Thursday, July 25, 2024

Mint Primer | Why Naidu faces a daunting task in Andhra Pradesh

N. Chandrababu Naidu’s fourth term as the chief minister of Andhra Pradesh could be his most difficult as he inherits a financially broke and industrially ignored state. Mint delves deeper into the challenges the Telegu Desam Party (TDP) leader faces this time around.

1. How big was Naidu’s win in Andhra Pradesh?

It was massive. TDP won 135 of the 144 seats it contested for the 175-member state assembly. That’s not it. Its National Democratic Alliance (NDA) comprising the Jana Sena Party and the Bharatiya Janata Party (BJP) won 164 seats in all. 

The YSR Congress Party, which was in power in the state for the past five years, managed to win just 11 seats. YSRCP leader Y.S. Jagan Mohan Reddy had focused excessively on doling out welfare schemes to the masses, ignoring development. The state failed to attract large investments, industrial development stagnated, and job creation suffered. This fuelled a strong anti-incumbency.

2. What was Naidu’s election pitch?

Naidu has promised better governance and economic development. He has also committed to revive industrial activity in the state and create 2 million jobs for the youth. But the bug of welfare politics has bit him too. He has promised ‘Super Six Guarantees’, which include: free bus travel for women; 15,000 per year for every school-going child in a household; 20,000 per year for farmers; three free gas cylinders annually; 1,500 per month cash transfer to women aged 18-59; and monthly unemployment allowance for the youth.

3. Will the state finances allow this largesse?

No. To say Andhra Pradesh’s finances are precarious would be an understatement. With welfare spending outpacing revenue growth, the state is battling cash-flow mismatch, with delayed payment of salaries and other dues having become the norm. Borrowings, at 44% of the state’s gross domestic product, are excessive. The bulk of it goes not for creating productive assets but to service revenue expenditure. The state has little headroom to borrow more.

4. So Naidu’s fourth term won’t be easy?

It appears so. Raising funds will be his biggest challenge. His ‘Super six guarantees’ alone, if implemented, are expected to cost the exchequer as much as 1.2 trillion annually. This is over and above what the YSRCP government spent on welfare. The state’s finances cannot fund this as things stand now. That apart, Naidu has promised to revive Amaravati as the state capital. The cost for this was originally pegged at 50,000 crore. Funds apart, he has to make Andhra Pradesh an attractive investment destination. For this, he must first convince wary investors of policy continuity.

5. What is the way out?

Under normal circumstances, Naidu would have found it impossible to keep his promises. But as luck would have it, his return to power in Andhra Pradesh coincided with the BJP losing its majority in Parliament. Today, he is a ‘kingmaker’ and the BJP-led NDA government at the Centre needs his support. Naidu is expected to take advantage of this situation and demand a special financial package, if not special status, for Andhra Pradesh. That should help him part-fund his welfare schemes and restart work on Amaravati, a project Prime Minister Narendra Modi inaugurated in 2015.

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