“Most of my seniors have not got jobs yet. There are no jobs as few factories have come up in Andhra Pradesh,” he says. He wants to vote for Telugu Desam Party (TDP). Its leader, former chief minister Chandrababu Naidu, will be able to drive more industrialization, he believes.
“He was the one who brought Korean car maker Kia into the state. We need more such investments,” he adds.
In April 2017, Kia India signed a memorandum of understanding with the state government of Andhra Pradesh to build a new manufacturing facility at Anantapur district. The car maker, which has invested over $2 billion in the production facility and a vendor park, commenced mass production in August 2019 with an annual capacity of about 300,000 units.
Many miles away, Sivaparvati is selling tender coconut braving the unbearable summer heat in old Guntur, a town famous for chilli and tobacco. Sivaparvati is a single mother and has a son, daughter-in-law and two granddaughters in the household. “I will vote for Jagan,” she says emphatically, referring to incumbent chief minister Y.S. Jagan Mohan Reddy, leader of Yuvajana Sramika Rythu Congress Party (YSRCP).
The reason? She has benefitted from the numerous welfare schemes the chief minister had announced. Among them are a widow pension scheme and support for educating her granddaughter.
Nonetheless, she also complains. About poor roads, lack of street lights, proliferation of mosquitoes due to open drainage. “Despite all this, my loyalty is still to Jagan. He has given us a lot of money,” she reasons.
Kiran and Sivaparvati underline the welfare versus development divide that has come to the fore in Andhra Pradesh, ahead of the simultaneous polls—for the Lok Sabha and the state assembly—on 13 May. At stake are 25 Lok Sabha seats and 175 state assembly seats.
TDP has aligned with Bharatiya Janata Party (BJP) and Jana Sena, a local party to take on YSRCP. Indian National Congress became a non-entity after people of the state punished it for carving out Telangana from Andhra Pradesh in 2014. In the 2019 general elections, Congress had a vote share that was less than the NOTA (none of the above) category (see chart). This election, Congress has tied up with the communist parties.
The YSRCP government, in the last five years, chose to spend as much as ₹4.56 trillion on welfare schemes. It did not, however, give a similar thrust to development. On the other hand, TDP has pitched for development. Three-term chief minister Naidu argues that without development there is no economic growth, no jobs and no funds for welfare schemes.
Jagan Reddy, meanwhile, has painted the elections as a class war—a war between the poor and the rich. Those wanting development and economic growth have been portrayed as pro-rich and enemies of the poor.
“Coming elections are a war between classes. Between poverty and wealth. We are representatives of the poor. If we lose, it is a loss for the poor,” the chief minister said while addressing his party cadre in December. “I take the side of the poor and Naidu is leading the feudal forces,” he added.
This battle, therefore, promises to be an engrossing one. Its outcome will have implications not just for the two big parties but also on the state’s finances, already under stress. More on this later.
“The outcome of the elections will determine if unbridled welfarism, as is the case with the present government, will continue at the cost of development or a balance will be struck between economic growth and welfare measures,” says Jayaprakash Narayan, general secretary, Foundation for Democratic Reforms, a Hyderabad-based think tank.
Tale of 38 schemes
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YSRCP came to power in 2019 with a huge mandate having won 151 of the 175 state assembly seats. The party also won 22 of the 25 Lok Sabha seats. TDP, which had 102 seats in the previous assembly, managed to win just 23 seats. People voted out Naidu for failing to deliver on the promise of getting the state a special status as part of the bifurcation deal. They also wanted change and hoped that Jagan Reddy would make their lives better.
Reddy did bring about change. He took a different approach to governance, not just by focusing on welfare measures but also putting in place systems to ensure they were delivered. The state government launched as many as 38 welfare schemes targeting the poor, especially women and farmers. They included schemes such as Amma Vodi (every mother of school going children got ₹15,000 per year); Rythu Bharosa (a guaranteed income support to farmers at ₹13,500 per year); YSR Pension Kanuka (social security pension for those above 60 years, disabled and widows); free housing sites and Vahana Mitra (interest subsidy scheme for commercial auto, taxi and truck buyers).
The government then went on to appoint three lakh village volunteers and 15,004 village secretariats. “Every 50 households had a volunteer who ensured that beneficiaries did not miss out on any welfare scheme. Some benefits were delivered on the doorstep,” says Kesineni Srinivas, YSRCP leader and Lok Sabha candidate from Vijayawada.
About 90% of the state’s households have benefitted from one or more of the 38 schemes. Reddy keeps reminding people on the amount of money his government has spent on welfare. As of April this year, ₹2.71 trillion was pumped in through direct benefit transfer (DBT) and non-DBT spend amounted to ₹1.84 trillion, aggregating ₹4.56 trillion, the state government had stated.
“With such a record, the poor and lower middle class, especially in the rural areas, are firmly with YSRC and that will tilt the scale in our favour,” hopes Srinivas.
Where’s Amaravati?
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Nonetheless, the lack of development has upset a lot of people.
P. Rajashekar runs a cab service in Vijayawada. He questions the usefulness of the Vahana Mitra scheme. Many a time, the interest subsidy he gets because of the scheme, goes towards repairing the vehicle—the roads, he says, are bad. He would much rather prefer good roads to the subsidy.
“Roads are so bad that I end up replacing the car’s bearings, tyre and oil a lot more now than before. In the last five years, there has been little infrastructure development,” he says.
