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Andhra Pradesh Zooms Ahead In Investment Lane
Posted by Pradeep Sadanapalli | December 30, 2007 | 934 views
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Loading ...WHEN Prime Minister Manmohan Singh visited the pearl city in July 2007 and took stock of the status of over a dozen projects in Andhra Pradesh, his finance minister P Chidambaram was categorical that Andhra Pradesh was heading for an investment boom.
Was this just a politically-correct statement to make after a visit to a state ruled by the Congress government? True to his form, the finance minister reeled out statistics to buttress his point. Sitting next to the finance minister on the dais was chief minister Y S Rajasekhara Reddy.
At the end of it all, Andhra Pradesh emerged as the top investment destination after Gujarat in 2006-07. It had 105 projects that attracted investments worth Rs 25,173 crore. The amount of investments had doubled over 2005-06. Presently, infrastructure projects worth Rs 40,000 crore are at different stages of implementation. The state has the largest number of special economic zones (SEZ) with 46 notified projects and another 10 in the pipeline. Over 25 SEZs were approved in 2007.
The state will house the country’s first Kisan SEZ, promoted by the Indian Farmers Fertiliser Cooperative (Iffco). According to B Sam Bob, principal secretary, Andhra Pradesh industries department, the company plans to invest Rs 2,000 crore to set up a multi-product SEZ focusing on agri and food processing industry, spread over 2,000 acres. Significant investments have come into the textile and automotive sectors as well. Sri Lankan apparel company Brandix has started production at their SEZ in Visakhapatnam. MAS Holdings and the Southern India Mills’ Association (SIMA) are also in the process of setting up projects in the state.
Homegrown company MLR Motors has finalised its design partner to make small cars for its project near Hyderabad and Ennore Foundries is setting up a plant near Hyderabad. According to Sam Bob, 2008 will usher in more investment. The Gangavaram and Krishnapatinam ports will become operational in the first half of 2008. So will the new international airport at Shamshabad near Hyderabad.
Mukesh Ambani’s Reliance Industries is looking at starting commercial production at KG Basin next year. The state government will also focus on attracting more manufacturing companies here, given the sector’s ability to create jobs in large numbers. While Brahmani Steel is setting up shop in AP, RKKR Steel is also looking at the state for its auto-component plant. The Fab City project in the semi conductor segment too is gaining momentum, with Andhra poised to become a solar hub after establishing itself in IT and pharma domains.
The biggest setback for Andhra this year was the crucial Krishna Godavari gas price issue. The state government could also not get any commitment from the Centre on gas supplies to power projects. What it managed was only an in-principle approval on its plans to develop gas pipeline infrastructure. This year saw hectic activity among private infrastructure developers like the Ramky Group, Indu Group and IVR Prime, who raised money from private equity funds. The real estate market was buoyant this year. Developers raked in their moolah from malls, commercial projects and upmarket residential projects.
Not surprisingly, there was a significant growth in the volume of bank loans. The Indian diaspora also remitted money into the state, a large chunk of which may have found its way into realty investments. As money poured into real estate, taxmen trained their guns on some developers to check if they were evading taxes.
But overall tax compliance in the state was much higher this year. Revenues from value added tax were buoyant. At the fag end of this year, the Rajasekhara Reddy government went overboard announcing several populist schemes including the Rs-2 per kg rice scheme, a brainchild of the former chief minister NT Rama Rao. With state elections just a few summers away, the opposition Telugu Desam is now gearing up to woo voters. YSR may also be worried about Telugu film icon Chiranjeevi’s imminent entry into politics. The opposition is also making some noises over the long-pending demand to hive off Telangana as a separate state.
Will the Congress-led government in Andhra Pradesh manage to do what the BJP did in Gujarat ? Will YSR be able to use the development plank to woo voters in the state? Answers to these questions may well hinge on how the CM leverages the investment boom to create more employment opportunities in the state and make life better for the common man.
SOURCES:
Economic Times
Topics: What's UP, Govt In Action, Business News |
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