Telangana: Economic implications of a division

Hyderabad as the shared capital makes sense for both Telangana and Coastal Andhra, but revenues remain a major concern for the latter. Leaders from Coastal Andhra have been voicing several concerns over the post-division scenario.

The down side of the creation of Telangana:

• Coastal Andhra was the prime beneficiary of canal irrigation developed under reservoir systems built on Krishna and Godavari rivers. Now, Telangana will emerge as the upper riparian state seeking its rightful share in river waters. Where will Coastal Andhra get water from?
• How will Coastal Andhra generate enough revenue to run a government in a separate state? Hyderabad and its suburbs form a prime source of revenue for the government.
• Hyderabad is the major source of employment for young people from the state and has been the single biggest destination for investments by the entrepreneur class belonging to the coastal Andhra region. There is a fear of losing this investment destination if Telangana forms with Hyderabad as its capital.

The positive side:

• A strong push for facilitating investments through building a new state capital in a less affluent district like Prakasam will give the Coastal Andhra investors from Krishna, Guntur and Nellore districts a chance for some business activity.
• All cement plants in the state are running at less than 50 per cent capacity because the installed capacity was more than doubled in the last five-six years, when local consumption fell. The formation of a new state is expected to provide a fresh impetus for demand growth for cement consumption in Coastal Andhra.
• Hyderabad as the shared capital till Andhra state builds its own capital is an idea no one can oppose. This also gives a sense of security to a large migrant population of coastal Andhra regions living in Hyderabad.
• Hyderabad is the centre of all the social infrastructure. Majority of the 700-odd engineering colleges are located in and around the state capital. A formula for sharing facilities of higher learning, etc will also go a long way in making peace between the people of the two regions.