The constant squabbles between Andhra Pradesh and Telangana, and their respective politicians, since the bifurcation have led to something good. In the recently released rankings, the two states tied for first place on the ease of doing business.
The annual Assessment of State Implementation of Business Reforms report prepared in collaboration with the World Bank, was released on Monday.
In 2015, while Andhra was ranked second after Gujarat, Telangana was ranked 13th.
Since then, both states, which are known to compete on various fronts, came up with extensive business-friendly policies and have now emerged as a great example for how competitive federalism can work.
"This is the second year of the report and the states have really been competing in implementing reforms," Commerce Minister Nirmala Sitharaman said while releasing the report.
Telangana and Andhra ended the closely-contested contest with a score of 98.78 per cent on the 340 parameters that were put together by the Department of Industrial Policy and Promotion.
They include single-window system for approvals, tax reforms, construction permits, environment and labour reforms, inspection reforms and paperless courts.
World Bank Country Director Junaid Ahmad said, "The important lesson of this report is how doing business is getting decentralised and unleashing the economic might of India."
"This exercise has instituted the competitive spirit of federalism in the states to carry out business reforms thereby motivating them to introduce measures for reducing compliance burden for starting and operating the business," Federation of Indian Chambers of Commerce & Industry (FICCI) Secretary General A Didar Singh said in a statement.
The Telangana government says a large part of the credit to its Telangana Industrial Project Approval and Self-Certification System (TS-iPASS) policy. Unveiled on June 12 last year, investors could get clearances in 15 days through the policy, failing which, the state government could be penalized.
State IT secretary Jayesh Ranjan told The News Minute, "The TS-iPASS act was the main reason for the growth in the rankings. Once we implemented the policy, the government agencies also made a lot of fundamental changes and reforms to their functioning."
"Their reliance on technology also increased, to ensure that things were done quickly and in an online manner," he adds.
Ranjan also adds that every proposal is closely monitored and tracked along every step of the approval process.
"For example, if any IT company applies, I will have to personally approve it and track it, to ensure that it gets the clearance within the time-limit," he says.
In Andhra Pradesh, Chief Minister N Chandrababu Naidu's Industrial Policy-2015-20 also assures clearances within 21 days through a single desk clearance system, failing which it is deemed approved based on self-certification.
It also provides incentives to new industrial units and provides specific sector related policies for textiles, biotechnology and automobiles sectors.
Any projects which invests Rs 500 crore or creates direct employment to 2,000 people would be accorded a mega industry status and a special package of incentives, the government said in April last year.
The state legislature also passed a bill that extended land leases to private entities from 33 years to 99 years.
Responding to the rankings, Naidu said, "I am very happy to share that DIPP and World Bank have announced AP as the No 1 state in ease of doing business rankings 2016 with an overall implementation score of 98.78 per cent. I congratulate all departments of the government, the Industries Department in particular, for their efforts towards making AP the No 1 state in ease of doing business."
"In spite of all the challenges due to bifurcation, Andhra Pradesh was ranked No 2 last year and I was very confident that we would achieve No 1 rank this year," he added.
Speaking to TNM, Ashok Reddy, former chairman of the Confederation of Indian Industry, (CII) Andhra Pradesh for 2013 – 2014 said, "When it comes to making a business-friendly policy, industries are always on the lookout for what type of benefits they get. The manufacturing industry for example, always sees the availability of land and electricity."
He goes on to add, "Telangana had an edge over Andhra as it already had infrastructure in all sectors, including the IT sector and it also has an abundance of talent, which made it the more attractive of the two states."
However, he agrees that both states actively sought to be more business friendly.
"Andhra on the other hand is a state with excess power, and providing subsidized electricity for a few years is just one such move which would really help the state attract more industries," he says.
He adds, "Despite having minimal infrastructure presently, five to ten years down the line, I'm sure Andhra would do much better, with the proposals that chief minister Naidu is coming up with."