After two years of Telangana, things are in the right direction

The birth of Telangana on 2 June, 2014, from the earlier state of Andhra Pradesh has been a major milestone in Indian politics and economics, which though rather acrimonious from the start would be a template that can be pursued by other large states which could be bifurcated. We have had success stories in MP and Bihar besides Uttarkhand, and this does pose hope for other states too which are becoming difficult to govern from the administrative point of view given the size.

Celebrating the second anniversary of statehood, Telangana has often grabbed the headlines for the wrong reasons such as irrational spending on populist programmes. But the progress of this state has been quite satisfactory and holds promise for the future.

Telangana was always a front line state in terms of managing the fiscal balances with a revenue surplus, and the 14th Finance Commission had commended the state for the same. It is true that building a new state is a major challenge as it involves reconciliation of political differences along the way and strong support from the centre for bringing about this development.

A big plus point has been the continuation of the administrative efficiency which has typified the southern region of the country. The doing business report on states based on implementation of the 98 points suggested by the centre has ranked Telangana at 13, which is well above the median rank of 16. Quite clearly this will be an immediate task which will be taken up by the government as the continued prosperity of any region depends on governance. The State economy is expected to grow at 9.2% at constant (2011-12) prices, as against national average of 7.6% during FY16.

Along with stable governance the state has also addressed the issue of power across the state which has helped considerably also in the rural areas in terms of providing irrigation, though there is admittedly a long way to go here. There have been several populist measures too that have been implemented in these two years like pensions, free education etc, which may be justified on the grounds of meeting the commitment that had been made earlier.

What are the challenges? With significant dependence on agriculture and the monsoon, and a large part of the prospects being driven by the weather conditions, the focus should not be lost to industrialization. The state has concentrated in the right direction on micro irrigation in particular which will help the farmers in times of monsoon stress. Other measures include farm mechanization, green house, and subsidy to milk farmers and on power. The state has already been channeling funds for loan waivers and subsidies for the rural folk, which is progressive, but has to be kept in check.

The second major challenge would be to bring about balanced growth through the state. Presently there is quite a bit of concentration in three districts: Hyderabad, Rangareddi and Medak which has to be widened so that the population gets well dispersed as well as bring about equitable development across the state. This has been a problem with almost all states that the concentration of attention and hence development tends to move towards the capital cities to the neglect of other areas. This has to be avoided.

Third, jobs need to be created because it has been witnessed anecdotally that every time there has been a new state created, employment is an area that can cause disenchantment among the citizens. This will mean growing the industrial and services sectors so that jobs are created on the way.

Fourth, while states are quick to provide recourse after a problem ensues, it is necessary that while in the initial stages of growth they are able to address social issues like health and education so that the government remains relevant in the lives of the subjects. It should be realized that while there is considerable enthusiasm when a new state is carved from an existing geography, the residents would introspect at a later time to take reality check on whether or not their lives have improved under the new dispensation.

Fifth while the city of Hyderabad would remain as capital once AP ceases to share the same when the 10 year period comes to an end, the government will have to address the lacunae independently before this happens, as there would be considerable reshuffling of resources across the two states. It is already a major electronics centre for the country which has to be leveraged to take it further.

Last the state will have to work harder on their fiscal parameters because the 14th Finance Commission has made a final recommendation of 2.4 percent of the central transfers which is down by 0.4 percent form 2.9 percent in the earlier regime. With a large number of obligations to be fulfilled there will be growing pressure on the government to expand the expenditure basket, and hence will have to be more judicious on both non-development expenditure as well as tax exemptions.

On the whole the performance has been good and one can give it a score of 7 out of 10, which is commendable.