In the latest legislative elections in Andhra Pradesh, Chandrababu Naidu’s Telugu Desam Party (TDP) came into power with an unprecedented majority, while in alliance with Pawan Kalyan’s Jana Sena Party (JSP) and the Bharatiya Janata Party (BJP). The TDP’s victory has revived the hopes of achieving a long-pending demand for Andhra Pradesh to receive a special economic status. Considering Naidu’s kingmaker position in the BJP-led National Democratic Alliance (NDA), which has now formed the Union government, this special status may very likely be secured. What’s more, it is possible that TDP’s latest electoral standing in the Parliament also holds the potential to address Andhra Pradesh’s crisis with its lost capital city. Recent speculative news reports suggest that Amaravati may now be back as the state’s capital. 

So what do these possibilities highlight about the relationship between coalition federal governments and the allied incumbent regional parties?

Naidu’s previous experience in leveraging parliamentary coalitions for regional economic development could be of great help to Andhra Pradesh in the next few years. His gamble with previous coalition federal governments (1996, 1997, and 1999) had yielded tremendous support for his government’s local development planning in Hyderabad until 2004. The significant policy support secured for the development of information technology (IT) and financial industries in Hyderabad under Naidu’s rule, from AB Vajpayee’s government, is a testament that coalition politics are beneficial for the state governments but only if the incumbent party is a numerically powerful ally in the federal coalition. Therefore, Naidu’s electoral advantage can significantly aid his plans for developing Andhra Pradesh (AP)’s capital city.

After Naidu’s ascent to power in 2014 as the Chief Minister of AP, his government had borne the responsibility to build a new capital city after the state lost Hyderabad in bifurcation. His government planned a greenfield city – Amaravati – between Vijayawada and Guntur cities. But the fate of this city was mired in controversies after TDP lost its mandate in the 2019 elections.

AP’s capital city

During the 2019 elections, Naidu’s government faced allegations of corruption and caste-based favouritism (pro-Kamma) in the land pooling exercise for the capital city. Jagan Mohan Reddy’s YSR Congress Party (YSRCP) emerged victorious in 2019, and immediately scrapped the plan to develop Amaravati as the capital city. Jagan’s government later announced the trifurcation of the capital into three cities — Amaravati as legislative, Kurnool as judiciary, and Visakhapatnam as bureaucratic. This decision remained unpopular among a large section of people, driving an anti-incumbency wave that the TDP alliance leveraged electorally in 2024. YSRCP lost all Assembly seats in 2024 in the erstwhile combined districts of Krishna and Guntur, which bordered the Amaravati capital region.

Jagan’s government had not only slowed the development of Amaravati, but also demolished important governmental complexes such as the Praja Vedika (a conference hall as a people’s grievance cell), citing violations of building bylaws. The speculative land trading in the area thus came to a grinding halt, and several villages around Amaravati which contributed to the land pooling went on indefinite protests opposing Jagan’s decision to move the capital elsewhere.

Though he often projected Visakhapatnam as a viable option, Jagan’s plans for a capital city hardly materialised. Completing a full term without any contribution towards the development of a capital city has been viewed as one of the biggest failures of his government.

Since TDP’s latest victory, the land prices in and around Amaravati have been surging multi-fold in the anticipation that Naidu’s government will resume the development of the capital in Amaravati. Many believe, and Naidu often reminds people in his speeches, that his previous experience with laying the foundations for Hyderabad’s economic revival could be of great use in developing a capital with world-class city ambitions in AP. 

A glance into his role in reviving Hyderabad’s local economy can shed light on his ability to leverage coalition politics for economic regionalism. What sort of support did he secure from the federal government for his subnational policies for urban economic growth in Hyderabad? What are the lessons it can offer for our democracy?

Naidu’s role in Hyderabad’s economic revival

Naidu played a key role in reviving Hyderabad’s economy by promoting knowledge-based industries like IT and finance among others. At the time, he had leveraged his electoral support for the 1999 coalition and sought support from Vajpayee’s government several times to materialise his policy ambitions. 

For instance, Naidu used Delhi’s federal circles to get a direct meeting with Microsoft’s co-founder Bill Gates in Delhi, which subsequently led to the establishment of the company’s largest development centre outside the USA in Hyderabad. Vajpayee also agreed to Naidu’s demand to permit the establishment of Insurance Regulatory and Development Authority (IRDA) headquarters in Hyderabad. Both these institutions eventually propelled the currently thriving IT and financial districts in Hyderabad. Vajpeyee even attended the inauguration of the Indian School of Business (ISB) at Naidu’s invitation. 

Naidu also offered tremendous support towards establishing ISB in a bid to develop techno-managerial human resources locally. He also successfully secured federal support for infrastructure development plans, like an international airport in Hyderabad. Naidu’s TDP was the biggest of BJP’s allies in the coalition government at the time, and his position made all the federal support possible.

The impact of majority governments

While previous BJP-led coalitions supported subnational urban policies, a majority government under Prime Minister Narendra Modi for two terms had meddled with the Telangana state government’s policy plans for Hyderabad that required federal support. 

Back in 2012, the Congress-led United Progressive Alliance (UPA) II government had approved an Information Technology Investment Region (ITIR) project in Hyderabad. An ITIR is a designated region with special provisions like state-led infrastructural development and tax exemptions, with significant support from the federal government. But then a majority government led by the BJP came in power, and it delayed the implementation of the ITIR project. 

In its second term, BJP’s majority government went on to scrap the ITIR project in Hyderabad, angering the Telangana government led by the Bharat Rashtra Samithi (BRS), then known as the Telangana Rashtra Samithi (TRS). The denial of federal support for developing Phase 2 of Hyderabad’s metro rail is another notable example here. Essentially, BRS had no significance to BJP in terms of forming the federal government, and therefore the majority government had no electoral incentive to offer support to the subnational policies for Hyderabad.

The trajectory of responses from the federal governments towards the policy plans by successive state governments in AP, and later Telangana, for Hyderabad’s economic growth highlights the differential treatment regional party-led state governments receive from coalition and majority governments.

Highlighting the influence of the UPA governments, it is often argued that coalition politics are better for economic growth. Simultaneously, it needs to be pointed out that coalition politics, whether through NDA or UPA, have significantly contributed to state governments staking their claim on resources from the Union to autonomously promote their cities. Put simply, coalition federal governments have the potential to do better in enabling urban development led by the state governments. 

Single-party majorities, like those of 2014 and 2019, may not yield as much space for the subnational governments under regional parties to negotiate with the federal government and initiate urban policies for local economic growth. Several of the national urban policies under Modi’s decade-long governance (2014-2024), such as the Smart Cities Mission ideated by the Union government, have been criticised for not being inclusive of the local social realities in the states.

As a kingmaker ally of the current NDA coalition, Naidu’s TDP is back in advantage to pull the strings of the federal government and secure support for its subnational policies in general, and Amaravati’s development as the AP’s new capital in particular. It can be argued that coalitions are in general good for incumbent ally regional parties for economic policy. However, as contemporary regional economic planning is dominated by neoliberal city-centric growth models, Naidu’s experience ascertains that coalition politics are particularly beneficial for administrators with ‘world-class’ city dreams.

Goutham Raj Konda is an urban and social policy researcher. He can be contacted at gouthamrajkonda315@gmail.com.