Telangana Now!

The Daily Chapter Of Telangana!

1. Why Seemandhras invested into Hyderabad?

Investors tend to invest in those places which give rich dividends. In India, some of the most favored destinations are the large metropolitan cities. By 1956, Hyderabad was already the 5th largest city in India, was covered by TIME Magazine, and it boasted world class infrastructure with major universities, industries, water bodies and institutions – all this was already in place before formation of Andhra Pradesh – so it had nothing to do with contribution of Seemandhras.

Not all states are blessed with cosmopolitan and metropolitan cities – there are very few cities in India while there are many states. Therefore, the businessmen and entrepreneurs hailing from states like Orissa, Chhattisgarh, Madhya Pradesh, Kerala, tend to invest in the major cities outside their states, like in New Delhi, Mumbai, Chennai and Hyderabad.

What helped Hyderabad to become a favored destination for investment in the last six decades consists of two essential reasons. One, after Independence, Indian government looked for safe destinations that were away from the border and away from the coast to develop its major establishments. Hyderabad is one of those choices along with Bangalore, lying in the South and away from the coast. Unlike in British ruled cities, where the city lands were owned by private individuals, most of the land in Hyderabad city was owned by Nizam, which later became property of the Government. Therefore, Hyderabad presented a much better case with easily available lands for expansion and installation of major institutions. The Indian Government installed many premier industries in Hyderabad, like ECIL, BHEL, HAL, DRDO, DRDL, etc. – and this has nothing to do with contribution from Seemandhras or Telanganas.

Hyderabad city with its premier institutions and educational facilities like Osmania University created the necessary ecosystem and viable atmosphere for further industry and expansion – including the recent IT industry. And like most investors in India who flock to metropolitan cities that guarantee return on their investments, Seemandhras flocked to Hyderabad to make their investments.

But Seemandhras enjoyed undue advantage over other investors in Hyderabad. Using the power of the Seemandhra majority, they converted Telangana into an internal colony. They grabbed large swathes of land for small amounts to reap windfall returns thereby creating a class of ultra-rich Seemandhra politicians and industrialists. Using these rich dividends, Seemandhras invested furthermore in building malls, shopping complexes, colleges and hospitals to become richer and richer.

2. Did Seemandhras invest into Hyderabad only because they believed it was their capital city?

Seemandhras claim that they invested into Hyderabad only because they thought it was their capital city, trying to establish an emotional attachment with the city. There is no truth in this. Investors do not invest in places which do not favor return on investments. They invest only in investor-friendly cities, even if it means the city belongs to another state. Today, many Malayalee and Telugu people invest in Bangalore even though it is not their capital city. Many Gujarathis continue to invest in Mumbai even after separation. Seemandhras invested in Hyderabad only because Hyderabad was investment friendly destination; and also because they could illegally grab lands in Hyderabad using the power of majority in the government of Andhra Pradesh.

3. Can Seemandhras claim Hyderabad just because they invested into Hyderabad?

No investor can claim a city for themselves just because they have invested into that city. American companies like Intel or GE make investments into Bangalore, but that does not mean the developed lands in Bangalore now belong to America. North Indians, Tamils, Malayalees, Telugus have invested in Bangalore – they build software companies, hotels, malls, and large apartments in Bangalore. That does not mean they own Bangalore.

India does not sell its cities to its investors or settlers. Cities belongs to the people of the region, either that is a district or a state. The best way to capture is the caption – ‘Hyderabad belongs to Telangana. Telangana belongs to India. Hyderabad belongs to all Indians’.

4. Can Seemandhras claim Hyderabad because they have paid taxes to build Hyderabad?

Seemandhra people have suggested that Hyderabad belongs to them as much as it belongs to Telangana people. They believe they have an ‘equal right’ over Hyderabad. One of the reasons they cite is that they have paid taxes that contributed to the development of this city and hence they own the city as much as people of Telangana.

When states or districts are divided, the cities, the towns, the ports, the dams, and the infrastructure like roads and railways go to respective regions decided by geographical delineation. Just because the taxes from entire district, or state, or country were used to build those cities or ports doesn’t make other regions claim them.

