Why Andhra Pradesh needs single capital

A few days after Prime Minister Narendra Modi took the country by surprise by announcing the demonetisation of high value currency notes on November 8, 2016, it was written in this column that the note ban was an exercise in futility that would derail the economy.

The assessment, more or less, came true with most of the banned currency notes landing in the banks and India's GDP starting its downward spiral nearly a year-and-a-half ago.

The proponents of this ill-advised move argued that the demonetisation exercise would flush out black money from the system. But that did not happen.

The primary reason for that is that Indians never hoard their illicit stash in hard cash. Demonetisation was like applying electric shock to a healthy individual to make his or her brain sharper!

With the central government's attempt to unearth black money turning futile, it deftly shifted focus to digitalisation of financial transactions in the country as people scrambled for currency notes.

That was the time when I approached a swiping machine supplier to find out the demand for swiping machines post the digitalisation move across the country.

For uninitiated, swiping machines are essential for traders and shops to accept debit and credit card payments. And most of the shopkeepers never bothered to have one before.

The supplier reeled out statistics that indicated enormous jump in the sales of such machines. He also made an interesting comment.

The supplier said that all the machines that were being sold and used were imported from China and other countries. At that time, India, the country of a billion people, had no factory that could make swiping machines!

The reason was that India lacked enough demand that could make such a factory viable in the country. That's true. 'Economies of scale' is essential for any plant to churn out profits.

This conversation came to my mind while dwelling on the recent announcement made by Andhra Pradesh Chief Minister YS Jagan Mohan Reddy that AP might have three capitals – executive capital in Visakhapatnam, legislature in Amaravati and judiciary in Kurnool.

It's difficult to understand how this strange plan would help the capital-less, revenue-deficit State. For a capital city to be successful and attractive for large-scale infrastructure and other investments, it should offer economies of scale.

It will take decades for any city in AP to reach a stage where it can offer economies of scale for infrastructure projects and businesses if the Jagan government splits different organs of the administrative process and establishes them at far-flung locations.

Besides, such an impractical move will cripple the administrative flow in the State at time when single window clearance for industrial and other approvals has become a norm.

Investors and companies will also face problems if AP goes ahead with multiple capital cities. For them, reaching out to different official setups at different locations consumes time and escalates expenses.

In this context, it is ideal for Andhra Pradesh to have single capital city. It can develop other cities through industrialisation and commercial push.

Further, Amravati is a better location for Andhra Pradesh to build its Greenfield capital because it is centrally located. Moreover, Vijayawada, Mangalagiri, Guntur and Amaravati will eventually transform into a massive urban conglomeration as and when these cities come closure in future.

Then, Amaravati will be a bigger city than Hyderabad a couple of decades down the line if rulers there plan well and execute it.

As Jagan Mohan Reddy rightly pointed out, the Greenfield capital requires massive investments, much more than Rs 1.09 lakh crore that the previous regime estimated if private investments are included.

However, attracting capital is not an issue if the government finds ways to assure growth and decent return on investments.

The 33,000-acre land bank that the government has at its disposal in Amaravati will make the task easier. But the government needs to do a lot of leg work and a deft convincing of investors, which is now a time-consuming process for the present dispensation.

Insider trading issue in which those close to TDP government allegedly bought lands prior to the announcement of capital location at Amaravati should not come in the way if Jagan government goes for the Greenfield capital and builds a better one than TDP's Naidu envisaged.

It's not a good idea to throw the baby out with the bathwater. Isn't it?

But if the Jagan government feels that it can't develop Amaravati and has different priorities, then it should declare Visakhapatnam as the capital city and locate all the arms of government and judiciary there.

Some say the Central government might take an objection to this as it notified Amaravati as AP's capital and Prime Minister had laid foundation for it.

But the central government can't do anything if the AP government says it doesn't have funds to develop Amaravati. It is very unlikely that the Modi government will come forward to offer funds for the Amaravati development.

GN Rao Committee appointed by the Jagan government on AP development, has made absurd recommendations, to say the least, when it comes to multiple capital cities.

It's better if the AP government throws away the report. The government has to make a choice between Amaravati and Visakhapatnam. It's as simple as that. For that, it doesn't need to appoint committee after committee.

The primary objective of the Jagan government should be to increase revenues and strengthen his government coffers. And the government should do it fast. That's the only way the government can effectively implement its path-breaking welfare measures.

For that to happen, the AP government needs to put curtains on the uncertainty over its capital city plans at the earliest possible.

If the uncertainty prolongs for long, it will harm the interests of Andhra Pradesh in long run. Further, regional aspirations will escalate into harmful agitations and violent protests, a phenomenon unheard of in Andhra Pradesh.

And as if that's not enough, useless figures like outdated film director Ram Gopal Varma also dare to express their useless opinions on serious issues like capital city.

And some people are foolish enough to circulate such good-for-nothing stuff.