Sanjaya Baru | Correct the ‘imbalance’ of the two Telanganas

The government and the people of Telangana felt justifiable pride when it was recently reported that the state had topped the national charts on per capita income among the 16 major states for which data is available for the year 2022-23. A state government report stated: “In 2022-23, the Per Capita Income for Telangana (Rs 3,08,732) at current prices and (Rs 1,64,657) at constant prices, is one of the strongest economic indicators of the well-being of a population, (being) 1.8 times and 1.7 times that of the respective National Per Capita Income (Rs 1,72,000) at current prices and (Rs 98,118) at constant prices… Telangana surpassed 8 states in a span of 9 years, moving from 10th position in 2014-15 to becoming the 1st ranking state in terms of Per Capita Income in the year 2022-23 at current prices.” This was indeed commendable.

What the report did not elaborate was that the state average has been pulled up considerably by the surge in incomes recorded in two of the state’s 33 districts. Ranga Reddy district, home to the rapidly expanding parts of the metropolis of Greater Hyderabad, including Cyberabad, Gachi Bowli, the Financial District and so on, alone reported a per capita income of Rs 7,58,102, more than double the state’s average. Hyderabad district reported a PCI of Rs 4,02,941. The adjacent Sangareddy district was ranked closed to the state average. The rest of the 30 districts are below the state average, with Vikarabad reporting the lowest district PCI of Rs 1,54,509 and the outskirts of Hyderabad, Medchal-Malkajgiri (Rs 2,45,232) and Yadadri Bhuvanagiri (Rs.2,47,211), coming up at the top.

Much of Telangana’s development over the past decade has been within and close to the Nehru Outer Ring Road (ORR).

One of the grievances of the people of Telangana that contributed to the division of the erstwhile united state of Andhra Pradesh was an imbalance in regional development. With the division of the united state, yet another regional imbalance has come to attention within Telangana. The state’s recent rise has largely been on account of the rapid rise of Greater Hyderabad, widening the development gap between urban and rural Telangana. This gap requires to be narrowed. Whoever forms the next government in the state has to pay much greater attention to the development of middle level districts like Medak, Warangal, Karimnagar, Khammam, Nalgonda and Mahbubnagar. In other words, future development must go beyond the Greater Hyderabad’s ORR along spokes away from the hub.

As it stands now, the Telangana economy is an example of what development economists have long defined as the “Latin American model”, with one big urban centre dominating the entire economy and large tracts of backwardness surrounding it. The Latin American school of economists, Andre Gunder Frank to name one, developed their “centre-periphery” model of global development based on this architecture of development. In the Latin American model, the “centre” grows at the expense of the “periphery”. There is no evidence to suggest that this has been the case within Telangana. The sources of Hyderabad’s growth have been both local and global.

As a rapidly growing hub of information technology enabled services, financial and other services, bio-tech, pharma and defence and aerospace related industries, Hyderabad has grown to become one of the three major urban centres, next only to the National Capital Region of Delhi and the Greater Mumbai region. Hyderabad has outpaced Bengaluru and Chennai. Its cosmopolitanism has made it a magnet for young people moving away from the communally beleaguered towns of the Hindi belt.

Of course, Telangana is not an exception when it comes to over-dependence on one urban centre. The economies of many states like Karnataka (Bangalore-Mysore centric), West Bengal (Kolkata-centric) and Rajasthan (Jaipur-centric) have followed this pattern. In southern India, Tamil Nadu has always had more dispersed development with several urban centres (Chennai, Coimbatore, Madurai and Trichy) developing. The newly created state of Andhra Pradesh has the potential to ensure more balanced development if Vishakapatnam, Rajahmundry, Vijayawada-Guntur-Amaravati and Tirupati are able to grow together.

While the rapid development of Greater Hyderabad has to be commended, it has contributed to two distortions. The most important distortion is in the state’s unbalanced growth. This would most certainly have contributed to greater inequality within the state.

Those groups that have ownership of land around the ever-expanding metropolis have become wealthier. Historically, in the first wave of the city’s growth, the Muslim and Kayastha elite have benefited disproportionately. In the second wave, the biggest beneficiaries were the then politically powerful Reddy community and the newly arrived Marwari and Agarwal communities. Then came chief minister N. Chandrababu Naidu and the emergence of Cyberabad, with the newly powerful Kamma community cornering the real estate. In the most recent phase, Telangana chief minister K. Chandrashekhar Rao’s Velama community has been dominant in the real estate business. The political clout of real estate barons has been the second distortion.

It is to balance out this visible inequality between the wealthy and the rest that the two major political parties in the state have been forced to offer a range of subsidies to the less privileged. The so-called “freebies” are not as much a political bribe seeking votes as they are an economic bribe of the powerful and the privileged who have cornered the benefits of development. Across India, the reality of rising inequality is stark. It becomes more so in regions of high growth.

To spread development beyond Hyderabad, it is not enough to build six and eight-lane highways connecting Hyderabad to towns like Nizamabad, Warangal, Khammam, Mahabubnagar and beyond. What these urban centres also require is good schooling, healthcare and other social infrastructure that encourages local population to invest in their local development. Telangana requires more urban centres rather than the continued growth and over-expansion of Hyderabad.

On the positive side, Hyderabad has benefited from the continuity in economic policies over a quarter century. From the days of chief minister Vengala Rao through the tenures N.T. Rama Rao, N. Chandrababu Naidu, Y.S. Rajasekhara Reddy and K. Chandrasekhara Rao, successive governments have built on their predecessor’s legacy. Hopefully, this trend will continue.