By Kumar David –

Prof. Kumar David

Andhra Pradesh’s Chandrababu Naidu leads the pack: Lanka’s muddled politicos can learn from Andhra

The economies of some big states in India are growing above the national average, among them Maharashtra, Tamil Nadu and Telangana; small ones like Pondicherry, Goa, Meghalaya and Sikkim are doing even better and so are Jharkhand and Bihar starting from a low base,. Andhra Pradesh (AP) comes in just behind Telangana. (Different sources report conflicting rankings: See statisticstimes.com).  However, in ambition AP Chief Minister Chandrababu Naidu leads the pack. His vision for AP is to be among the top three by 2022, number one in development cum happiness by 2029 and a global investment hub by 2050. His joint seminar with Microsoft’s CEO Satya Nadella – of Indian origin, born in Hyderabad – was not short of oomph in shooting for the stars. Naidu is no poor man’s saviour; his goal is capitalist development, a latter day state-level Lee Kwan Yue. If successful he will achieve what Ranil wants to but can’t. 

Why is it that Indian states reach tall targets but GoSL is mired in a muddle? Maharashtra, Madhya Pradesh, Tamil Nadu, Telangana and AP are all above the high national growth rate of 7 to 7.5%. Some at 10% are on course to become India’s Guangdong or Jiangsu. If economy A is half that of B, but growing at a sustained 5% higher rate, then mathematically A will overtake B in 14 to 15 years. In an inversion of the rabbit and tortoise story, a faster growing number will, at some point in time, always overtake a slower growing one, whatever the initial handicap. Lanka’s economy grew at 4.5% last year and the Central Bank, whistling in the dark, says it will rise to 5.5% in 2017; still 4 to 5% below the best performing Indian states.

I picked Naidu as my specimen because he and Ranil share a common ideology, a globalization oriented capitalist outlook. Years ago it was called neo-liberalism, now defeated and dead. In a snapshot of Nimal Sandraratne’s views Shyamon Jayasinghe (Colombo Telegraph 21 April) says: “What we need on a national scale is transformation of the economy from import dependence to export led growth. This can be built only on domestic and foreign investment. Government has to put in place a policy environment to encourage this”. Well, improving exports is fine; it will help Lanka climb out of a debt basin, investment will generate employment and the profit seeking classes will be pleased.

But there are three other aspects to examine. (a) Why is it that Naidu’s initiative seems to be delivering, but not Ranil’s? (b) What is the role of government – Andhra State in the case of Naidu, GoSL for Ranil? (c) Since neither Naidu nor Ranil are populists, not even to the extent of Prime Minister Modi, what does this portend for the poor?  This essay will make a stab at the first two questions.

Naidu’s cylinder is firing but not Ranil’s

In respect of conundrum (a) I will not critique Ranil unfairly; the inherited debt burden is huge and Lanka cannot circumvent financial and a degree of political subservience to China in the wake of Rajapaksa era profligacy, waste and megalomania. And the whole world still lives in the shadow of the 2008 WobbleU shaped recession; wary globe watchers expect another wobble, a follow up recession, next year. Ranil and GoSL will have a hard time attracting Western capital because investors are running scared all over the world There are only small signs of upturn in the global rate of profit, whose decline was the forerunner of 2008 crash. Lanka is a riskier basket than India and Andhra Pradesh for Western capital, so Ranil is batting on a stickier wicket than Naidu. Those who know me well will recall that I am not a UNP supporter or Ranil devotee, but if the alternative is a Rajapaksa-sibling scoundrel, what choice do we have exept to try and avoid a one-term fate for the miserable current lot?

Where Ranil does have a strong hand and seems to be bidding two-no-trumps is in finessing China, India and Japan on Lanka’s port facilities. I cannot explore this at length but readers should visit Jeremy Luedi’s “Are Sri Lanka’s ports the next Great Game for China, India and Japan?” in Global Risks Insight, April 17, 2017. Luedi’s case is convincing and emphasises political and economic not strategic factors, a line of reasoning I have advocated. (Who needs Trinco, Hambantota or ocean waters south of Lanka for hi-tech naval strategy?).

China is focusing on Hambantota, India and Japan on Trinco, and the US Jaffna. China crony Mahinda bleats that Ranil plans to apportion control accordingly, but Lanka needs investment. Japan’s Abe says: “Without a free and open Indian Ocean, there cannot be real prosperity in the region. This is why it is essential for Lanka to grow as a hub and develop ports that are open to everyone”. Our location between the Middle East and East Asia is valuable though India and Japan are concerned about Chinese investment and influence.  Ranil is pitching Lanka as a trade and finance hub. He wants Japan to use us as a trade hub and hopes to deepen the FTA with India via ECTA and wants FTAs with Singapore, China, Indonesia and ASEAN countries. I support these initiatives in principle; sans global linkages Lanka will stagnate.

But the government is facing a storm instigated by the Rajapaksa led Joint Opposition (JO) which wants to sabotage the Ranil administration at every turn. (Shyamon does a fine job eviscerating Rajapaksa mouthpiece Dayan Jayatilleke in the aforementioned CT piece). Pathologically, the JO is anti-Indian because India and Tamil are synonymous to the chauvinist mind. Majority Indian control of the Trinco oil storage facility is what keeps Dayan and the JO awake at night.

The flashpoint of domestic anger are plans to expand the Hambantota project into a 15,000 acre economic zone with 80:20 ownership in favour of China. The $1.4 billion will be the largest foreign investment in the country with an additional $13 billion expected in subsequent developments according to Leudi. The project promises 83,000 jobs but has been delayed by JO instigated unrest. The plans spare developed land and nature reserves, but the future of nearby villages is uncertain. This has panicked locals. The way things handled by the government is plain stupid; it grossly mishandled the propaganda. Another contentious issue is a plan to extend Colombo Port City by eight to ten miles, making it the largest in the region, but at the expense of the urban poor who are pushed out to make way for flashy office blocks and condominiums for the wealthy. Meethotamulla tragedy is symptomatic of the calamities that this and previous government top-brass precipitate.

Naidu drives hard, Ranil plays off the back foot

The Naidu video exudes confidence because he has a support mechanism of experts, officials and politicians. The pitch is directed and led by the Chief Minister. Information technology (bandwidth and cloud technology), building a new capital at Amaravati, expertise for efficient governance, highways, infrastructure and liaison with Microsoft are the key projects. One can’t use the term state-capitalism for something confined to one local State, but I think you get my point. There is no assurance of eventual outcomes; I only say Naidu is a well-ordered state-capitalist.

Ranil’s economic team is Charitha, Paski and Manik, residues of an old school tie JR-era neo-liberal rump. Harsha and Eran are not dregs but have neither the clout nor the personality to say boo to this cabal. There is are one or two novice Cabinet economic committees but the missing link is a planning commission. A hard-core packed with engineers, information specialists, economists with hands on experience, can-do project managers, and types who know how to manoeuvre decisions through the machinery of state. Geriatrics whose use-by date has expired are no good for steering the ship of state. Actually Ranil is more able than the aged crew he is cloistered with. And nationally there is no visible machinery of independent planning-intelligence; only a few “think tanks” that parrot the IMF. 

What brought this incompetence home to me like a hammer blow was the monumental blunder in the cavalier decision to abandon the Sampur power project. (I served on some inane and pointless committee). The national political leadership was out of its depth, but everywhere in the world leaders rely on subject experts. The shocker was the epic ignorance of ‘advisors’ closeted with President, Prime Minister, subject Minister and the Public Utilities Commission. I bet Naidu engages competent professionals and of course he plays in a different ball park.