July 13, 1998

In an unprecedented coup, an astute Chandrababu Naidu impresses World Bank officials enough for them to single out the state for a Rs 2,200 crore loan.

By Amarnath K Menon

Impressing World Bank mandarins is not an easy task. They loosen their moneybelt only for those whom they consider astute, forceful and capable of heralding change. Andhra Pradesh Chief Minister Chandrababu Naidu seems to meet the grade. In an unprecedented decision last week, the World Bank singled out the state for a loan of Rs 2,200 crore before its financial year closed on June 30. The move put an end to apprehensions that following Pokhran II, even deserving states would be starved of World Bank funds. It's been the biggest coup of Naidu's career.

The hefty sum is for a programme that Naidu recently unveiled. The five- year Andhra Pradesh Economic Restructuring Programme (APERP) has a Rs 3,300 crore outlay, of which Rs 1,100 crore is to be met by the state. "The programme is aimed at making a qualitative difference in the lives of the poor," says Naidu. While such statements flow easily from politicians, the World Bank is convinced that Naidu will practise what he preaches. World Bank Managing Director (Operations) Caio K. Koch-Wesner not only congratulated Naidu on the "historic achievement", but added, "It is befitting the first multi-sectoral state-level investment operation in India will benefit Andhra Pradesh which has so clearly demonstrated its commitment to reforms."

In the three years since he dislodged his father-in-law N.T. Rama Rao (NTR) to become Andhra's youngest chief minister, the 48-year-old Naidu has frequently tried to prove that in administration, the ends always justify the means, even if it means jettisoning populist schemes that could invite public wrath. Reneging on the vote-grabbing ploys of NTR, Naidu has cut back on the distribution of rice to the poor, scrapped the ban on liquor sale and increased the tariff for electricity supplied to farmers. The price of rice for the poor has been hiked from Rs 2 to Rs 3.50 a kg and the monthly quota has been limited to 20 kg. He has also made major shifts in the prohibition policy, which was largely responsible for NTR's miraculous comeback in 1994, by auctioning vends. To appease women, however, he has not lifted the ban on the sale of arrack.

As chief minister, his track record has been impressive. Well-versed in the intricacies of money management, Naidu has a modern outlook. This, he feels, is imperative for a vibrant economy and for better governance.

A natural leader, authoritarianism and self-aggrandisement form part of Naidu's style. These qualities were in evidence ever since he ran the TDP as a backroom boy for NTR since 1983. He has no second-in-command and goes to great lengths to stifle dissent. Yet, he is open to ideas and is eager to go down in history as the chief minister who changed the face of the state.

For this, Naidu has evolved a compact strategy. He has rolled back subsidies, formed self-help groups like Water Users Associations (WUAS) and borrowed funds to invest on infrastructure. To cut down flab, Naidu has triggered off the restructuring of institutions, beginning with the closure of public-sector enterprises like the Andhra Pradesh Fisheries Corporation before moving on to the legislation for dismantling the Andhra Pradesh State Electricity Board (APSEB). Protests from employees' unions has failed to deter him. "Reforms, rationalising of subsidies and ensuring a higher return on the capital will improve the APSEB's efficiency," says Naidu, who tracks the performance of the power stations on a daily basis. With this he hopes the plant load factor, already up at 72 per cent, will be better at 85 per cent.

The formation of 10,292 WUAS, a novel venture, will lead to efficient water management. WUAS are to collect water cess, monitor supply, distribution and maintain the canals. "We used to spend Rs 40 per acre, of which Rs 32 went on salaries, and the rest for irrigation works," says J. Raymond Peter, additional secretary, irrigation. If the WUAS function as the Government anticipates, the revenue recovery will go up from 64 per cent to 95 per cent and the area under irrigation by more than 3 per cent a year.

Besotted with hi-tech, Naidu encourages ministers and officials to be likewise. "It is like setting a cat among the pigeons," says a bureaucrat. "By providing us computers, he wants us to have information at our fingertips and conducts review meetings regularly to keep us on our toes." On the more basic level, Naidu has taken steps to increase the state's resources. APSEB netted Rs 240 crore more in 1997-98 due to a 2.5 per cent increase in billing. Excise revenue rose from Rs 59.14 crore in 1996-97 to Rs 696.69 crore last year and is expected to rake in Rs 820.76 crore this year.

Naidu does not stint money where required. A 10-storeyed building to house computer companies, built at a cost of Rs 80 crore, is to open in August at the Hyderabad Information Technology, Engineering and Consultancy (Hi-Tec) City. Another showcase is the sprawling Indian Institute of Information Technology. "This is to emerge as an autonomous institution for distinct corporate schools of infotech companies like Microsoft, IBM, Oracle and Satyam Computers," says Ajay P. Sawhney, additional secretary, information technology.

It is hard to sell a state where a third of the districts are racked by Naxalite violence. However, Naidu's computer-based slide presentations are slick and his halting English is no setback. As a foreign banker who rated him the best speaker at the Euromoney conference in Delhi on June 25 puts it, "We understand only one language -- business." Naidu's political rivals don't. "He is leading the state deeper into a debt trap," says former finance and power minister K. Rosaiah. Naidu is well aware that huge borrowings, if not matched by growth and development, can wreck the economy. For the moment, however, Naidu's worry is to win the next assembly elections due in December 1999. Then only can he continue to be on the saddle.

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