Telangana State

Telangana State- A Potboiler? The developments of last one week on demand for statehood for Telangana have been very fast in Andhra Pradesh. Perhaps, the political circles in New Delhi were taken by surprise by the speed with which events overtook the decision makers. The 11 days fast of TRS chief K.Chandrasekhar Rao (KCR) forced a situation calling for swift decision by the UPA government & opposition parties on announcement for creation of a separate state of Telangana. We have seen the political struggle & violence since beginning of the Telangana movement in 1969. While the states of Jharkhand, Uttarakhand, and Chhattisgarh were created as soon as BJP came to power, the issue of Telangana did not find favour with political allies of BJP. Congress ruled Andhra for most of the time along with TDP for breaks but did not concede demand for Telangana. Now, all of a sudden it is facing the stark realty and is forced to act. It was left with no choice but to announce initiation of process for separate Telangana. With all the sympathy that KCR has gained with his fast, there is no doubt that the UPA government has to wade through a political minefield. Is 11days-fast-unto-death is the new formula for separatists, be it internal or external to the boundaries of the country? There are many other demands like Vidarbha, Gorkhaland, and Bundelkhand which have been on the back burner for a while. There was a talk of separating Jammu, Kashmir & Ladakh into three small states couple of years ago. It is but natural that Telangana will stoke the fires elsewhere. It is therefore necessary to have a long term strategy to decide in totality on such divisive issues of national importance and long term implications. Review of New States created in 2000: There should be a comprehensive review of economic benefits of creation of new states like Jharkhand, Uttarakhand & Chhattisgarh in last ten years. This should be done by the planning commission and presented to the parliament & then made public. Have the people of these states gained better living standards or economic opportunities? If there is significant dispersion

of economic activities and development which can be directly attributed to creation of new state then the need may be justifiable. Sustainable Economic Development: What is the most economical minimum size of a state to be viable in relation to natural endowment factors and resources? The regions like Telangana, Vidarbha, & Marathwada have problem of water scarcity. Telangana has been deprived of the benefits of irrigation from Godavari which has gone to coastal Andhra. Will they be fighting like Karnataka & Tamil Nadu for water resources? The size of population, revenue generation and geographic spread must be the driving factors. We have created seven small states in North East and yet there has been hardly any economic development to talk about. We have failed to even promote tourism in North East to take advantages of the natural endowment factors. The people of North East have not had any economic progress visible in other parts of the country. That is why these states are sitting ducks for the Chinese incursions and malafide intentions. What is the growth in per capita income of this region since creation of smaller states? What have they achieved in last 60 years? They depend more on Central Govt. for financial assistance and have not done anything substantial to generate internal resources. Up to 60-80% of share of disbursement comes from the Centre. These states have been used to looking at New Delhi very routinely for their survival without efforts to attract private sector investment to generate additional sources of revenue. Most of the central assistance goes to meet non-plan expenditure leaving little for development. So if we create more new states like Telangana,Vidarbha & Bundelkhand what is the assurance that it will translate into economic development of the regions? Blue Print for Growth: Can Planning Commission along with industry & trade bodies like CII, FICCI and Assocham give a blue print for economic development of the new states? What industries can be set up in the new states and what new infrastructure has to be created to spur the growth? I was associated on behalf of industry to promote down stream industries in Assam in a specific sector. In spite of the natural endowment factor & resources available, there is hardly any scope for the ripple effect of large industrial complex being set up in Assam. There is hardly any local entrepreneurship to set up any

projects. Entrepreneurs have to migrate from Kolkata or other industrial cities. Entrepreneurship development has to be an important strategy to empower locals to start small businesses to cater to local and regional markets. So, if a new state is created, there should be clear blue print for development. There should be adequate avenues for generation of jobs locally and for collection of higher revenue for sustainable development. New Growth Centers & Not Just States: Creation of new states should be considered only after other efforts for development of the region as growth centers have failed. Setting up of new growth centers should be done with special financial packages with objective of direct benefits in terms of addition to GDP contribution and per capita income of the region in a specified time frame of a five year plan of the state. The UPA government has just approved Rs 7,200 crores package for Bundelkhand (split between MP & UP geographically). That is simply because UP is a football ground between Mayawati & Rahul Gandhi and Congress wanted to score the goal. If Bundelkhand can utilize this package productively as intended, it will be a path breaker alternative to creating new states. Was, any time in the past, any special financial package offered to Telangana even though it has been under Congress rule? Telangana was perhaps better off before merger into Andhra with Hyderabad. It is the case of economic neglect for short term political gains. There is no point in simply splitting a state like Andhra into two for political reasons. That would only create additional power centers, top heavy bureaucracy and more corruption as in Jharkhand. Successful Small Nations: The planning commission should study the economic model of small nations say in Africa. Botswana is fastest growing economy in the world. 70% land is Kalahari Desert and diamond mining is the major driver of the economic development. Per capita income is US$ 15000 approx. And they do have democratic elections! Jharkhand economy is also driven by the mining sector. Is it comparable to any other economy elsewhere under similar endowment factors? Evolve New Model for Economic Development:

UPA government should consider Telagana development as a trigger to launch a new economic development model for fast growth of the new regions or states. The aspirations of the people in general are met out of economic development whereas aspirations of politicians are met out of power concentration they can create. When a new state is carved out, basically the politicians are interested in new power structure. Let UPA not fall for the temptations of political compulsions to create Telangana. Let UPA come out with its own blue print for ensuring that the devolution of economic power reaches people & not handful of politicians. Instead of segmentation by language, caste and sub-castes, let them segment the country by economic viable regions with focus on economic growth. That would ensure strategic long term benefits for the nation and people. The creation of Telangana should not be done in haste. It is time to take stock of overall achievements of new states created in last 15-20 years and rework the model and then, if required, create not just Telangana but also Vidharbha, Bundelkhand and Gorkhaland and any other region which has potential to add to economic growth by special long term focus. Why wait for agitations and fast-unto-deaths to trigger growth. If you can generate growth, the political fall out is obvious. Vijay M. Deshpande Corporate Advisor, Strategic Management Initiative, Pune December 11, 2009 Scroll down for my other blogs Or visit www.strami.com