These are times of counting losses. Growth is stunted; consumption has withered; the rulers and the ruled at the two sides of divide are adrift. In our federal country, States are looking up to the Centre to address the Goods and Services Tax (GST) shortfall. Even the best are not in good shape.
I bring in Andhra Pradesh here for a specific reason. News has filtered in that the southern State with the longest eastern coast could suffer a revenue shortfall of Rs 7,000 crores upwards. The double whammy is the literacy rate (66%) which is worse than even Bihar (70%), a rather uncharitable comparison to its strides under Nitish Kumar.
Then you wake up to a morning when Finance Minister Nirmala Sitharaman is gushing on the State for being the best in implementing the Business Reform Action Plan for third year in a row. This was only last week. But it referred to 2019—a year when Andhra was the cynosure of the country. It was a model of good governance, an inspiration for the rest of the states.
As the last year had closed upon us, Andhra Pradesh was beaming from ear to ear. It had been rated the second best in Good Governance Index (GGI) in the country and nobody knows why Jharkhand was deemed better even though their scores were identical. It’s youthful chief minister, Jaganmohan Reddy, fresh from his simultaneous State and Lok Sabha poll sweeps, appeared worthy as people’s choice.
A good move on Reddy’s part was to put a bureaucrat, who had helped the Union finance ministry with its budget not long ago, as Special Chief Secretary of Industries and Commerce. It was a new government and somehow fresh ministers and a few fresh bureaucrats seemed par for course. Rajat Bhargava, an IAS officer of 1990 batch, was now at helm.
Bhargava recalls the GGI moment with clarity. It’s weighed up on three scales of (a) Ease of Doing Business (EODB); (b) growth rate of industries, and (c) MSMEs. When he took over last summer, he found on his table that only 60 of the 187 had been complied with. By June 15th, it had jumped to 146. By August 15, the target of 187 had been met before the window of performance had closed.
“It was important that everyone was brought on board. The vision needed to percolate down to all departments. We needed to meet and meet often. Gradually everyone bought the vision. I have always believed in interpersonal approach and fortunately had a Commissioner (Siddhartha Jain) who shared the philosophy.”
How the wheels moved
The wheels moved. The departments responded. Industries were listened to. Those who had made up their minds to move out of the State were persuaded to hold on to their horses. GM Modular (electronic and kitchen appliances) thus didn’t bolt. Munoth, the Lithium-ion cell manufacturers, didn’t take to heels after settling on Tirupati. Nearly a thousand crore rupees rode on these two companies alone. “We covered everybody. I must have met 6,000 personally. Industrial promotion officers would interact with around 100 every month. Dozens of processes, sanctions were streamlined,” recalls Bhargava.
An important milestone was the Investors’ meet in June 2019. They came from all over: Tirupati, Vellore, Chennai etc. “The state has some remarkable industries. Apache shoes, for instance, is aligned with Nokia. Some 23 departments were in attendance to smoothen everything which could bolster the Ease of Doing Business in the State.”
Critical was the MSMEs sector. “Out of around 3 lakhs in the state, some 1.70 lakh enterprises were in distress. NPA was big, around Rs 2,500 crores. They needed hand-holding. Loans were restructured. The related issues of transportation or legal charges etc were attended to. State government schemes such as YSR Navodoyan were a huge fillip. Some 1.3 lakh industries had their loans restructured,” remembers Bhargava.
Bhargava would go to industries, spend time there, even stay overnight, choosing it over a five-star bed. It was a confidence-building exercise. And it rarely failed.
The State has some 39 operational Special Economic Zones (SEZs), 272 industrial estates and industrial development areas. Bhargava chuckles at the mention: “We had received a backlash when we announced our intention to give locals the first right of employment. But it was already prevalent. Brandix (a Sri Lankan clothing brand) was made up almost entirely of local workers. So was Kia Motors, a South Korean automotive manufacturer, with 83 percent locals on board.”
We are talking here of a State which primarily relies on agriculture for its economy. Some 62 percent of it is either directly or indirectly with this sector. But industries, such as automobiles and auto components, Information Technology, textiles, mines, pharmaceuticals etc are not only big but also have the potential to grow even bigger.
“It’s important that different ministries work in tandem towards a vision. Fortunately, the CM is reform-oriented. He asks to be informed on a daily basis but then doesn’t make you look over the shoulder all the time. You have space to manoeuvre and shape the landscape,” reflects Bhargava. (In the image below, Bhargava is seen with his chief minister Jaganmohan Reddy).
As is easily understood, industries depend on a good supply chain which in turn depends, for instance, on transport and IT in modern context. The State has a better road density (33km/sq.km) than the national average of 30.45km/sq.km. IT remains potentially a huge sector which is a pleasant irony in a state struggling with literacy.
Literacy: A scheme which has even World Bank’s attention
Bhargava wouldn’t duck but rather take you on on literacy. “You would hear some big things in education sector soon. The mid-day meal scheme is a norm around the country. The present State government has taken the bull by the horns, so to speak. Now Rs 15,000 is deposited with the mother of a school-going child. It would cost the State exchequer Rs 7,000 crores. The new policy has interested even the World Bank which wants to see how this all works out,” informs Bhargava.
Some 2400 schools are being built. The target is of 4,500 by March 2021. There are various schemes which go by names such as My School, Today-Tomorrow which could be tongue-twisting for a north Indian if asked to pronounce in the local dialect.
Female empowerment is big on the future chart. There are self-help groups, micro-management of finances, tailoring skills, employment in dairy farms etc. Interestingly, even though Andhra suffers on literacy map, the gap in education between the two genders is minor when compared with a host of other States.
Now comes the sobering part. Bhargava, after a year’s stint, was moved out of Industries and Commerce ministry in the midst of raging Covid-19 pandemic. He is now Special Chief Secretary of Revenues which, as said, suffers from a deficit of 7,000 crores, primarily a fallout of the terrible pandemic. He is confident he would fill up the gaping hole significantly. Tourism is also under his sway while the country is still going through its episodic Unlocks.
It could be that Bhargava’s chief minister trusts him to spin a miracle. Like it was with Industries and Commerce in the State which is worth $US 7 billion today.
Don’t fix which ain’t broken is an old maxim. But we are living in distressed times when you trust instincts more than the pattern. With system in place, industries perhaps could run on its own steam for the time being. It’s revenues which are slipping in a coma. You do need your best man to restore its health.
