In the early years of independence, the formation of states was based on language. Today, Andhra and Telangana appear to be a bifurcation, with people of both states speaking Telugu.

There is a view that the break up could have been far more amicable. But political expediencies and deep-rooted angst didn’t allow it.  In one sense, it was also about political upmanship in a unique situation where national parties, unmindful of their affiliations, wanted to take credit for the bifurcation. The Congress which was in power and so could be seen as the ringmaster, received a massive drubbing in the husting. The party that has ruled the state for decades and the one which has contributed the most number of MPs to the UPA over the last ten years, was in a shambles. It did not win even a single Assembly seat in the Andhra elections that ensued soon after the bifurcation.   Clearly the people of Andhra Pradesh weren’t too pleased with the partition.

Rise of regional parties

South, in comparison with North, has been open to regional parties and there has been a balanced mix of local and national parties in fray for power. But the bifurcation of the state and the creation of Telangana and residual AP, has catapulted two regional political parties.  The Telangana Rashtra Samithi (TRS) led by firebrand K Chandrashekhar Rao and the Telugu Desam Party led by the tech-savvy Chandrababu Naidu won landslide majorities in Telangana and Andhra respectively. The two now have a  clear mandate to rule with no coalition pressures to impede their governance style. There are no power struggles,  no wolves to keep out of the corridors of power through wily machinations and both CMs are strongmen  wielding extraordinary powers over the party apparatuses and the government machinery. The duo thankfully till now, have exercised it to work for their states’ development.

Competitive federalism to spur states to engage in a healthy competition on growth is now the new norm in India. For Andhra and Telangana the backstory of their respective births as new states has ensured that they are born with an inherent desire to compete. Good neighbourly relations will boost the prospects of both states and will give wings to the aspirations of Telugus on either side of the divide. The silver lining is that one may see the day when they are competing and cooperating with the same intensity. Why? They share a common capital for (Hyderabad); the two are known for their brilliant sensibilities and administrative acumen to be the best, both are considered taskmasters and their ideas are slowly beginning to bear fruit.

Change has hit both ways...

Change can either be for better or worse. Remember, historically Andhra and Telangana have been at loggerheads. Little wonder, change has hit them both ways. For one, there has been the competitive spirit, each willing to outdo the other, in the manner of sibling rivalry. For another, there has been a display of brotherhood. Like, when the Telangana chief minister was one of the guests of honour for the foundation stone laying function of Amaravati, the proposed new capital of Hyderabad. Rao stunned everyone with his offer of help and support to build the city.  And then there were the mud slinging and telephone tapping.

The case of tapping of phones of Andhra officials, including those of the chief minister as reported during the vote-for-note scam in Telangana, the open threat issued by the two sides, the police cases filed on top leaders show that things aren’t calm as yet. But it isn’t just about in-fighting between the regional biggies, it is also about how leaders with absolute power dictate the course of law and call the shots.  The phone-tapping and the vote-for-note scam showed both leaders in bad light.  The scary part is that they didn’t mind to let these serious accusations and FIRs die a natural death.

Now coming to the good part of change.  To start with, both states have been pro-people. Yes, there has been a surge in populist schemes that in the long run will bleed their respective treasuries but still good work is being done on the ground.

Hyderabad, the best in India!

In what is yet another jewel in its crown, the ‘City of Pearls’ has emerged as the Number One city in India in offering the best quality of living standards in Mercer’s Quality of Living Report 2015.

Ranked 138th globally by the Mercer report, Hyderabad beat Pune (145th) to the top spot in India and left India’s IT hub Bengaluru (146th), Chennai (151st), commercial capital Mumbai (152nd) and India’s political capital New Delhi (154th) behind in the quality of living sweepstakes.

Vizag model emulated

While Hyderabad is the biggest city in Telangana, the port city of Visakhapatnam which was completely devastated in 2014’s Hudhud cyclone, is the biggest in Andhra. Vizag not only turned around in less than a year, but also won accolades for running one of the best municipalities in India and also a torch-bearer of the LED revolution sweeping Indian cities. The city after Hudhud decided to go in for more expensive LED ligting which in a year time helped the government recover the costs. This is being emulated by 100 cities across India. These are just two of the many examples of how breaking-up is sometimes better than staying together. Both regions have grown and the investment flows have been spectacular.

Investments galore

Hyderabad is now home to biggies like Uber, Facebook, Google, Apple and Microsoft and mind you – all these giants have their biggest centres outside the USA in Hyderabad. So it isn’t like having an office or a small branch, but having huge centres of excellence and though the ball was set rolling earlier, the governments of the day have been catalysts of change by actively pursuing the same.

AP too, hasn’t been behind. Known for his vision and tech-savvy approach, Chandrababu Naidu has also been trying his best and the results are here to see.  A plethora of investments have been promised to the state at the Sunrise Summit.

