Recent political developments in Andhra Pradesh suggest that the state could find itself a victim of the vendetta politics unleashed by its chief minister, YS Jagan Mohan Reddy. Apparently blinded by his antipathy to political rival and TDP supremo, Chandrababu Naidu, Reddy has been focused on undoing the schemes and projects initiated when the former was chief minister. This seeming witch-hunt is likely to have serious economic costs and impact Reddy’s own plans to stamp his legacy on the new state. The move to keep Naidu and his son, Nara Lokesh, under house arrest during the weekend ahead of a TDP rally confirms that the government has lost the plot.
Despite sweeping the assembly elections in May, Reddy seems to be haunted by Naidu at every step. In the past 100 days, Reddy has cancelled power purchase agreements signed by the Naidu government, ordered re-tendering of the multi-river basin Polavaram project, and most importantly, stalled the building of Amaravati, the capital city. Thousands of crores are now stuck in these projects, though the Andhra Pradesh High Court stopped the Polavaram re-tendering. Reddy has spooked industry and financiers by proposing multiple capital cities for the state, instead of completing the work at Amaravati. The World Bank and the Asian Infrastructure Investment Bank have dropped their plans to lend to the Amaravati project, which will put pressure on the state’s finances, and cause cost overruns when work restarts in the future. Construction majors have shifted men and material out of the under-construction city, while the government has been busy pulling down buildings that served as the offices of Naidu. Simultaneously, the Reddy government has introduced the AP Employment of Local Candidates in Industries and Factories Bill, 2019 that makes it mandatory for industry to hire 75 per cent of its workforce from the local population. Reddy, who is fighting corruption cases, has justified his actions as part of an attempt to detect “irregularities” in contracts and projects, and course correct. However, few seem persuaded by this argument as the lack of continuity in policies and the populist move to reserve employment for locals turns industrialists wary of investing in Andhra. Business sentiment in a state once known for its entrepreneurial energy is low, which could impact Reddy’s own political plans. How is he going to raise funds for the expansive welfare schemes and enhanced emoluments he promised in the campaign if investments dry up?
Reddy’s father, the late YSR, won consecutive elections by expanding the welfare state. He could do that because the economy of undivided Andhra Pradesh was doing well. Jagan Reddy doesn’t have that luxury — with Hyderabad going to Telangana, he will need a booming Amaravati and more to shore up the state’s finances. He should seek a lasting legacy not by erasing Naidu’s work, but by building a stronger economy and ensuring political freedoms.
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