Why Telangana needs Hyderabad

Now that the Congress and the United Progressive Alliance (UPA) have announced their backing for Telangana’s Statehood, the economic prospects and growth potential of India’s proposed 29th State have once more come to the fore.

The Telangana region, comprising 10 of the 23 districts in Andhra Pradesh, has a larger area than the other two regions, Rayalaseema and coastal Andhra. Excluding Hyderabad, Telangana sprawls over 1.14 lakh sq km, while the four districts of Rayalaseema cover 67,000 sq km and the nine coastal districts encompass 92,800 sq km.

Fundamentally, the Telangana economy is vibrant, thanks to the contributions from Hyderabad and Rangareddy districts.

Telangana’s broad economic parameters, such as the Gross State Domestic Product (GSDP), which is the total value of goods and services produced in a given year, and standard of living as indicated by per capita income, appear to be sound vis-à-vis the Andhra and Rayalaseema regions. The aggregate gross district domestic product of the proposed state’s 10 districts in 2009-10, stood at approximately Rs 2,16,281 crore.

That was a little less than half of Andhra Pradesh’s Rs 4,90,411 crore GSDP in the same period. Indeed, if the Andhra and Rayalaseema regions were to be taken individually, Telangana’s contribution to the State Domestic Product was the highest. This was obviously driven by a strong contribution from Hyderabad as can be seen in the table.

PER CAPITA INCOME

As a reflection of the standard of living, per capita income at factor cost doubled at the state level from Rs 25,321 in 2004-05 to Rs 52,814 in 2009-10. Excluding Hyderabad, Telangana’s per capita income was lower than the state average in many districts. Khammam, Warangal, Nizamabad, Adilabad, Karimnagar and Nalgonda had shown low per capita income.

Discrepancies in gross district domestic product and trends in per capita income indicate that the new State will have to go a long way in providing a better standard of living to the people. In terms of foreign direct investment, the State as a whole registered a fall from $1.2 billion in 2010-11 to $848 million in 2011-12, largely due to uncertainties over the Telangana issue.

The report of the Srikrishna Commission on Telangana points out that the region, excluding Hyderabad, has lagged behind other regions. Overall, the State attracted Rs 12,421 crore through FDI, and of this, the region’s share was only Rs 1,658 crore, as compared to Rs 5,499 crore for coastal Andhra. But if Hyderabad is included in Telangana, its share in the FDI pie would be Rs 6,490 crore. Clearly, Telangana needs to create an economic climate that will attract investors.

Beyond Hyderabad, the potential for industrial growth in the immediate future can be seen in the Jadcherla area of Mahboobnagar district. A Pharma Special Economic Zone, anchored by Aurobindo Pharma, is in the offing there.

Looking ahead

In addition, a ‘Green Industrial Park’ over a 1,000 acre area is coming up with the active support of the Confederation of Indian Industry and State Government.

Iron ore reserves in Manuguru in Khammam district have the scope for a ‘greenfield’ steel plant. Vizag Steel has signed up to use iron ore from here. Similarly, the limestone rich district of Nalgonda holds the promise of more cement units. The coal reserves with Singareni Collieries can lead to the setting up of power plants in future, something Telangana Rastra Samithi Chief K. Chandrasekhara Rao has been harping on.

The agri-based sector is also quite promising. With 15 lakh hectares under cotton cultivation, there is rich potential for new textile units to come up. A handful of units in the region, including GTN textiles, provide quality material to global brands. There is also talk of revival of the sugar industry, especially the Nizam Sugar Factory in Bhodan, Nizamabad district.

The recent approval by the Centre for a hardware park on the outskirts of Hyderabad, where the electronic industry is expected to come in with big investments, is expected to give a major fillip to neighbouring districts, both in terms of employment and ancillary units.