Summary
Ongoing unrest in the coastal regions of India's Andhra Pradesh state exemplifies the threat local politics pose to India's national strategic interests. Protesters upset with the prospect of Telanganan statehood, including local utility employees, have shut off power and other services to some parts of Andhra Pradesh, much to the detriment of the city of Hyderabad, one of India's most vibrant local economies and a center of the country's information technology sector.
The threats to Hyderabad and southern India's power grid, as well as to Chennai's industrial sector, already have prompted New Delhi to begin negotiations with protest leaders. But with India's contentious national elections only eight months away, supporters on both sides of the Telanganan separatism issue will continue to leverage Hyderabad's significance to the Indian economy in their attempts to gain concessions from the government.
Analysis
India's ruling Congress Party supported Telangana's bid for statehood July 30 despite the controversy surrounding the issue. The government hoped the backing would earn it some votes in the May 2014 elections and that it would dispel long-held notions that it was feckless and corrupt. According to the government's decision, Hyderabad will serve as a joint capital for 10 years before transitioning to a union territory. The city will lie outside a future Telanganan state and the future Seemandhra state, which will be composed of the remnant Rayalaseema and Andhra districts of Andhra Pradesh. In theory, the Telangana decision will help the Congress Party retain control of the government and counter the growing influence of its rival Bharatiya Janata Party.
New Delhi apparently miscalculated the degree of opposition the decision would incite. Certainly, the Congress Party realized there was internal dissent within its ranks -- indeed, it has been criticized by some of its otherwise stalwart supporters -- and it has not forgotten the protests and demonstrations against Telanganan statehood earlier in 2013. But the government did not anticipate this kind of public backlash. Tens of thousands of protesters, many of them public utility workers, from southern and eastern Andhra Pradesh and from areas outside the more prosperous Hyderabad have taken to the streets over the prospect of losing the economically robust city. The power outages risk impeding not only the Hyderabadi economy but also the economic activity of southern India, including the economic and manufacturing hub of Chennai in Tamil Nadu state.
Though they have aggravated India's troubled power sector and jeopardized India's shaky economic rebalancing after months of currency devaluations and declining foreign investment, supporters of a unified Andhra Pradesh have succeeded in transforming local political prerogatives into a matter of national economic security, demanding policy shifts from a national government that cannot afford to have one of its key domestic policy initiatives fall apart mere months ahead of an election.
More than 4,000 megawatts of power generation have been taken offline in Andhra Pradesh since the strikes by power utility employees began Oct. 6, reducing capacity by nearly 25 percent. In Hyderabad, hospitals and residential areas have reported rolling blackouts. Prices of foodstuffs and other commodities have been spiking ahead of rumors that local transportation workers, who are vital to bringing goods to the centrally located city from the ports, might also go on strike. Visakhapatnam, a critical port city in Andhra that links to Kolkata to Chennai, is also beset with strikes by port workers, and thousands of protestors have blocked road and rail infrastructure leading in and out of the city.
No Easy Solution
New Delhi has not released any data on the economic impact of Andhra Pradesh's unrest, but the risks to the local economies of central and southern India are something the country must take seriously amid slowing national growth, especially with the Congress Party's ongoing foreign direct investment reforms attracting little meaningful investment from international companies.
There are few signs that a sustainable solution to the unrest is in sight. The Congress Party is unlikely to reverse its decision, and even if it rescinded its support for an independent Telanganan state, protesters from Andhra and Rayalaseema would likely be replaced with protesters from Telangana itself. Moreover, tensions surrounding the status of Hyderabad as a regional capital aside, New Delhi faces future political battles over the political representation of Seemandhra. With Rayalaseema having the dubious distinction of hosting some of the poorest and least-developed regions in the country, it would not likely pass up an opportunity to score key political and economic concessions from the state.
There is also the issue of the eventual capital within Seemandhra, an issue that would pose risks to domestic infrastructure and economic activity. Andhra and Visakhapatnam are Hyderabad's closest points of contact with the coast, and they could continue to threaten the city's access to seaports and natural gas from the offshore Krishna-Godavari basin even after Telangana gains its independence.
Unfortunately for Congress and the United Progressive Alliance, there will be no quick or easy solution to the crisis that has spun out of the government's decision to back Telanganan statehood. Promises of local funding and development projects and attempts to stall making a final decision, including a possible move to reexamine the future status of Hyderabad, may temporarily quell regional unrest. But they cannot solve the fundamental divisions and economic inequality between India's urban areas and its rural regions, which rely heavily on subsistence agricultural activity.
New Delhi has sent Defense Minister A.K. Antony to help restart local negotiations between Andhra Pradesh's three sub-regions in hopes of ending the protests, and national power grid technicians are being reshuffled to try to bring power back online in central and southern India. There are indications that leaders on all sides might be ready to negotiate, but there are no clear indications that a settlement will be reached anytime soon. In this context, the central government is on alert against regional communist militants, known as Naxalites, and Islamist militants that may try to take advantage of the governments' distractions to launch attacks of their own.
As regional politicians assess their electoral situations, local services such as power generation and transportation will come back online before the tide of public anger turns against them. Nonetheless, the threat of large-scale domestic unrest will linger in Andhra Pradesh throughout the political campaign season, serving as a stark reminder of the risks and economic challenges presented by the political realities of India's weak central authority and powerful state governments.
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