To understand this, we can pose a counter argument- can people of Telangana claim rights over cities like, Vizag, Vijayawada, Tirupati, that were developed with tax money that came from people of Telangana? Should Telangana claim a right over the sea ports and government buildings in Seemandhra just because their taxes were used to build them? Such ridiculous propositions will leady to absurd conclusions.

5. Does Hyderabad contribute lion’s share of state’s revenues as claimed by Seemandhras?

Right now, Seemandhras are making exaggerated claims on how big is the share of revenues from Hyderabad. Some of them suggested that this share is as high as 50%. Some have gone on to say it is 70% of state’s revenues. They inflate the figures so much that any observer would feel that creation of Telangana with Hyderabad as its capital would be a colossal loss to Seemandhra – thereby making it look like it is an unfair deal for Seemandhras.

The New Indian Express explains this: “the fundamental flaw in all these stories is that Hyderabad is seen not as an urban district as depicted in the revenue records but as an extended area comprising large parts of Ranga Reddy, some parts of Mahbubnagar and Nalgonda districts.”

The revenues are always calculated per district, not as per urban management as is done by Seemandhras. The reality is that the revenues from GHMC area of Hyderabad are only 23% of the state’s revenue. If we were to consider the Hyderabad urban district, this number becomes even smaller.

Moreover, the amount of revenues received from a city has never been the argument for stopping the creation of a state, or for sharing the revenues from the city even after the separation.

6. Should we wait till Seemandhras build their capital city similar to Hyderabad?

Hyderabad is not created in the last sixty years. It was already the 5th largest city in India in 1956. It is not necessary that all capital cities have to be metropolitan cities. Many states do not have a Mumbai, Delhi, Hyderabad or Chennai in them. Raipur, Bhopal, Dehradun and Ranchi became capital cities overnight. Right now, Seemandhras have many cities like Vijayawada, Guntur, Vizag, Tirupathi, which are bigger than these cities. Therefore, it is clear that Seemandhras can start functioning in a new capital city of their own immediately from day one after formation of Telangana.

Some Seemandhras feel that a new city like Hyderabad should be created before they let go of Hyderabad. If that is the case, no state will ever be formed in India. Ahmedabad or Gandhinagar has not become Mumbai even after fifty years.

7. What about the security of Seemandhras living in Hyderabad?

First, it should be clearly understood that Indian Constitution guarantees protection to all people living in anywhere in India, and this is enforced through various institutions like police force and judicial system. It is the responsibility of a state to provide security to all the people – whether they are native to the state, migrant population, or foreign visitors.

Second, it has to be understood that no special protection can be provided under Indian Constitution for a particular group of people based on their identity in religion or region. When North east people were targeted in Bangalore in 2012, no special force was created to provide security to them. The Union Government did not take over responsibility of law and order in Mumbai in times of riots between Hindus and Muslims, or when Tamils or Biharis were targeted. It is the responsibility of the state to provide protection to all people – giving up this responsibility to the union government is a clear admission that the state has failed to provide that protection – and no self-respecting state would agree to it.

Since Telangana is not even formed, the case of whether Seemandhras are targeted or not has not even arisen. To use the imaginary fears that they would be targeted in future and thereby deprive the new state of its federal duty and responsibility of providing protection to its people smacks of outright insult. When states like Jharkhand or Nagaland are treated as mature states, why is Telangana being treated as immature even before the state is formed?

Third, there is no insecurity to Seemandhras anywhere in Telangana. Lakhs of Seemandhras have been living in Telangana for many decades now. Even at the time of intense agitations of last four years, no Seemandhra person living in Telangana was targeted. This is an artificial fear being created to deny Hyderabad to Telangana.

Fourth, one can ask why is there a fear of insecurity to Seemandhras living ONLY in Hyderabad but not those living elsewhere in Telangana. How about the Seemandhras living in Medak, Adilabad, Warangal, Mahbubnagar? Such a concern focused only on Hyderabad clearly demonstrates that this is an imaginary fear created only to deny Hyderabad to Telangana.

MUCH is being touted about the share of Hyderabad in the state revenues. The Seemandhra lot wants a share of it, if not the whole city. If they can’t get it , they want to deprive Telangana of it by demanding that Hyderabad be made a Union Territory. The Telangana protagonists won’t let go of a paisa, let alone the city which is expected to fund development in the new state.

