Karnataka: Readying for the fight

Ever since S.M. Krishna took over as the chief minister of Karnataka, many see his indefatigable pace of functioning as a desperate attempt to catch up the time his state lost to neighboring Andhra Pradesh. Bangalore has always been known as the Silicon Valley of India, with the city being the hot favorite among the IT entrepreneurs and global giants alike. However, during the last few years, with the rise of flamboyant Andhra Pradesh chief minister Chandrababu Naidu, Karnataka lagged behind in promoting itself to attract foreign investments into the state.

One of the most noteworthy aspects of S.M. Krishna’s latest drive is that he has taken conscious efforts to promote other districts in the state too. There is no extra thrust for Bangalore any more. He fully realises the dangers of portraying Bangalore as Karnataka. This is clear from the fact that six out of the 11 IT projects that the recently held Global Investors’ Meet (GIM) are situated out of the capital city.

Having turned his attention first on tightening the administration, Mr Krishna’s next move is to bring more money into the state for further development. Bangalorites will remember how their roads got a new coating within weeks of Mr Krishna’s taking over. Surprise visits to government offices and introduction of swipe cards at secretariat were some of the first visible changes.

Mr Krishna first mooted the idea of a GIM while addressing the Global Economic Forum meeting late last year. He moved at an unprecedented speed to get most of the projects okayed so as to announce during the GIM. Most of the projects that were announced during the GIM were proposed within the last few days. 

It is interesting to note that more than half the investment that came in during the GIM was in non-IT sector. Of the around Rs 13,000 crore of investments proposed, Rs 6,000 crore is for the IT sector. Projects worth Rs 2,000 crore are related to laying of fibre optic cable across the state. Reliance and Enron are the two main players in this segment, with BPL and SpectraNet also announcing smaller projects. Though this network can be used currently for data transmission only, these players are expect to enter voice transmission as and when the government liberalises it. But, the question is does the demand qualify for such a large number of fibre optic networks. As a state official pointed out, ultimately there would be place for not more than two (and currently, it looks like the two being Enron and Reliance) players, with the rest being either bought over or vanishing.

It was learnt that Reliance group contacted the government on June 1 to set up the project. In one of the fastest government decision heard ever, the state government gave its nod so as to sign the momorandum of understanding during the GIM on June 5. Does this send any signal to other competing states, mainly Maharashtra, Andhra Pradesh and Tamil Nadu?

One relatively lesser talked about fact that emerged from the GIM is that the massive NewsCorp plan to invest in Bangalore has given the city the entertainment angle too. So far, both IT and communication sectors are adequately represented by Bangalore with many a big projects being announced here. The meeting of Mr Krishna with News Corp chief Rupert Murdoch during the latter’s India visit paved the way for News Corp’s investment of Rs 1,000 crore in the city to set up a global convergence venture. The project will create multimedia content for News Corp’s global requirement through broadband technology. Sources say that the company is in a hurry and would set up the venture in three months. "With this project, Bangalore can now boast of being a true ICE (information Communication and Entertainment) centre," said a state official.

Mr Krishna clearly realises the need and room for improvement of infrastructure in his state. In a recent interview to CIOL, he said he planned to remove all infrastructure bottlenecks, including power shortage, within one and half years. He has already clinched a deal with the World Bank, which has agreed to give the state loan worth Rs 12,000 crore over the next five years.

As Union Finance minister Yashwant Sinha pointed out during the inaugural address of GIM, the second phase of reforms would be powered by the involvement of state governments. The future will be determined by the manner in which the states are able to independently carry out the reforms process, through focusing on education, health, infrastructure and poverty elimination. Most of the states are realising that the less they depend on the Central government, the faster they are able to implement these programs. The spirit of competition among the states is an encouraging development as the ultimate beneficiary of such healthy tussle would be the citizen.