The southern Indian state of Andhra Pradesh was never a gleaming opportunity or location of interest for investors. At this point, therefore, it may be fair to ask, if the state is moving towards changing that. 

It is noteworthy that despite a raging pandemic and all the other obvious constraints, the state took some solid steps towards development, rather than sitting idle and engaging in petty politics. Recently, the Andhra Pradesh Economic Development Board (APEDB) signed a Memorandum of Understanding (MoU) with the Indian School of Business (ISB), thus taking a step forward to the next level. The state government’s decision to collaborate with academia, more so with a quality institution like ISB, is praiseworthy. 

There is no two opinion that although Andhra Pradesh ranked high in the Ease of Doing Business (EODB) index, actual investments are not yet guaranteed. The investors, after all, should be convinced about investing and accruing high returns. The recent move by the government to join hand with the ISB is perhaps a step forward realising these hard facts about how to draw actual investments.

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Here, one may note that EODB is a combined initiative by the Government of India’s Department for Promotion of Industries and Internal Trade (DPIIT) and the World Bank. The objective is to improve the general business atmosphere at the subnational level. In 2019, Andhra Pradesh stood first in the overall EODB ranking, thus proving that the ongoing business reforms had succeeded in promoting transparency, efficiency and effectiveness in governance of business enterprises.

The rise in Andhra Pradesh’s Gross State Domestic Product (GSDP) supplements the claim that the state was productive despite the COVID-19 pandemic and other odds. During 2019-20, at constant prices, the GSDP growth rate of the state was at 8.16 per cent, much higher than the national average of 5%. The figure below summarizes the respective contributions from three main sectors – agriculture, industry and service – that have contributed in the growth.

Figure 1: Broad sector-wise estimates at constant (2011-12) prices from 2017-18 (SRE) To 2019-20 (AE), in Rs. Lakh Crores | Source: Socio Economic Survey 2019-20, Planning department, Government of Andhra Pradesh

As evident, the service sector has contributed quite significantly in the rise of the GSDP, so has agriculture. However, the contribution of the industry sector has to boost, and herein lies the challenge for the government, especially in the post-pandemic context. 

Now, based on the facts and figures, it is safe to say that indeed the state is indeed becoming an attractive destination for the investors. The whole idea of creating nine distinct city specific hubs – justice, knowledge, education, finance, electronics, health, tourism, government, sports – is a welcome step.

To achieve this, the focus should be city-specific and the regional or the local comparative advantages should be identified. Herein lies the advantage of the small places or the upcoming hubs, to become innovative in terms of attracting investments.

For example, in Amravati, already the education service providers have made a giant footprint. SRM-AP, VIT-AP, Amrita Vishwavidyalaya and the likes have started operating. This is also why the proposed city is emerging as the ‘knowledge hub’ of Andhra Pradesh.

3D model of the Amaravathi smart city | Photo: Wikimedia Commons

In creating the same, the government should engage institutes of higher learning in potential research and development of the state. This can happen via a public-private partnership wherein these institutes can actually act as consultants to the state government. The faculty pool, the technical knowhow, state-of-the-art infrastructure of these institutes are bound to create a positive aura in the domain of education and further innovation and knowledge creation.

The seriousness is supported by the fact that the state government is heavily investing in skill development. As a part of this, across the 25 Parliamentary constituencies, in two phases, the Andhra government has proposed to initiate 25 world class multi-skill centres as part of the YSR Multi Skill Development Centres (MSDC). Further, the proposal to establish a Skill University is another welcome step.

The sole objective of these institutes of learnings will be to design courses that would cater to the local market demands and thus, ensure employment at the local and regional level.

To identify the comparative advantage, every city should create a data pool highlighting the strengths of the local socio-economy. This may contain the socio-economic performance, welfare of the inhabitants, the potential entrepreneurs, and the likes. It is important to showcase in a nutshell as to how these areas over time have the potential to become international.

Such initiatives will resolve the liquidity problem to a large extent, both for the entrant and the incumbent, the companies and the households. For the same, the government has to ensure that manufacturing supply chains are clustered close to consumer markets.

The state government is focussing on the Micro, Medium and Small Enterprises (MSME) to benefit from the local advantages. As a step forward, during 2019-20, with an investment of Rs 2979.86 crore, MSMEs were established and this is expected to generate direct employment for 76,716 unemployed.

In the entire exercise, the role of the policy-making and the political fraternities is of immense importance. Consider the example of Vijayawada. The way the urban local body gained attention and accolades is noteworthy. All ‘smart city’ programmes of the city started with the then visionary mayor and municipal commissioner. The role of the opposition was equally potential in the functioning of the corporation.

The same is true at the state level and its high time that both Chief Minister Jagan Mohan Reddy and leader of opposition, N Chandrababu Naidu, realise this. Else, in this endless political tussle, it is the common man and the growth and development of the state that will suffer.

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Cities are becoming the engines of growth worldwide. They are becoming smarter with the use of technology and intelligent management systems. There is no doubt that today’s problems and the future challenges will be tackled via technology.

In this, the state government should collaborate with existing corporates and academic for a futuristic and implementable and innovative plan. Given the enthusiasm of the institutes of higher learning to invest in Andhra Pradesh, the state has earned the potential to benefit from a much closer and combined interface – industry on one side and scientific knowhow (as developed by the institutes of higher learning) on the other.

The cities in the state has all the potential to transform from ‘dormant to dominant’ in the days ahead. The nine hubs created will also benefit from the forward and backward linkages. It is high time that political willingness at all levels be fully concentrated on the growth and development of the state. Politics can wait, not the opportune time.

Sooner the policymakers realise this, better for all towards a smooth take-off. The idea of a decentralised capital would be worthy if each of the destinations can be transformed into specific hubs for specific activities leading to better living standards and greater livelihood opportunities.

Views expressed are the author’s own.

Featured image: Aerial view of Dhyana Buddha statue in Amaravathi, capital of Andhra Pradesh | Wikimedia Commons