Rajashekar voted for Reddy in 2019. This time, he is batting for Naidu.
Similarly, a cross-section of people Mint spoke to felt that the government was taking away more than what it was doling out. Power costs have risen sharply; petrol/diesel prices are higher than other states as the YSRCP government did not reduce taxes on it.
Even in rural Andhra Pradesh, not everyone is happy. Take the case of three mandals—Tulluru, Thadapalli and Mangalagiri—not far from Vijayawada. About 29,000 farmers from 29 villages had agreed to give away 35,000 acre for the development of Amaravati, once touted to be the state’s new capital. TDP was in power back then. However, the YSRCP government junked the idea.
Roads are so bad that I end up replacing the car’s bearings, tyre and oil a lot more now than before.
—P. Rajashekar
“We were promised 1,250 square yards in the fully developed capital as compensation for every acre (4,840 square yards) we gave,” says P. Poorna, a resident of Tulluru town.
The farmers now have a protest site in the town, a thatched pandal with large pictures of freedom fighters. “We have been protesting continuously for the last 1,599 days against the YSRCP government’s decision to scrap Amaravati as the state’s capital,” says V. Madhu, a farmer who is from Lingayapalem, a village five kilometre from Tulluru.
Farmers have also taken the government to court. The High Court of Andhra Pradesh, in March 2022, ordered the Amaravati masterplan to be implemented. But the state government has appealed to the Supreme Court.
The land is still with the government and most farmers have taken up menial work or are selling off their other assets to make a living.
“We have been cheated. From landowners, we have been reduced to landless labour,” says Poorna.
Pattabhi Ram Kommareddy, national spokesperson for TDP, says anti-incumbency is high. “Farmers are unhappy as they have not been compensated for various natural calamities in the last five years; state government employees are upset as their salaries have been delayed; the youth are unhappy due to the lack of jobs; law and order has deteriorated,” he explains.
Show the money
The YSRCP government’s short-sighted policies, Kommareddy says, are to be blamed. “Welfare and development must go hand in hand. Only when wealth is created can it be shared with the poor. In the absence of development, the state government has borrowed heavily and pushed the state deeper into debt without any productive assets to back the debt,” he says.
Investment is another weak area. “When we were in power between 2014 and 2019, major companies such as Kia India and Motor established their facilities here. Not a single major investment has come in the last five years,” the TDP spokesperson says.
YSRCP’s Kesineni Srinivas disagrees. “Andhra’s GSDP (gross state domestic product) has grown by 50% in the last four years. Per capita income has risen from ₹1.5 lakh in March 2019 to ₹2.1 lakh in 2022-23. This has been possible on account of strong industrial growth,” he says.
Meanwhile, the state continues to rank high when it comes to the ease of doing business. In the latest Business Reform Action Plan 2020, unveiled by union finance minister Nirmala Sitharaman, Andhra Pradesh was categorized as top achiever along with six other states such as Tamil Nadu, Gujarat and Telangana. Investments worth ₹13.5 trillion were garnered at the Global Investors Summit in March 2023.
The Adani group has begun work on setting up data centres in Visakhapatnam and has announced plans to set up two cement units. Reliance Industries is setting up a 10 gigawatts solar park, he adds.
So, what explains the perception of zero development? “I think we have been very poor in marketing our achievements,” says Srinivas.
Super six and a trap
Welfarism, by now, is deeply entrenched in Andhra Pradesh. So much so, even the pro-development Naidu has been sucked into promising welfare schemes. And YSRCP doesn’t miss a chance to point it out.
TDP has announced ‘Super Six Guarantees’ in its manifesto. This includes free bus travel for women; ₹3,000 per month unemployment allowance for the youth till they get employed (TDP has promised to create 2 million jobs); ₹15,000 allowance for every school going kid in a family; ₹20,000 per year income support for the farmers; three gas cylinders per year and ₹1,500 per month to women aged 18 to 59.
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According to chief minister Reddy, TDP’s promises will cost the state ₹1.21 trillion over five years, over and above what is already being spent—way beyond the capacity of the exchequer.
“Naidu is desperate to come back to power and has been promising schemes which he knows cannot be delivered. That is not new to him. In 2014, he made over 600 promises, including farm loan waiver. He did not keep most of them,” says Srinivas.
Andhra Pradesh’s finances are already under stress and Naidu may indeed be tying himself into a knot. The state’s debt to GSDP ratio when off-budget borrowings are included, is a high 43% (2022-23 revised estimate). That leaves very little room for further borrowing. The quality of expenditure, measured as a ratio of capital outlay to total expenditure, is 9.2% in the 2018-19–2022-23 period. This is low compared to Tamil Nadu’s 12%. With a revenue deficit of 2.2% of GSDP, the state is already borrowing ₹29,000 crore just to meet its revenue expenditure. This could worsen as growth in welfare expenses is galloping faster than growth in revenue receipts.
Welfarism is deeply entrenched in Andhra Pradesh. Even the pro-development Naidu has been sucked into promising welfare schemes.
“The state’s finances do not allow much leeway for more welfare spending than what is already being made,” says Paras Jasrai, economist, India Ratings & Research, a provider of credit ratings.
Post liberalization, in 1991, it was accepted that economic growth was critical to tackling poverty. There was a consensus among most political parties. This consensus, Narayan adds, is now under threat and the battle for Andhra Pradesh is a prime example.