Denting Investor confidence in AP
Controversies are the order of the day for the Y S Jagan Mohan Reddy government. To be fair, not all of them are of its making but it is no exaggeration to say that many of them are. The latest controversy the government finds itself in is the exit of the Gulf-based LuLu Group. LuLu had signed an agreement during the erstwhile Naidu regime for building a convention centre, a shopping mall and a five-star hotel in Visakhapatnam with an investment of `2,200 crore, and it was supposed to generate about 7,000 jobs. The government has cancelled the land allotment to it on the grounds that the plot in question is entangled in a legal dispute and that it was leased out at a throwaway price.
The government could well be right but the move has prompted the group to declare that it will no longer invest in Andhra Pradesh. Seen in the context of the recent exit of the Singapore consortium from the Amaravati start-up area project (albeit by mutual consent), 75% job quota for locals and the ongoing spat with renewable energy companies over the proposed scrapping of power purchase agreements, LuLu’s public declaration will further dent investor confidence in the state.
This doesn’t augur well for Andhra, notwithstanding the government’s argument that it is cleaning up the system and the reviews are part of a long overdue course correction. Good intentions will not bear fruit if they are not carried out and conveyed effectively. The problem is the government’s actions are being viewed negatively as an effort to erase the legacy of former Chief Minister Chandrababu Naidu. Right or wrong, it is gaining ground, and the government, if it is serious about attracting investments, must come up with a vibrant policy.
The ongoing review of the industrial policy must be expedited to contain further damage and a positive narrative must be set to allay the concerns of the investors. Else, Andhra will not only lose out to other states but will also have a massive unemployment problem on its hands.