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Panic among Andhra Pradesh businessmen over state government's vindictive decisions

Two recent decisions -both reversals of stands by the previous government of united AP -are being cited as examples of Telangana's cussedness.

, ET Bureau|
Updated: Jul 03, 2014, 12.58 PM IST
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Two recent decisions -both reversals of stands by the previous government of united AP -are being cited as examples of Telangana's cussedness. 
Two recent decisions -both reversals of stands by the previous government of united AP -are being cited as examples of Telangana's cussedness. 
HYDERABAD: The state of Telangana and its government are just a month old but already there are concerns that the ruling Telangana Rashtra Samithi (TRS) is allowing emotion to get the better of business sense.

Instead of keeping its eyes focussed on governance, the administration, many believe, is taking decisions that are perceived as aimed at hurting the interests of some corporates.

Two recent decisions -both reversals of stands by the previous government of united Andhra Pradesh -are being cited as examples of Telangana's cussedness.

In one case, the government asked L&T to change the alignment of the Hyderabad metro rail project and in another it is trying to retrieve land bought by Lanco group through government-organised global competitive bidding.

"There is panic among the Andhra Pradesh entrepreneurs with business interests in Telangana, especially in sectors like real estate, irrigation, construction and infrastructure where the government has a big say," said chairman of a large infrastructure firm requesting anonymity.

Such fears are not uncommon, ET's interviews with entrepreneurs showed, but most of them did not want to be identified for fear of being targeted by the government or the TRS.

The industrialists either have large public-private-partnership infrastructure projects or pricey personal assets in and around Hyderabad. Dozens of them with direct or indirect political linkages with parties that opposed the bifurca tion of Andhra Pradesh now fear a witch-hunt by the agitators-turned-lawmakers in the new state.
 

Hyderabad houses some of India's largest infrastructure firms that have built nearly one-third of the country's power, road, airport and irrigation projects.

Most of these companies, among them GMR, GVK, Lanco and IVRCL, are owned by businessmen with roots in Andhra Pradesh.

S Srinivasa Rao, an associate professor at the Jawaharlal Nehru University , is of the view that muscle-flexing by the government could send undesirable signals to investors.

"Such signals may make the job of the government tough to retain investments, forget about attracting fresh ones. Political retribution could affect investors, people and the overall economy."

L&T, which has already suffered significant cost and time overruns in implementing the elevated Hyderabad metro rail project, is concerned that the government's directives to go underground at critical locations in the city could further affect schedules and project viability.

The infrastructure company has spent over Rs 6,000 crore so far.

Lanco group, which in 2005 bought around 100 acre from the government for Rs 427 crore at Manikonda, has spent over Rs 3,500 crore on its integrated township project, Lanco Hills.

Two years after the government allotted the land to several corporates in Manikonda, the Wakf Board moved courts claiming ownership of land.

In May 2012, Supreme Court allowed Lanco to proceed with construction and directed the state government to compensate the Wakf Board if the latter was the owner of the land.

While L&T and Lanco group are examining their legal options and preparing claims for compensation to make projects viable, others are readying for the eventuality of a prolonged legal battle.

"Entrepreneurs should not be penalised for no fault of their and for trusting the government while buying land or entering into alliances," said IVRCL group chairman E Sudhir Reddy.

"However, the law can take its own course if there are any irregularities committed by corporates."

A senior L&T executive who didn't want to be named said "the company would consider invoking penal clauses stipulated in the concession agreement to adequately compensate for any deviations that the government would direct."

A L&T spokesperson said, "We have not received any letter from the government in regards to change of alignment/going underground and hence we can't react to it."

Terming that it was not an issue only with 100 acres of land bought by Lanco, Lanco group chairman Lagadapati Madhusudhan Rao said, "Wakf Board is disputing some 1,600 acre of land at Manikonda that was allotted by the government to large global and domestic enterprises like Google, Microsoft, Infosys, Wipro and ISB."

Telangana IT and Panchayat Raj minister Kalvakuntla Taraka Rama Rao, who is also the son of chief minister K Chandrasekhar Rao, told ET, "We are more than happy to reach out and help the companies sort out. We do not have ulterior motives or hidden agendas.

We are particular on zeroing down on political corruption."

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