10 years of demerger, different development contours in Telugu states

By J R Janumpalli

June 2, 2024 was the 10th anniversary of the reorganization of two Telugu states. The skepticism in the viability of the new Telangana state after demerger had created an anxious curiosity all around. All Andhras and a few Telangana ‘intellectuals’ were also prophesying bad days for Telangana. It was all because of not appreciating the real antecedents of the two regions. And the continuous build up of a false narrative and working on it by the Andhra elite. And with their numerical majority in the Assembly and the cultivated political leverage with the Center have dominated Telangana in the united state. Facts were deliberately submerged under a motivated fiction. They were successful in showing Telangana as second class to Andhra.

Telangana is the longest and the most sanguinary state struggle in India. It took 58 years, many campaigns and loss of hundreds of lives, to come out of that needless forced merger. It is like a ‘political freedom inside a democracy’. After the demerger, in the lost 10 years the real facts have started emerging debunking the myth built on it. The real strengths of two Telugu states have come into a clear cut juxtaposition. Telangana state out maneuvered the residual AP and has proved its better statehood credentials with a great aplomb. After these 10 years, the renowned international publication ‘The Economist’ has said the Telangana model of development is worth emulating.

In the very first year, Andhra ended up with heavy revenue deficit, a recurrence of the before 1956 position. Telangana has shown revenue surplus like in 1956 residual Hyderabad state. In 2014-15, AP claimed a big revenue deficit grant from the Center and got about Rs. 12,000 Cr. In addition to that 14th and 15th Finance Commissions were influenced to get Rs. 52,000 Cr deficit grant for AP averaging about Rs. 5000-6000 Cr per year. It was the highest deficit grant to any new state created in independent India. Yet, the gap between revenue income and revenue expenditure of AP was not bridged substantially in the last 10 years.

It is not the case with Telangana. Like before merger the new state also has registered surplus and maintained it till the advent of Covid virus, in which time all the states in the country have gone into deficit budgets. Telangana has recovered from it and is making a prudential budget management within the stipulated norms of the RBI. AP could not do it. That is a tell-tale story of the inherent financial strengths of the two regions. Finally, the truth has come out clearly, erasing the made up false narrative.

Telangana was always having a higher percentage of per capita revenue than Andhra region. Periodical official figures are available to corroborate it. Dhar commission 41.59% (1945-48); SRC 42.89%(1956); 14th Finance Commission (38.94%). The revenue earnings in the separate states also indicate the same. One more important economic parameter is the percentage of state owned tax revenue (SOTR) in the total revenue of the state. Higher percentage of SOTR leverages the state to manage its budget better. It can borrow more,service the debt better and increase its revenue with more capital investment. It helps the state register better growth year after year. The financially leading states in the country like Maharashtra, Tamil Nadu and Karnataka have higher SOTR. As per the RBI statement for the years from 2015 to 2022, these states have more than 65 % SOTR. Telangana with 72 -75 % is in the vanguard. AP’s SOTR is 51% and all states average is 46 %. That broadly defines the comparative financial variation of AP and Telangana states.

But the myth created before the demerger was that, without A.P.’s economic support Telangana would be in a problem. But it proved to be totally incorrect.  If Andhra was so comfortable with its finances in 1956, there was no need for it to force a merger with Telangana and  give several assurances to Telangana in the name of a gentle men’s agreement. It was a dire necessity for A. P. to merge with Telangana for economic viability and for a ready made first class capital in Hyderabad. It was totally unnecessary for Telangana, whose ingenuous act has become a bane for the region.

In the united Andhra Pradesh approximately 50% of revenue income used to come from 10 districts of Telangana with a population of 3.52 Cr, as against the population of 4.94 Cr from Andhra’s 13 districts. The revenue expenditure on an average used to be 35-38% in Telangana and 62-65% in Andhra. Even after the merger, there was no attempt to match the revenue income and expenditure in Andhra region. Instead the deficit was made good with a part of the revenue from Telangana continuously year after year. The Kumar Lalith and Bhargava committees in 1969-1970 have vouchsafed this. It continued for 58 years. And the post merger budget figures have confirmed the fact emphatically. In the light of it, A P  needs to draw suitable inference from it and try to correct its financial inequity ,instead of repeatedly blaming the demerger, for the state to make steady incremental progress.

The political development also in the two states, has taken different paths. Andhra embroiled itself in the false premises of victim hood,world class antics and caste politics. The maiden government which focused on world class capital, without regard to its state size limited  economy has landed the state in deep trouble .The people have realized it and other vainglorious expenditure and corruption in it and gave a referendum like verdict against TDP government. But,the YSRCP govt. also is bogged down with the impossible Amaravati capital and its own equivocal 3 capital alternative. Leaving aside the ailing economy, the government is indulging in heavy welfare administration. The excessive dependence on the Center’s devolution and grants, made the state over reliant on Center. The lack of proper perspective for the reconstruction of the state and less capital investment has forced the state to take a low contour of economic progress.

In contrast Telangana though it was given a bare state after a prolonged struggle, without any substantial sops, has stuck earnestly to the reconstruction of the state, which was kept stagnant in the united state. The people have given a measured verdict in 2014 giving just enough majority to TRS to govern the new state. The TRS government has undertaken a premeditated and strategic reconstruction plan without much help from the Center. Making use of its own resources, refurbished by the availability of the share of its revenue which was spent on Andhra, in the united state and has gone forward with relative ease. And has implemented a prudential budget of capital investment mixed with innovative welfare schemes and established its self reliant economy firmly. TRS was reelected with a massive majority in 2018.

With a renewed political energy it has completed many big ticket projects in Power, irrigation, industry, construction etc. and has joined the motley club of economically leading states in the country in a short span of time. It reached the highest per capita income in the country in 2023. And is riding on an ever rising wave of economic development. It proves beyond doubt that its merger with Andhra was a historic blunder. Thus the two Telugu states have undertaken different political and economic journeys, after demerger, commensurate with their inherent abilities. As per the Care Edge state ratings of 2023 Telangana state gets 4th ranking in the overall score, while A P is at 8th place in-spite of very large central devolution and grants.

Recently, ‘The Economist’, the UK based international journal has stated that since its formation in 2014, Telangana has outpaced many older States in economic growth. And the Telangana development model is worth emulating.

Telangana has reached to the cusp of incremental growth in the last 10 years, because of a spirited and futuristic state reconstruction. But the anticlimactic political change in 2023 December Assembly elections amidst a very peculiar fake politics and the resulting decelerating developments in the state are raising concerns in the maintenance of its trajectory of growth. In A P also the political change in the 2024 elections does not promise a better economic performance. That is the vagary of the partial democracy we practice.