The Hindu Business Line : Lessons from Andhra Pradesh

Andhra Pradesh, under the TDP, missed the momentum in the principal components of economic activity that address the livelihood and purchasing power issues of the ordinary citizens. It has trailed in agriculture, industry, professional services and trade which account for over 80 per cent of the State's electorate. It is, therefore, not surprising that the State has voted the TDP out of power, says G. Ramachandran.

VOTERS of Andhra Pradesh have voted out the Telugu Desam Party (TDP) under the leadership of Mr Nara Chandrababu Naidu because the party failed to provide solutions pertinent to livelihood and purchasing power. The TDP and Mr Naidu had expended considerable effort and public resources towards improving the technology environment and the administrative environment of India's fifth most populous state. But they failed to improve the economic environment of the electorate. They failed to practice good economics that could have a significant impact on the electorate's economic well being relative to the past and relative to other States.

Andhra Pradesh is home to 7.37 per cent of India's population. However, the purchasing power of its electorate was merely 6.57 per cent of India's aggregate purchasing power at the end of 2003. A State and its electorate that are as well off as the nation should account for approximately equal percentages of the nation's population and purchasing power.

Andhra Pradesh's purchasing power should have been at least 7.37 per cent of India's purchasing power. That is, its local per capita purchasing power should have been at least equal to the national per capita purchasing power. But the local per capita purchasing power fell short by more than 10 per cent of the national per capita purchasing power.

The electorate would have voted the TDP and Mr Naidu back in the 2004 election to the legislative assembly if their publicly showcased policies towards technology and e-governance applications had possessed the potential to materially lift its economic well-being. First, Mr Naidu's technology orientation and e-governance policies should have shown promise of boosting the electorate's chances of closing the unacceptably wide gap between local well-being and national well-being. Second, the policies should have demonstrated their effectiveness in accelerating incomes and purchasing power.

But the TDP and Mr Naidu have failed comprehensively on both counts. The rejection of the TDP's candidates in all the three regions of Andhra Pradesh — Rayalseema, coastal Andhra and Telengana — shows that the electorate has taken care of its larger interests and long-term economic aspirations by voting the TDP out of power.

The winning candidates — the would be lawmakers — of the Congress and the Telengana Rashtra Samithi should pay attention to converting Andhra Pradesh's economic disadvantages into advantages. They should pay attention to accelerating the growth of incomes and purchasing power in Rayalseema, coastal Andhra and Telengana.

Arresting the slide

The electorate had started with a significant economic disadvantage in 1999. Nevertheless, it reposed faith in its technology-savvy leader with the hope that the disadvantage would be transformed into an unbeatable advantage. Mr Naidu had presented technology as the most effective means for bringing about significant and rapid changes in the way the citizens could pursue economic activity and incomes. The lawmakers belonging to the TDP had presented e-governance as the right means to assist citizens in their pursuit of a higher standard of living. Therefore, the TDP was re-elected in 1999 for a second term under the leadership of Mr Naidu.

The TDP may have deserved a second term, but a third term would have pushed the electorate into a spiral of poverty and despair.

An analysis by the Business Intelligence Unit (BIU) shows that the per capita purchasing power of Andhra Pradesh rose by Rs 4,669 between 1999 and 2003.

The per capita purchasing power of all households in India — measured by India 500 Plus — increased by Rs 7,024 in the same period. The growth impetus in Andhra Pradesh was about 33.5 per cent weaker than the growth impetus enjoyed by the nation between 1999 and 2003.

The closing-up effect had eluded the electorate. Its per capita purchasing power had not risen fast enough. The hope that Andhra Pradesh could catch up with the rest of India had been belied. There was no acceleration. If technology and e-governance could speed up things, there was concrete evidence that they had sped up the electorate's downhill ride.

Andhra Pradesh had slid, and slid rather fast. Its capability to derive the significant benefits from the nation's awesome growth impetus had been impaired in every segment of the consumption economy. It had begun to trail the nation in aggregate purchasing power, basic goods, simple branded goods, high-end branded goods and luxury goods. The TDP had disappointed all classes of the electorate.

Momentum matters

It is difficult as well as absurd to dismiss the constructive role of technology and e-governance in pushing the frontiers of local economies and in expanding the local opportunities and capabilities of citizens.

But the adaptation of technology and e-governance in Andhra Pradesh seems to have had no constructive impact on the electorate over a four-year period. If four years are too little for the expansion of opportunities and capabilities, the electorate had no clue whether another five years of the TDP would narrow the gap between India and Andhra Pradesh. It had no clue or proof that the TDP would take advantage of the national growth momentum and then step on the accelerator so as to grow the local economies smartly and responsibly.

India's growth momentum has since 1999 been built by agriculture, industry, transportation, professional services, housing, trade and finance. An analysis of the income data and the index of economic activity shows that Andhra Pradesh has been too preoccupied with technology and e-governance to take note of how the rest of the economy had been growing.

Andhra Pradesh has missed the momentum in the principal components of economic activity that address the livelihood and purchasing power issues of the ordinary citizens.

It has done better than the rest of India in housing and finance. It has trailed in agriculture, industry, professional services and trade. Agriculture, industry, professional services and trade account for over 80 per cent of the State's electorate. The TDP had failed to come to terms with the economic aspirations of the State's citizens.

It is therefore not surprising that they have chosen to vote in the TDP's rivals. Livelihood and purchasing power are important questions that political parties and their leaders should address. Good, pragmatic economics has become the principal determinant of the political fortunes of India's political parties and their leaders.

Voters will vote political parties to victory when parties and their leaders work towards increasing the purchasing power of the electorate. Voters will vote out parties that fail to increase the purchasing power of the electorate.

(The author is a financial analyst. Feedback may be sent to indiagrow@sify.com)