER report, “N-SIPI is an evidence-based index that is built around five main pillars and 51 sub-indicators, which were identified after several rounds of brainstorming and discussions with industrialists, academicians, central and state government functionaries.”

Not surprisingly, in overall NCAER rankings, AP stands fourth after Gujarat, Delhi and Tamil Nadu. Of particular concern should be the state’s 19th rank in business climate and 14th position in infrastructure. However, the silver lining is AP’s tax policies and investor-friendly land acquisition.

While the NCAER study and the DIPP report complement each other, their contents are contradictory. Though it is always possible to defend the negative outcome and hail the positive points, the two reports on doing business and investment in AP do not give a real picture of ground reality. But one can draw one’s own conclusion after reading another report in TOI. According to it, Medha Towers, in Vijayawada, purpose built in2008 as IT Special Economic Zone, has few takers even after bifurcation. Just two companies with about 200 employees are reportedly working from that premises. The major partner in the project L&T is reported to have sold its stake to another company.

Even if we consider it as a stray example, the reasons for IT companies not moving to Vijayawada, for that matter Vizag, can be many. When you compare the AP cities with Hyderabad, they are poor cousins in every respect. They have to go a long way before catching up with well-developed and advanced infrastructure the joint capital has. Moreover, the twin cities have an international flavor and cosmopolitan culture that makes it the toast of multinationals. Coupled with social life, world class hospitals, educational institutions and an international airport to boot, Hyderabad has established itself as a happening city.

In contrast, the new AP capital Amaravati is yet to take a concrete shape and Chief Minister Chandrababu Naidu is struggling to get funds to raise the new city off the ground. He has promised to make it a world class city, the best of its kind, with integrated development and environment-friendly infra. To realize his grand vision, which envisages overall industrial-economic development around the capital city, he must first provide a conducive atmosphere to attract people and investment for industrial growth and economic development.

As it is, there is a widespread perception that rich agricultural lands are being turned into government offices and industrial zones to showcase Amaravati. And, in the process, there is no clarity in and around the Capital Region what exactly the Naidu government wanted to do with thousands of acres of fertile land it acquired from farmers. Allegations are also galore that the TDP government is helping a particular community to benefit from the land deals.

Now, it’s time for TDP supremo Chandrababu Naidu to address the concerns raised by the opposition parties and farmers in the light of NCAER report which mentioned corruption in the government is a serious problem. While Chandrababu can take comfort in securing No 1 rank in ‘the ease of doing business,’ he can’t afford to ignore what AP industrialists feel about investing more in the state. If that is the case, the chief minister can’t hope to see the promised billions pouring into the state.

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