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 October 1, 1999

Andhra Pradesh in the time of Naidu

So was there a lot of hype that created a deluge of unnecessary hope? ''To reach a stage where we would be in a position to attract investment, an interest has to be created about the state,'' says Narender Surana, past president, Federation of Andhra Pradesh Chamber of Commerce and Industry. ''Chandrababu Naidu's efforts have created such an awareness.''

''Naidu's efforts have benefited not only the state but also the rest of the country. For instance, Bangalore has realised it has much more potential,'' says B V R Mohan Reddy, chairman and managing director, Infotech Enterprises Limited, a successful software export company.

''In the long run, the image, the hype will help,'' says Professor Ch Shyam Sunder, head, business management department, Osmania University. ''They say it is not easy to get loans, but he has succeeded in getting them.''

''I won't agree with the people who say he is talking big, and doing nothing,'' says V K Srinivasan, former AP additional chief secretary. ''It is a fact that he has done something. He has changed the climate. But if he says, 'I have done a lot of things,' I won't agree...''

Has the Hyderabad information technology industry fared any better, with the thrust given by the Naidu government? ''Once the election is over you will see what he has done,'' says Mohan Reddy. ''Following the liberalisation drive of the 1990s at the national level, the industry was looking for a short start-up for a venture. The Hi-Tec City is a good move in this direction.''

''The growth has been really good in percentage terms,'' says Rennitala Chandrashekhar, AP's IT secretary. ''The growth has been really good in terms of bringing who's who of the IT industry to Hyderabad. We have a made a very good beginning in IT-enabled services, and that is the major growth area of the future. Hyderabad has clearly established itself as a major IT centre. In fact the whole state, not just Hyderabad.''

How does Hyderabad compare with Bangalore and Pune? ''I won't go into details like when or whether Pune has overtaken us,'' says Mohan Reddy. ''I see that the initiative has been taken, the awareness created. To that extent I am pleased with what is happening. It is good to see that everything is happening right here.''

So is Hyderabad now in a position to overtake Bangalore, as was claimed initially?

''It is not easy to overtake Bangalore in the IT race as Hyderabad had entered the scene very late,'' says M Ramachandraiah, reader, computer science department, Osmania University.

''Bangalore has been around for a long time. I would not like to oversimply it,'' says Chandrashekhar. ''But what is important is: Where the new investment is headed, whether new companies are looking at Hyderabad... and what the percentage increase is... Today, from a point where it was a miniscule one in 1992, Hyderabad has reached a stage where it is one-fourth of what it is in Bangalore.''

The reality, according to Professor D Narasimha Reddy of the University of Hyderabad, is that cities like Madras have been scoring over Hyderabad by providing cheaper infrastructure.

While L&T sells space in the Hi-Tec City at Rs 2,700 per square foot, the Maharashtra Industrial Development Corporation intends to offer it at Rs 1,300 per square foot in its Hingewadi Park in Pune. The present rates in Bangalore hover around Rs 3,500.

''Naidu has talked too much about Cyberabad,'' says Professor Narasimha Reddy. ''People are being cheated. For instance, several students of Karimnagar, who have been bowled over by the media hype, feel cheated now. They told me recently that they can't get in anywhere. At this rate, Andhra Pradesh would soon lose its distinction of having the highest number of IT professionals.''

Professor Reddy has a point. Pune has already overtaken Hyderabad. Software exports from the Maharashtra city doubled from Rs 3.5 billion to Rs 7 billion last year. In contrast, exports from Hyderabad grew from Rs 2.85 billion to Rs 5.75 billion last year.

There is also speculation that the 500,000-square-foot Hi-Tec City, built by L&T, has no takers and that phases II and III are unlikely to take off. Dr C V Raja Reddy, a leading medical practitioner of Srikakulam, says, ''I have been to the Hi-Tec City. Go and see for yourself how many floors have been occupied.''

However, Chandrashekhar denies the rumours. ''Hi-Tec City is at the moment 92 per cent full -- 92 per cent is fully booked,'' he says. ''It may not be physically full because the companies are ramping them up at their own pace. The space available at Hi-Tec is only 8 per cent, and the enquiries we have got are much more than that. We are, therefore, starting the second phase in October.''

Bangalore, Madras and Pune might be ahead of Hyderabad, but the AP capital has several big names which would make any Telugu proud.

''Now we have a lot more jobs with the arrival of several big names like Baan, Metamore and Microsoft,'' says Mohan Reddy.

However, Ramachandraiah says Microsoft's arrival has not had any impact on Hyderabad.

''I feel good about the development,'' says Mohan Reddy. ''But then, smaller companies have to compete with them in getting projects. Also, the cost of hiring professionals has shown a phenomenal rise. Bangalore went through this when the multinationals had arrived.''

''It is too early to say anything because some of these big companies have relatively low level of dependence on the local companies,'' says Chandrashekhar. ''But some other companies like GE, which has just begun its ramping up, plans to set up a huge unit. Their strategy involves a lot of local participation... So it is still a little early to say what the impact of their arrival has been. The indirect impact has been that Hyderabad has attained a certain level, which has brought in a number of other companies.''

But is it true that the Hyderabad IT industry owes its existence to Naidu? ''Whatever growth we have seen has happened on its own. He has done nothing worthwhile,'' says Professor Narasimha Reddy. ''On the contrary, his entry has had a lot of adverse impact. The Hi-Tec City contract was given to L&T. In return for the land given by the government, it has got a 10 per cent share in the project. L&T is free to charge any rate, and very few of the start-ups can afford its high rates... Despite the hype, Naidu has not invested a single rupee in IT... He was merely trying to spot something where he could pitch his identity.''

''There is no denying the fact that a lot of impetus has been provided by Naidu's leadership'' says Chandrashekhar. ''But, at the same time, it is not as if that there was nothing before that or that everything will come to a halt if he is not around. In fact, Andhra Pradesh has been at the forefront of IT usage, for a decade at least. There has been a history of this culture getting built slowly. Even now there is a large team which has played a significant role.''

Perhaps this is what Naidu had in his mind when dropped his hi-tech policies from the TDP manifesto. ''Computerisation and usage of information technology have already become part of our administration,'' according to him. ''There is no need for any special mention.'' Really?


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