Massive Political Corruption In AP Deters Businesses From Expansion: NCAER Study

Vijayawada: Hardly a day after Andhra Pradesh was declared one of the top rankers along with Telangana in the Ease of Doing Business list, a research study by the National Council for Applied Economic Research (NCAER) says that industrialists in the state believe that the prevailing political atmosphere, labour conditions and available infrastructure are not at all conducive for expanding their business operations.

As many as 60 percent of the respondents, who participated in the survey, said they did not want to expand their business in the state in the next five years. According to 51 percent of the respondents, the situation would not improve in the next six months. However, the rest were more optimistic about improvement in the situation.

Notably, a majority of the respondents complained about rampant corruption in government. The government-related problems, including corruption are categorized as most serious problems for businesses in AP. More than 74.3 percent of respondents said corruption was deep-rooted in the state while 17.1 percent felt it is 'moderate'.

Interestingly, the NCAER report goes contrary to the ease of doing business ranks in which AP shared the top rank with the neighboring Telangana, announced by the Centre on Monday.

As a consolation, industrialists have lauded tax policies in AP. More than 91 percent of industrialists said the land acquisition policy in AP was the major attraction for investments.

The report which analysed business and economic trends across the country two days ago said the state investment potential index (N-SIPI) addresses informational asymmetries among different states, by giving each state a single composite investment score, that gives a comprehensive measure of how the 21 states and one Union territory are positioned to attract investments. While N-SIPI does not measure streamlining of regulatory procedures and business reforms, it perfectly complements the recent World Bank and department of investment promotion and policy (DIPP) ranking of states, on how they fared on a 98-point action plan for business reforms.

“N-SIPI is an evidence-based index that is built around five main pillars and 51 subindicators, which were identified after several rounds of brainstorming and discussions with industrialists, academicians, central and state government functionaries,“ said NCAER.

The five pillars of N-SIPI include labour, infrastructure, economic climate, political stability (including governance), and perceptions of good business climate. As the industry survey covered only 21states, this study gives two types of rankings. The first is N-SIPI 21, which is the comprehensive ranking based on all five pillars, the remaining nine states are mentioned in the N-SIPI 30 where industry surveys have not been conducted.

This year's N-SIPI 21 ranks Gujarat, Delhi and Tamil Nadu as the top three destinations for medium-term investment. States that have a significant amount of catching up to do include Bihar, Uttar Pradesh and Jharkhand. At a more disaggregated level, there is a significant variation among states. In the economic climate pillar, Delhi tops the list, closely followed by Andhra Pradesh and Maharashtra. Gujarat tops in two pillars political stability and perception of good business climate.

AP stood ninth in labour issues, 14th in infrastructure and 11th in political stability. However, AP ranked fourth in overall performance considering all five pillars. AP is ranked second in economy climate pillar. AP earned a poor 19th rank in perception of business climate.

L&T Quietly Exits From Medha Towers After Selling Its Stake To Another Company

Even as the decision to denotify Medha Towers in Vijayawada as a special economic zone (SEZ) is pending, its major partner, Larsen & Toubro, made a quiet exit from the ownership selling its stake to another company .

Medha Towers is the first IT SEZ to be set up outside Hyderabad in united Andhra Pradesh. Energy company Greenko has now stepped in to take the place of L&T. The IT tower was built in 2008 as a joint venture between L&T and APIIC.The APIIC has 26 per cent share and L&T has a stake of 74 per cent. The project cost was Rs 70 crore. The new entrant, Greenko, has bought all the stakes of L&T.

According to L&T representatives, the decision has to be ratified in board mee ting to make the change. The company informed the decision to exit from the towers to the Securities and Exchange Board of India (SEBI).

But insiders say that the new company has a tough task ahead as Medha Towers remained vacant all these years with barely two IT companies operating from the premises. Though built almost eight years ago, the Medha Towers did not get the required number of companies to fill the space.Though it was touted to be the most suitable office accommodation for IT companies, currently 200 employees are working in the towers as against nearly 2,000 employees it can accommodate.