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OTHER STORIES RELATED TO NATION Unending Wishlist Interview: N. Chandrababu Naidu

The Nizam would have approved. Last week, Andhra Pradesh Chief Minister N. Chandrababu Naidu came calling on the Government of India. In the 32 hours that he was in Delhi, Naidu met Agriculture Minister Ajit Singh, Food Minister Shanta Kumar, Commerce Minister Murasoli Maran, Environment Minister T.R. Baalu, Petroleum Minister Ram Naik, Home Minister L.K. Advani and Vice-President Krishna Kant. He also met Prime Minister A.B. Vajpayee for an hour.

Vajpayee hosted a 90-minute meeting where virtually every Central Government secretary was present to attend to Naidu’s needs that filled 97 pages of a spiral folder and spanned 27 ministries (see chart). The needs included 10 lakh tonnes of rice from the Food for Work Programme (FWP), a new international airport, Rs 950.97 crore as drought relief assistance and Rs 1,299.17 crore for combating extremism.

By the time the Andhra Pradesh ceo boarded the Jet Airways flight back to Hyderabad he had assurances on 225 issues and a promise that the 10 lakh tonnes of rice would be delivered by June. When this happens, Naidu would have collected more grain than all other states put together since August when the scheme was launched. This, though, is not the first time he has got the Union Government to consider, if not wholly accept, his needs and demands. Over the past five years Naidu has managed to get the Central ministries to pour over Rs 40,000 crore into Andhra Pradesh.

While the Central loans have doubled in five years from Rs 1,575.6 to Rs 3,189.9 crore, grants have jumped from Rs 1,528 crore to Rs 3,424.1 crore and external assistance has trebled from Rs 1,118 to Rs 3,640 crore. That the state has cornered a lion’s share of resources is proved by just one statistic: while Central grants to all states increased by only 2.6 per cent between 2000-1 and 2001-2, Andhra Pradesh’s share rose by 34 per cent.

Congress MP Renuka Chowdhury attributes Naidu’s success in extracting resources to “a weak Centre vulnerable to political blackmail”. To be fair, the mechanics of his modus are much more sophisticated and based on the principle of leverage. Since 1996, the Telugu Desam Party (TDP) has been a critical prop to both the United Front regime and the Vajpayee-led nda Government at the Centre. The nda needs the support of Naidu’s 29 (now 28) MPs. Sure the Government won’t collapse without Naidu but it will be rendered fragile and susceptible to worse pulls and pressures.

The Donors

Finance: Yashwant Sinha Since 1997-98 Naidu has obtained Central loans of Rs 9,894 crore, external assistance of Rs 8,280 crore for 32 projects, and institutional support for market borrowings of over Rs 6,500 crore. Power: Suresh Prabhu Since 1997 the Power Ministry has invested around Rs 8,000 crore in Andhra Pradesh. These include the 1,000 MW NTPC power plant at Simhadri and upgradation of the national grid and a new HVDC line. Food: Shanta Kumar Rice procurement from the state went up from 38.54 lakh tonnes in 1997-98 to 71.23 lakh tonnes in 2000-1. Of the 80 lakh tonnes procured nationwide in the past five years, 25.8 lakh tonnes was from the state. Rural Development: M. Venkaiah Nadu The state has received special additional assistance of Rs 1,100 crore since 1997-98. Of the 30 lakh tonnes of rice released by Centre since August 2001, the state has bagged 21.5 lakh tonnes.

Then again, it is not a simple leveraging of the political arithmetic. Naidu has used this strength to ensure that key postings have his sanction. These range from seizing the Speaker’s post for the late G.M.C. Balayogi, support to Kant’s candidature (who helped him oust his father-in-law N.T. Rama Rao as chief minister) to demanding that former rbi chief C. Rangarajan be appointed governor. In recent times, Naidu has lobbied for Andhra Pradesh cadre ias officers, like the extension to Cabinet Secretary T.R. Prasad, and ensured choice postings, be it in-charge of external assistance, power or commerce and industry, for his nominees.

Timing is critical to leveraging. His recent visit to Delhi was in the backdrop of Gujarat which some believed had diluted his leveraging power. But Naidu had a new fulcrum: tdp’s abstention from voting in the Lok Sabha debate on Gujarat. Add to this nda’s desperation to get its own candidate elected as President. The nda allies realise that Naidu can deliver 56,228 votes of the electoral college.

Not surprisingly, his demand for 10 lakh tonnes of rice under the fwp was conceded in principle despite charges of corruption and objections by concerned ministries. “The fwp scheme,” says Congress MP S. Jaipal Reddy “is the cockpit of political corruption. The state now has a millionaire in every mandal.” Former Andhra Pradesh chief minister Janardhan Reddy alleges “the scheme that was tailored to provide employment to poor and drought-affected sections has been hijacked by the tdp to feed its own cadre.”