THE HEADQUARTERS

The Sri Krishna Committee did not take any notice of the revenue bases of either Telangana, coastal Andhra, Rayalaseema or Hyderabad. However, Mr Rosaiah, as finance minister, presented to the Assembly a set of figures in answer to a member’s question. Here he devised a new formula and invented a “Headquarters” category apart from Telangana, Rayalaseema and coastal Andhra. This “Headquarters” is presumably Hyderabad City and the revenues that occur to the state government and not those based on the three regions. And this is the bone over which the fight for Hyderabad revenues is all about.

For “Headquarters” revenues, he showed an annual average (2003-06) revenue of Rs 7,704 crore. This works out to 37 per cent out of total state’s revenue.

Recently, a leading national newspaper carried a story that on a demand by the Seemandhra heavies to make Hyderabad a Union Territory. It said, “Responding to their demand, Antony and Digvijaya handed over a detailed note prepared by the Union home ministry on Andhra Pradesh’s revenue statistics.”

IT ADDED

“The note, which was given to some Seemandhra ministers, said Hyderabad and Rangareddy districts (Greater Hyderabad or HMDA area) are contributing more than half of AP’s total tax collections. While AP’s total tax collection in 2012-13 stood at Rs 69,146.5 crore, Greater Hyderabad area contributed Rs 34,100.73 crore to the exchequer, making it impossible for Telangana to think of it without Hyderabad.” (note the decimal points to give “accuracy”)
The story also stated that Telangana revenues without Hyderabad were Rs 13,506 crore while coastal Andhra had Rs 16,729.05 crore annual tax revenue and Rayalaseema got Rs 4,809.89 crore revenue. The total for the three regions without Hyderabad would then be Rs 35,044 , that is 51 per cent of the state total with Hyderabad contributing to the remaining 49 per cent Does this make sense?

REVENUE SHARE

Now another national newspaper has carried a story with a table showing that out of the state annual budget of Rs 1,60,000 crores Hyderabad’s share was Rs 90,000 crores and it comes from Rs 40,000 crore in revenues, Rs 35,000 crore in central taxes and Rs 15,000 crore in local revenues. By now the confusion is complete and that is perhaps the objective. So let us look at the State Budgets for more clarity.

The latest reliable budget figures are for 2011-12 and 2012-13 as the budget for 2013-14 is in trouble already and these are given below:

The state’s share of central taxes, grants-in-aid, non-tax revenues (proceeds from sale of government lands) will not be affected by the de-merger of Telangana from Andhra. The real issue is state tax revenues. Disaggregating these figures, we are given the following break-up:

Common sense tells us that the four biggest items are collected on a locational basis. That is, sales tax is credited to the registered address of the company or firm, state excise to the district or registered office of the firm, stamps and registration to where the land was sold and vehicle taxes to the district where the vehicle is registered.

Equally, taxes on property and land revenue are collected where the land or property is located. All this means that the 97.6 per cent or so of the state tax collection is location-based and credited to the district concerned. Thus, demerger will have no effect on the legitimate revenues of Telangana , coastal Andhra or Rayalseema.

So what does one make of the figures floating around Hyderabad’s great revenue collection which the Seemandhra is expected to lose and Telangana gain? It is inconceivable that Hyderabad has a tax revenue of its own of Rs 34,000 crores much less Rs 55,000 crores. As per Rosaiah’s statement, Hyderabad (as Headquarters) had, in the period 2003-06, an annual average revenue of Rs 7,700 crore. Even if we think 37 per cent was the share of “Headquarters” in the state during 2003-06 and apply to the latest state total figure we get only Rs 24,420 crore. Much of this revenue, as was demonstrated earlier, is specific to Hyderabad and will not relate to Seemandhra.Only sales taxes paid by Seemandhra-based companies registered in Hyderabad will be lost if their registered offices move out.

But the one thing everyone concurs on is that Hyderabad generates the largest share of corruption in the state. This is due to the location of the capital with its political and bureaucratic nerve-centre. Even that will shift to the new capital in coastal Andhra and Rayalaseema automatically.

By Gautam Pingle

(Former Director, Public Policy and Governance, ASCI)