Are Telugu states industrial policies on a path of self-annihilation?

After bifurcation, both the Telugu states - Telangana -- India’s newest state -- and Andhra Pradesh has been struggling hard on a single objective of attracting more and more investors. Both the Chief Ministers are in fact competating each other to lure domestic and foreign investors. Chief Ministers, ministes and senior officials have been visiting various countries, many industrial cities of the country meeting many industrialists.

Both of them announced new industrial policies, claiming to be first of its kind, offering single window clearance of all major industrial proposals, with in two of three weeks, uninterrupted power supply and easy access to land and water, besides many other officers.

Telangana Chief Minister K Chandrasekhar Rao promised `red carpet’ reception to such investors stating that protocol officer will receive them at the airport and directly will bring them to his. Andhra Pradesh chief minister N Chandrababu Naidu too promised several incentives.

However, they may very well be on a path of self-annihilation, says a latest investigative report done by Down To Earth, a science and environment fortnightly. The two states have embarked on a reckless race for attracting industrial investment, putting all environmental concerns on the backburner and creating a potential trigger for a conflagration between industry and agriculture.

Both the states are outdoing each other to offer packages of unprecedented goodies -- assured clearance of large investment proposals, single-desk clearance, self-certification, protection from inspections, priority allocation of water, land and uninterrupted power. While industry has hailed the policies as “imaginative and innovative”, environmentalists and activists are appalled. The states are witnessing rampant pollution of natural resources, a prolonged agrarian crisis (in Telangana) and a host of other unresolved issues which need to be addressed.

On June 22, for instance, the Telangana government cleared 17 investment proposals amounting to Rs 1,500 crore within 10 days of application – this was the fastest grant of approval in the country. And it was fully in line with the state government’s promise as stated in its new industrial policy.

TS-iPASS - Telangana’s new industrial policy

Telangana chief minister Chandrashekara Rao’s new industrial policy is titled Telangana State Industrial Project Approval and Self-Certification System (TS-iPASS). The policy, announced on June 12, states it will make Telangana the “world’s most investment-friendly state”.

The provisions of TS-iPASS make it astounding. The policy mandates that permissions and licences will be given within 15 days for big projects, and if no decision is taken during this period, it will be deemed to have been given. The government promises to clear all proposals for projects which have an investment of over Rs 200 crore within 15 days, while other projects will have to be approved in a month.

“The new state offers a land bank of nearly a million hectares and a 10 per cent water allocation from all sources for industrial use. The new policy also promises ‘minimum inspection, maximum facilitation’, under which the state’s regulatory checks and balances have been diluted to a great extent.”

Minimum inspection translates into inspection every three to four years with a one-month notice, and ‘no random inspection’ without a cause. The policy also says it encourages “self-certification” and “automatic renewals”.

Having rolled out a red carpet for investors, the state expects to attract an investment of 5 lakh crore by the year 2020. TS-iPASS, predictably, has drawn cheer and support from industry associations.

While Telangana with its TS-iPASS may have done a first, Andhra Pradesh chief minister N Chandrababu Naidu’s policies, too, are aimed at the same bounty. The state is offering a land bank of half a million hectares and is trying to attract an investment of Rs 2 lakh crore. Like Telangana, the state is offering its natural resources uninhibitedly.

A recipe for a conflict

What will this do to the environment and natural resource base of the two states? Telangana has been facing a prolonged agrarian crisis and has as many as 89 per cent of farmers’ families in debt. Farmers in the state are keen to sell their land to industry. Rao’s government is quiet about allocation of water for agriculture. A farmer, quoted in the report, says that she spent Rs 40,000 on digging a bore well without finding water. Her husband committed suicide due to debt.

In Andhra Pradesh, however, agriculture pays; most farmers are unwilling to part with their land.

Down To Earth reports that both states will face a challenge in providing water and power to the industry – which will happen at the cost of farmers and common people. Privileges offered by the Andhra Pradesh government to industrialists include reimbursing one rupee for every unit of power consumed and permission to store water in government-owned reservoirs. While in undivided Andhra Pradesh, .55 per cent of water was available to industry, it has now been increased to 10 per cent.

The report says that Telangana’s promise of 24x7 electricity supply to industry is not viable as the state has been facing a power crisis. The report points out that this could lead to a conflict between industry and agriculture, among other things.

The report has also analysed the impact of rapid industrialization in states such as Jharkhand and Chhattisgarh – this industrialization did nothing to change the economic status of the states. In Chhattisgarh, industrialization led to the shrinking of forest cover while in Jharkhand, the number of households with outstanding debt increased by nearly 9 per cent in 10 years (2003-13), a period that coincides with the state’s targeted industrial growth. Both Jharkhand and Chhattisgarh governments tabled deficits of Rs 2,184.6 crore and 5,761 crore respectively, for the financial year 2014-15 despite pursuing pro-industrial policies.

Managing Editor Richard Mahapatra says, “Andhra Pradesh and Telangana are primarily agrarian states. The state governments should have carefully examined the issues in their states before formulating policies that grant the right to clearances without sufficient checks and balances and allocating large amounts of water and land to industry. This is all the more important because this model has not worked for other states and can trigger conflicts while depleting natural resources irreversibly.”

By Ch. Narendra