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Majority of India Inc, surveyed by Assocham, perceives that Andhra Pradesh may be in for a long haul of agitations and bandhs on the knotty Telangana issue, taking a toll on investment in the State.
This could particularly impact the new economy of Hyderabad.
The situation is likely to continue till 2014 elections impacting the business environment not only in Hyderabad but other commercial hubs of the State such as Vijayawada, Kakinada and Visakhapatnam.
Sixty-seven per cent of the CEOs and senior managements of the corporate entities felt that the biggest casualty of the impasse on Telangana was investment in Hyderabad, particularly in the IT sector.
Hyderabad as the joint capital of Telangana and Andhra Pradesh would be difficult to sell and there was a need to build a political consensus.
The Hyderabad region has been among the top destinations of the foreign direct investment with cumulative FDI of $8.6 billion between 2000 and 2013. The city witnessed increase in FDI in 2012-13 to $1.16 billion, up from $848 million in the previous year. However, the trend may not continue till there is clarity on the political situation.
“While a liberal and friendly State regime continued in the recent past, unfortunately political events revolving around the demand for separate State of Telangana, have overwhelmed the political leadership. Besides, investors all over the world do not prefer a place which has rallies, bandhs and uncertainty of political structure,” D.S. Rawat, Secretary General, Assocham, said in a statement.
Majority (81 per cent) of the respondents do not see an early solution to the issue, impacting business environment.
Apart from global IT investors remaining wary, those seeking opportunities in the state infrastructure like hotels, transport, ports are also less likely to be enthused about Andhra Pradesh.
Neighbouring States tend to gain when there is political instability, the survey noted.
“It also apprehended that the situation was likely to become murkier in the run-up to the 2014 elections with investment being a casualty,” said Rawat.
rishikumar.vundi@thehindu.co.in
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