The problem is that in Andhra Pradesh, unlike other states, it’s not the district administration but the district ministers who run the fwp scheme. The Opposition contention is that a large portion of the fwp rice is finding its way back into the Food Corporation of India godowns via the rice mills. In fact, earlier this month, authorities seized 970 quintals from Satyanarayana Murthy, husband of P. Ananthalakshmi, tdp MLA from East Godavari district. The state Government also filed cases against 64 rice millers and 146 government officials last month.
Following this, the Ministry of Food apparently called for an audit that was rejected at Naidu’s meeting with Vajpayee. The Agriculture Ministry finds it odd that rice procurement from Andhra Pradesh should rise from 38.54 lakh tonnes in 1997-98 to 71.23 lakh tonnes in 2000-01 even as the state Government claims there is drought in 22 districts. Says a senior official in the ministry: “Contrary to Naidu’s claims, only six districts are facing drought conditions and hence the state is eligible for only 1.7 lakh tonnes of rice.” It’s another matter that Andhra Pradesh has bagged 21.5 lakh tonnes between August 2001 and April 2002.
The irony is that a major chunk of poverty reduction programme grant has gone to Andhra Pradesh—a state that has only 15.77 per cent population under the poverty line—when other poorer states have been left wanting. Small wonder Bihar Chief Minister Rabri Devi felt compelled to tell Vajpayee at a recent function, “Prime Minister sahib, ek nazar idhar bhi (Bihar too deserves a glance).” Other states like Karnataka with 200 pending proposals, drought-stricken Rajasthan and Maharashtra reeling under infrastructure cost debt too have begun complaining, albeit in private. Not just about the cornering of fwp quotas but over grants, loans and external assistance as well. Last year, of the Rs 4,200 crore released by the Japan Bank for International Cooperation (JBIC), Rs 1,554 crore (37 per cent) went to Andhra Pradesh. Of the Rs 500 crore aid released by the UK-based Department for International Development Fund, Rs 320 crore went to the state. Unlike Naidu, other chief ministers have little or no clout at the Centre.

As yet nobody has dubbed Naidu’s efforts to garner resources unfair but the fact that a chunk of national resources are going to one state is clearly inequitable. The nda ministers are quick to deny charges of favouritism. Says Union Rural Development Minister M. Venkaiah Naidu: “No state can say we have discriminated against them.” Despite the doubling of rice procurement, Shanta Kumar maintains, “There is no bias.” Power Minister Suresh Prabhu goes a step further: “You can do business with Naidu. He delivers. He doesn’t demand, he pleads for his state.”

Naidu also works hard at his game plan. Using modern corporate methods —unlike many chief ministers—he goes to the trouble of fitting the needs of the state to the Central schemes. So even as he is lobbying for Central clearance for private power projects he has tied up the coal and gas linkages. On a political level, like ntr, Naidu repackages Central schemes to ensure dividends for the party.

Naidu has also successfully projected himself as a mascot of reforms for institutions ranging from the cii to World Bank. His critics call it marketing, but the truth is that Naidu has initiated serious reforms. The partial revocation of prohibition, cut in expenditure on supply of subsidised rice, freeze on fresh recruitments, de-bundling of the Andhra Pradesh State Electricity Board (APSEB), hike in power tariffs, and increases in water are all seen as positive indicators. Which is why he is able to woo aid and assistance from agencies ranging from jbic to the Asian Development Bank.

Naidu’s hunger for resources is an ingenious Keynesian strategy. In addition to the 31.5 lakh tonnes of rice worth Rs 3,607 crore, he has got Rs 1,500 crore by pushing procurement by 30 lakh tonnes. Since 1997-98, the state has collected cumulative Central loans worth Rs 9,894 crore, grants of Rs 10,953 crore and external assistance of Rs 8,280 crore which Naidu has used to prime the economy. Add investments by the Ministry of Power and aid from the Rural Development Ministry.

Ashok Lahiri, director National Institute of Public Finance and Policy, says, “We must recognise and credit Naidu for catapulting Andhra Pradesh from a relatively low to a high position. He has improved governance at various levels and introduced benchmarks.” There is nothing wrong in maximising resource collection, adds Lahiri, “as long as you are putting it to good use.” But not everyone is convinced of this. His move to fly 250-odd MLAs to China and three other South-East Asian countries on a Rs 4 crore junket isn’t exactly the best advertisement of prudence.

For the state’s young, urban middle class, though, Naidu is a poster-boy of an India that could be. As a senior minister says, “He projects a credible hope.” Performance though does not match projection. On January 1, 1997, Naidu launched the Janmabhoomi programme from Kokkonda village in Medak district. He promised the villagers a 30-bed hospital, a 33-KV sub-station upgradation of the primary school, a veterinary hospital and a bus-station. Today, there is a partially finished school building, a sub-station with no power transformers and no trace of either the hospital or the bus-station. Expectedly the knives are out.

At the macro level too Naidu’s gambit of debt-driven growth is under threat. On the face of it life expectancy has improved, literacy levels have jumped from 44 per cent to 61.1 per cent in the past decade and gsdp rose from Rs 67,866 crore to Rs 82,434 crore in the past five years. But is this growth sustainable? RBI officials reveal that in the past 10 years the stock of debt has gone up by 17.5 per cent while revenue has grown at only 15 per cent. As N.J. Kurian, adviser, Planning Commission, says, “Unless the debt profile changes, the present level of debt and borrowings is not sustainable.”

In essence, the rise in gsdp is externally funded (by debt, aid and grants) and is perhaps as vulnerable as the South East Asian boom of the 1990s. Naidu will need to live the reformist image that he has projected—cut costs, divest and make the investments pay. It will carry a political cost; it will also not deliver instantaneously. Naidu’s demands will only increase. So will the price for his support. The Nizam would have approved.