Hyderabad [India] fears return to basics


By Sudha Ramachandran
Asia Times
Dec 17, 2009


BANGALORE - The Indian government, by agreeing to initiate the process of carving a new state, Telangana, out of the present Andhra Pradesh, has opened up a Pandora's box. The move has breathed new life into dozens of movements across the country with similar demands for creating more states within the Indian union. It has also triggered a battle over the city of Hyderabad, capital of undivided Andhra Pradesh.

Over the past fortnight, Andhra Pradesh has been torn by violence. Initially it was pro-Telangana activists who went on a rampage to press their demand for a separate state. With the government conceding their demand, those opposed to the move are now unleashing violence.

Hyderabad has become the main battleground, with activists of both sides venting their anger on vehicles, public infrastructure, homes and businesses. Scores of shops and malls have been set ablaze and buses destroyed over the past fortnight. Shut-downs have brought business to a standstill and have severely impacted travel and tourism. Losses incurred so far run into millions of dollars.

Hyderabad is not new to violence. It has in the past been hit by Hindu-Muslim riots. Numerous terrorist attacks have ripped through the city in recent years. There were apprehensions that that violence would impact investment. It did not. Whether the city can survive the present crisis is a question many, especially big businesses, are asking.

What sets apart this crisis over Telangana from previous challenges is that the instability and uncertainty over Hyderabad today is unlikely to go away soon - because Hyderabad is the main bone of contention between Telangana and what will remain of Andhra.

Telangana supporters insist that Hyderabad should be the capital of the new Telangana state, to which, after all, the city is linked geographically and historically. Hyderabad is in the heart of the Telangana region and its historical experience has been different from the rest of Andhra. Unlike the other two regions of the present state, that is, coastal Andhra and Rayalseema, which were under direct British colonial rule, Telangana was under the Nizam, whose capital was Hyderabad.

But those from non-Telangana districts believe that Hyderabad should become the shared capital of Telangana and Andhra. They point out that the demographic profile of Hyderabad today is mixed. What is more, Hyderabad's economic success, they argue, is the outcome of the hard work of people from the other two regions.

At the root of the battle over Hyderabad are hard material considerations.

Hyderabad is an economic powerhouse. It is a leading information technology (IT) hub. Leading multinational companies such as Microsoft, IBM, Oracle, Dell, Motorola, GE, Amazon and Google have a significant presence - it is home to Microsoft's largest product-development center outside its headquarters in Redmond, Washington. Indian companies of the first rank, such as Infosys Technologies, Wipro Technologies and Tata Consultancy Services, also have a strong presence, helping the city to account for 18% of India's software export earnings.

Aggressive promotion of the IT industry in Hyderabad and extensive development of digital infrastructure along with setting up of numerous IT campuses in and around the city contributed to Hyderabad earning itself the sobriquet of "Cyberabad". It is also a hub for biotechnology and pharmaceuticals.

Hyderabad accounts for 60% of undivided Andhra's revenues, and the rest of the Telangana region is economically backward; 69% of the Krishna River and 79% of the Godavari lie in Telangana, but it gets less than 15% of their waters. It has huge coal reserves but industrial investment has been low. Maoist activity is high in several districts, standing in the way of investment.

Telangana as a whole, then, needs Hyderabad to be economically viable.

For residents from outside Telangana, today's Hyderabad is their city. It is they who made huge investments in its IT and biotechnology sectors, real estate, infrastructure, education, hospitals and hotels. They are demanding that Hyderabad be made the joint capital of Telangana and Andhra. Coastal Andhrites living in Hyderabad fear that once this city is made the capital of Telangana, they will be looked on as "outsiders" and be discriminated against in jobs.

There is concern that "Brand Hyderabad" has been battered by developments over the past month, and the city's fate continues to hang in the balance. Andhra's political leadership played an important role in building Brand Hyderabad, with a former chief minister, often referred to as the CEO of Cyberabad, given his energetic efforts in building the IT sector. With that leadership now in tatters, the brand will suffer, according to many in the IT industry.

The 11-day-long-fast by a local politician, K Chandrashekar Rao, which led the government to concede to the demand for a separate Telangana, has not gone down well with the captains of industry. He is likely to become Telangana's new chief minister and few in the world of business are impressed with his leadership skills. They believe that once in power, he will need to act more responsibly to woo investors.

Some Hyderabad-based businessmen express confidence that it will be business as usual once the dust over creation of a Telangana state settles. The question is when this dust will settle.
The government has set the process of creation of Telangana in motion, but it will be some time before it comes into being. The carving out of a separate Telangana state requires a resolution to this effect being passed by the Andhra Pradesh assembly, that is it has to be an amicable divorce. Given the deep polarization in the state at present and the strong opposition to the formation of Telangana within the assembly - over half its 294 lawmakers have resigned so far - this is unlikely to happen soon. A two-thirds majority is required to pass the resolution.

Investors, especially those from abroad, are not going to wait around while Hyderabad struggles with its future. The investment will go elsewhere. India's number one software hub, Bangalore to the south, is likely to gain from Hyderabad's troubles.

It has been a poor year for Hyderabad - 2009 began with Ramalinga Raju, chief executive and founder of Satyam Computer Services, admitting to massive fraud and diversion of funds. It ends with the future prosperity of the very city he helped to bring to prominence in doubt.

Sudha Ramachandran is an independent journalist/researcher based in Bangalore.

http://www.atimes.com/atimes/South_Asia/KL17Df03.html