Higher capital expenditure...

Both Telangana and Andhra need to be proactive as they are coping with the consequences of bifurcation. Here are the interesting points of comparison. Telangana started its budget with a positive opening balance.  Its proportion of revenue receipts to total receipts (82 per cent) is higher than that of Andhra (76 per cent).

Telangana’s capital expenditure spending, both in value and percentage terms is ahead of Andhra but in the subsequent year, Telangana surprisingly dropped down its percentage of capital expenditure spends. Remember, it is captial expenditure that brings about future revenue earnings.

Seeking to generate revenue for the state, Andhra is focusing on ‘Sale of waste lands and redemption of land tax’ (Own Tax Revenue) while Telangana is focusing on ‘Sale of land and property’ (Own Non-tax Revenue)

The proportion of plan to non-plan expenditure is very low in AP whereas in Telangana the gap between the proportion of plan and non-plan is narrower than that of AP.

While Andhra has a revenue deficit, Telangana has a surplus, albeit a nominal one.

The major challenge for both the states is to generate the funds needed to meet the various schemes announced by the respective governments along with the recurring expenditure. While nominal maintenance of revenue surplus situation may not finance capital expenditure on the economic or social activities, cap on fiscal deficit and debt stock, as per the Finance Commission, restrict the scope of state borrowings. Hence fiscal discipline is important and there is no place for profligacy.

Money matters...

Both states are going after investments to shore up growth. Telangana has signed MoUs with a number of big names who are seeking to either wanting to set shop here or wish to expand their footprint.  For instance: IKEA is looking to make its first investment in Hyderabad drawn by its impressive infrastructure and composite culture. Amazon has plans to establish its largest fulfilment centre, also in Hyderabad and is setting up a cloud data centre. Google is building its largest campus outside the US in Hyderabad and other IT majors like Facebook, Microsoft and TCS have a strong presence in Hyderabad.

Uber, the taxi aggregator is making the City of Pearls its new home. Thanks to the thriving ecosystem created by the presence of a multitude of players in different technology industries like IT, Telecommunications and Biotech. Telecom players like Micromax and Celkon have also committed investments to set up manufacturing units in Hyderabad. The Telangana government has been proactive in improving the ease of doing business and in creation of a robust support system through its initiatives like ‘T-HUB’ a start-up incubator and TASK, a skill and knowledge development body. All in all there is no doubt that Telangana will continue to remain as favoured investment destination due to its existing advantages and its business friendly government.

Sunrise summit...

For the Andhra Pradesh government the task of attracting investments has not been easy. The state has several advantages which need to be showcased to investors. The most obvious ones are its port facilities and its significant mineral reserves. The government organised a mega investment summit to highlight the natural advantages of the state in terms of the resources on offer and the business friendly policies introduced by the new government. The summit was a runaway success with MoUs promising Rs 4.78 lakh crores of investments. The Sunrise summit seems to have shined a new ray of hope for the people of Andhra Pradesh after they had swallowed the bitter pill of bifurcation.

Impact on the social arena...

Technology is changing the social landscape. Being connected is a key necessity of life for residents of a state as we step into digital living. The Andhra government has envisioned provision of broadband services to all its citizens at a nominal cost. The multiplier effect of this technology intervention on Andhra will be positive.

Telangana  is modernising its police force with significant investments in strengthening policing infrastructure with investments in brand new vehicles, ipads etc. A modern police force is a necessity as peace and security are indispensable to foster a thriving business environment. Telangana has also taken a step towards gender sensitive policing by setting up an all-women police stations. The initiatives to strengthen peace and security will definitely help to retain its position as the most liveable city in India.

Sustainability

There is one question on everybody’s mind. These states are in a very unique situation. Their budgets, revenues and resources are interlinked – and at times, stuck in offices of the PMO. They are struggling to meet ends meet, yet have been progressive and pro-people. But is the initial two years a honeymoon phase? Will they focus on development all through? Where is the money going to come from for the mega-water projects that both chief ministers have planned to finish before their terms’ end. Well, there has been a positive start, a growth trajectory and an overall people-friendly approach to how governments work. But how sustainable it is, is something we have to wait and watch.

It’s all about being good neighbours

The recent court battles between the two neighbouring states on sharing the educational institutions ended with the Supreme Court calling for Andhra being accorded with its rightful share of the combined resources as set out in the Bifurcation Act. Telangana should have honoured the promises made in the Bifurcation Act as it had Parliament’s sanction. Likewise, Andhra should refrain from orchestrating a power crisis in Telangana. Battling it out in courts and wasting meagre resources over political one-upmanship bodes ill for both states. The two states should temper their competitive streak with some cooperation and aim for good neighbourly relations in the long-term for the good of the Telugu people.