Business Daily from THE HINDU group of publications
Wednesday, Nov 01, 2006
Industry & Economy - Economy
States - Andhra Pradesh
Focus on farm for industrial development
"New economy should grow in a big way and our Government is giving it the necessary momentum."
THE ANDHRA PRADESH Chief Minister, Dr Y.S. Rajasekhara Reddy. - K. Gajendran
Andhra Pradesh has just completed 50 years. It has come a long way since it was carved out of the erstwhile Madras Presidency on the basis of language.
Today, the State is among the front-runners in terms of potential for investment, development, new economy industry and agriculture.
Basically, a strong agrarian State with its rice granary in the coastal districts, Andhra Pradesh has made strides in information technology (IT), healthcare, education, and has a very huge Non-Resident Indian presence, whose potential to contribute to its growth is also showing up.
The State has enjoyed a stable political dispensation for the last decade, with the successive governments -- Telugu Desam Party earlier and now the Congress government led by Dr Y.S. Rajasekhara Reddy -- wielding considerable clout in New Delhi. This has led to some positive spin-offs for the State in terms of investments, projects and the Centre's support during natural disasters such as cyclones, floods and drought through central schemes and subsidies.
On the occasion of the State completing 50 years, Business Line caught up with Dr Rajasekhara Reddy to get a first-hand account of how the State has journeyed in the past, what are the present Government's priorities and how it hopes to reach the top among the States in the country. Excerpts from the interview:
In your view how has the State fared in the last 50 years. What is your perspective?
We can divide the past half-a-century into two periods the first three decades (1956-83) under the Congress rule and the last two decades (1983-2006), predominantly under the Opposition rule.
In the first phase, the Congress focussed on agriculture, rural development and irrigation.
It saw projects such as Nagarjunasagar and Srisailam, which brought prosperity and shored up development projects. Large industries too came to the State during the period.
The rule under the Opposition, however, seems to have neutralised this development with their emphasis on cheap popularity and publicity driven schemes.
The net result in that not even a third of arable land is under assured irrigation even now. About 65 per cent of the people depend on irrigation and agriculture and it got neglected.
How is your Government looking at developing the State and rectifying the situation?
I think agriculture should give a kick-start to industrial development.
This is what we are doing by giving more focus to the sector in our planning and budget allocation.
Hence, you see huge allocations to irrigation sector as well in our Government. This does not mean that I am against new economy industry.
It also should grow in a big way and our Government is giving it the necessary momentum.
The World Bank seems to have once again become the favourite of the State. It has promised to provide fresh loans, despite your Government's initial apprehensions on conditionalities, how has the change come over?
Is the Government diluting the promises on free power to farmers, by insisting on meters and assuring timed supply?
We are a reformist State. The Government of India wants reforms. Even the World Bank is insisting on reforms in certain sectors, hence there is no big issue. However, the World Bank is by and large against giving free power to farmers. In view of the large number of suicides by farmers in the State over the years, the Government felt it had to first protect their interest.
Hence, the decision to provide free power to 95 per cent of the farmers. AP is the only State to do this and it is not a big drain on its economy. Our crisis in the power sector is not due to free power supply to the farmers but because of the wrong policies of the erstwhile TDP on gas linkages and power sector growth.
Could you elaborate?
The existing gas power plants of 1,000-MW capacity are generating at 50 per cent capacity only. About 1,500-MW new capacity remains idle on account of non-supply of gas despite firm allocations in the gas supply agreements with GAIL (India) Ltd. More than Rs 5,000-crore investment has gone into these projects and with the earliest signs of gas availability in 2008, they have to lie idle for another two years.
The problem has got further compounded with the recent decision of GAIL (India) to stop supply of gas from the Ravva Fields of the Krishna-Godavari basin, after its unilateral decision to increase gas price was not agreed to by the power utilities.
The State does not seem to be having problems in mega projects like the Fab City, ONGC's refinery and mining projects, though it is doing well on the IT and real estate fronts and consumer products?
Yes, IT and of late real estate have shown buoyancy with the Government able to put the right policy initiatives in place. On the mega projects, the ONGC's refinery and special economic zone (SEZ), there seems to be some problem.
The State is seized about it and has discussed with the highest authority in the country. The management crisis in ONGC seems to have created the problems of the reported review of the proposed Rs 5,500-crore, 7.5-lakh-tonne Greenfield refinery in Kakinada and the Rs 1,500-crore SEZ there.
"We have taken it up with the Centre and ONGC and hope to resolve it."
In the meantime it seems that Reliance Industries would provide gas at the earliest in a couple of years. On the ambitious Fab City project also, the Government is pursuing it with the Centre to come up with the semi conductor policy at the earliest to give the project a boost.
The necessary measures such as land acquisition and providing other infrastructure from the State side are on.
While all these are going on, on one hand, the massive expansion programme okayed for Visakhapatnam Steel Plant, involving thousands of crores is a mega project under way for the State.
Is the Government taking into account the regional aspirations and providing development strategies. What is your view on the Telangana issue?
In the last two-and-half years since the Congress (I) came to power, the rural economy is looking up.
Irrigation projects are being grounded and they are spread in all the regions of Telangana, Rayalaseema and coastal Andhra. Even IT and BT are not lagging behind, with several industries coming up.
On irrigation and other industrial projects, while there seems to be political consensus in other neighbouring States, in Andhra there are political differences with the Opposition TDP and the CPI (M).
The last two decades of under development clubbed with successive drought years have made some regions backwards. "We are addressing the issues. On Telangana, the Congress (I) President, Ms Sonia Gandhi, has been given the task of finding a solution, let's wait."
Is Naxalism posing a stumbling block for development of certain pockets in the State and projects coming up. Though not vocal, industry chambers and consultants tend to put their finger on the issue as a negative factor for a more spread out development of the State. What is your strategy or response?
Do you think it is still an issue? Not as far as we are concerned. It is under control and the industry need not worry on that count.
You talked about big investments from Jindals,Nalco etc. in Visakhapatnam and Kakinada in bauxite mining. Has there been progress in convincing the investors and the opposing groups?
Too much is being made out of non-issue there. By March-April 2007, the Jindal Group which is putting up a bauxite project will start work.
The Andhra Pradesh Mineral Development Corporation is playing a significant role there.
How do you think Andhra Pradesh will be able to get into the top States in the country as far as progress and development is concerned? What is the strategy of the State Government in the long term?
If all our initiatives in irrigation and agriculture involving thousands of crores and infrastructure projects are completed, Andhra Pradesh will be rapidly on the top. The State has been able to launch several projects already, and has constructed 20 lakh houses to boost the people's hopes.
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