HYPERBOLIC
Is the industrial environment healthy in A.P.?
http://www.thehindu.com/todays-paper/tp-national/tp-andhrapradesh/article3592978.ece
It is time Andhra Pradesh gets itself on the fast track of development so as to attract global and local investors.FILE PHOTO: NAGARA GOPAL Two recent announcements by the government have puzzled industrialists in Andhra Pradesh and investors looking for new ventures to park their funds.
One was in May declaring that a Abu Dhabi government-owned company would establish a petroleum refinery at a cost of US $ 6 billion in the Petroleum, Chemical and Petrochemical Industrial Region (PCPIR) in Visakhapatnam. The second was in June when the government announced clearance by the State Investment Promotion Board of 25 mega industrial projects with a whopping Rs. 40,379 crore investment.
Had the industrial environment, on a downswing after the Telangana agitation and the political uncertainty, suddenly changed for the better? It was only in January this year, memoranda of understanding for investments worth Rs. 6.47 lakh crore were signed during the CII’s Partnership Summit.
Did all this mean Andhra Pradesh had become the most favoured destinations for global and local investors?
A reality check becomes necessary to verify these postulations. Among other parameters, a healthy industrial environment would mean easy availability of power, water and land besides swift government clearances.
For the last three months, a power holiday has been declared due to shortfall in supply.
On June 30, power utilities could supply 216 million units (mu) as against the requirement of 252 mu. Even water-related issues have become thorny with India Cements Managing Director summoned twice by the CBI for questioning over allegations that rules were bent for supplying water to his cement units.
The government has cancelled agreements with Brahmani Steels and Rakshana Steels while Royal Enfield preferred Tamil Nadu to Andhra Pradesh for its expansion plans.
It’s hardly the stuff that can attract investors.
Murky controversies have engulfed allotment of land for industries. A former Minister, Mopidevi Venkataramana, is in jail over the Vanpic issue while five other Ministers have been served notices by the Supreme Court over allegations that their departments tweaked formal decisions taken by the Cabinet. The list of IAS officers and industrialists placed in the dock by the CBI on issues relating to land allotment, mining leases and the government’s equity in joint ventures reads like a who’s who of Andhra Pradesh.
“After all this ruckus, no IAS officer is ready to stick his neck out and make the going easier for investors,” a retired bureaucrat said. In fact, even the Cabinet is treading warily and is trying to put into place a new land allotment policy. At its recent meeting, it could take no decision on the draft policy as Ministers wanted a fool-proof system which prohibited anyone from tampering with a decision once it was approved by the Cabinet.
Manufacturing sector
A leading city businessman said the State required investments in the manufacturing sector but not many industrialists would be eager to put their money there, given the present situation. “Investing money in real estate, liquor business and in contracts is an easy way of making money. Setting up a manufacturing plant requires hard work, investment, technology and ability to stand up to competition,” he said.
Former CII president Y. Harishchandra Prasad was asked whether the upcoming investments were a sign of a good industrial climate. He said, “It is not all about mega projects. The small and medium units are suffering due to erratic power supply. They are unable to meet their production targets and resorting to layoffs.”
Mr. Prasad said the State’s GDP can go up only if the manufacturing sector flourishes, which it is not. Andhra Pradesh must get itself on the fast track of development as its GDP has fallen from 8.9 per cent to the sub-six level. It must at least keep pace with the national GDP which is projected in the 5.8-6.5 band by the rating agencies for the 2012-13 fiscal.
Precarious power situation, row over water, murky controversies over land allotments and much more is hardly the stuff that can attract investors