Business Standard

Telangana in turmoil

Agitation mauls AP's industries, halts GDP growth

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The agitation has mauled industries in Andhra Pradesh, crippled tourism, gouged the common man, severely impacted the state’s and brought it to a standstill.

No public transport, no school or college, no government service and no power for hours together between sunrise and sunset.

No, this isn’t some dystopian, anarchic world set in a novel. This is what the state of Andhra Pradesh—or specifically the region of Telangana, which includes the capital Hyderabad—looks like, subsequent to the launch of a general strike in support of the demand for a separate state.

The prolonged strike, organised by pro-Telangana outfits, has not left anyone in the Nizam’s dominion untouched—from home makers to street vendors, farmers to manufacturers. Yet, the strike has not yet subsided and will undoubtedly ravage Andhra’s economy if it continues in this fashion. Crippling losses have hit not just the state exchequer but also those engaged in economic and commercial activity.

According to senior vice president of the Federation of Chambers of Commerce and Industry (Fapcci) Devendra Surana, the industry is incurring a loss of about Rs 250 crore a day. The Associated Chambers of Commerce and Industry (Assocham) said that the tangible loss of goods and services during the first fifteen days of the agitation stood in excess of Rs 10,000 crore, while the opportunity losses could be much higher. “The general strike has led to frequent power outages and the public transport system has come to a virtual standstill. This has pushed up industrial costs by over 15 per cent and dented Andhra Pradesh’s image as a lucrative investment destination,” the industry body said.

In addition to a daily, four-hour, peak time power cut, a three-day power holiday is in force for industries. “The SSIs in the state are losing out almost nine hours of work per day. Most of the small-scale industries do not have power back-up. And once power comes, it takes them around five hours to start the work,” said B Hanumantha Rao, president, Federation of Andhra Pradesh Small Industries Associations (Fapsia).

Around 35,000 micro, small and medium enterprises (MSMEs) operate in and around the state capital, employing around 600,000 workers. They contribute to 40 per cent of estimated daily turnover of 1,000 crore by the entire industry. The are incurring a loss of Rs 60 crore a day, Rao said.

In fact, industrialists are afraid that Hyderabad, which accounts for nearly 60 per cent of the industrial activity in the state, will go the Kolkata way as far as investments are concerned.

According to the estimate of president VS Raju, a day’s bandh observed in the state capital costs the industry about Rs 400 crore. And, there were seventeen bandhs in the last one year. Added to this was the general strike for the past 29 days during which period industry in the region was shut-down completely for two days.

With production and delivery schedules severely impaired, industrialists in the region are a worried lot. “I have not slept at a stretch for six hours in the past one month. People just come to my factory premises and ask us to down the shutters. They don’t know about my problem, that I have to deliver goods on time to my international customers,” a top producer of pharmaceutical products is learnt to have told his friend at a social gathering recently.

It’s not just industry—the state government is also cash starved. According to unofficial estimates, the state exchequer is incurring a revenue loss of Rs 200 crore a day due to the strike. This estimate, however, is prior to the 4,000-odd employees of the excise department joining the indefinite strike on October 5. With liquor being the major revenue earner for the government—bringing in close to Rs 1,300 crore a month—the strike by the excise staff is expected to erode revenues further. More so because the Telangana region, with fifteen distilleries, four breweries and seventeen depots, accounts for 60 per cent of the liquor sales.

The strike has also gouged the mining and transport sectors, with the state-owned Singareni Collieries alone incurring a daily revenue loss of around Rs 20 crore for the past one month. With a majority of its 66,000 workers taking part in the strike, average production losses of close to 100,000 tonnes of coal per day has been reported by Singareni as compared to normal production of 150,000 tonnes.

The Andhra Pradesh Road Transport Corporation (APSRTC), one of the country’s premier state road corporations, has so far incurred a loss of Rs 150 crore on account of the ongoing strike, according to Prasada Rao, managing director. Of the total fleet of 22,000 buses, the corporation operates 10,000 buses in the Telangana region. All these services were off the roads ever since the employees in Telangana joined the strike.

Every development during this strike breeds a chain reaction with disastrous consequences. The APSRTC consumes 600 million litres of diesel every year and its daily consumption has almost come down by half during the strike period. The state exchequer is expected to have lost more than Rs 25 crore from VAT on this dip in diesel consumption.

Not surprisingly, on an aggregate level, the state gross domestic product (GSDP) is expected to be hit by around two percentage points during the second quarter if the strike continues further—bringing it down to 7.5%. “Power and mining are the two major sectors that have been hit by the current strike. It has its downstream of impact on services and industry as well. We also have to take the time lag into consideration before normalcy comes back into the economic activity,” a senior official of the Directorate of Economics and Statistics told Business Standard.

The strike is also causing hardships to petty business owners. “With our hotel located near the Balanagar bus stand and the commuters being our main customers, we used to witness counter sales of over Rs 35,000 a day. With no buses plying the roads, our sales have come down to less than Rs 20,000 a day since the last fifteen to twenty days,” T Nagender, cashier at Hotel Anand Bhavan, said.

Things are no different for small-time electronics dealers like Sri Sai Lakshmi Electronics at Koti, the bustling business centre in which offers ‘affordable Delhi’ electronic goods. “People are not venturing out for shopping because of inadequate transport facilities, especially from the city outskirts. This is indirectly impacting our business. While we are selling around ten to twelve portable colour TV sets, an equal number of DVD players and five to six sound systems, these numbers now fell to four to five units,” Sri Sai owner, P Govardhan, said.

Curiously, unanticipated beneficiaries of this fiasco are dealers of two-wheelers, thanks to a moribund public transportation system. “We have been seeing forty per cent increase in sales since the last ten to fifteen days. Bookings, too, increased and we are receiving an additional twenty bookings a day, from the regular forty to fourty-five bookings,” says Anand Rao, a TVS Suzuki dealer.

The one sector relatively unscathed by all of this—Information technology. “Since the general strike started, whenever there is a bandh, the attendance levels are down by about ten per cent,” BVR Mohan Reddy, chairman and managing director of Infotech Enterprises, who says that his company was still managing to meet his deliverables.

Still, the rest of Andhra’s industry is not so fortunate. If a solution is not found to the state’s current impasse, it might bleed the state and its industries dry which will inturn begin another bout of lawlessness and anarchy that no one in Andhra will be able to afford.

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