Southeast Asian Stability Is at Risk
International Herald Tribune
August 30, 2000
Thomas Muller

The streets of this sprawling southern city, capital of the state of Andhra Pradesh, are filled with symbols of the dot-com era: roadside billboards touting World Wide Web portals, online news services and e-commerce companies.

But in a sign that Hyderabad is anchored to its traditional past, many of the billboards are painted by men who stand on scaffolding made of tree branches lashed together with twine.

As in many other Indian cities, hopes for dot-com prosperity here run parallel to desperate poverty. But hopes are high.

For the last five years the chief minister of this mainly rural state has tried to lift its 80 million inhabitants by using information technology and by following the economic model of East Asia's success stories.

Foreign companies have endorsed the programs with investment. Microsoft set up a software development center, one of only two outside the United States. Oracle and Citibank have set up backroom operations in the state, drawing on the large pool of software engineers that Andhra Pradesh churns out from its more than 400 colleges that offer degrees in computer science.

In the last few days, however, glimpses of the old Hyderabad — a city of fractious politics and poor infrastructure — have stolen all the headlines.

Floods and violent protests have raised questions about what is widely considered to be one of the most hopeful economic experiments India has seen in decades.

N. Chandrababu Naidu, 50, chief minister of Andhra Pradesh, says his role models are Lee Kuan Yew of Singapore and Mahathir bin Mohamad of Malaysia. Like those two veterans of successful economic development, Mr. Naidu has focused his efforts on improving infrastructure and attracting foreign investment. His mantra is wealth creation.

But the violent protests that followed a recent rise in electricity prices highlight a central question: Will the East Asian economic model work in India's raucous democracy?

The leaders that Mr. Naidu professes to admire relied on heavy doses of paternalism in their early years of development, trading political freedoms for economic performance.

Yet, with democracy and its litany of freedoms so firmly entrenched in India, political repression on an East Asian scale is unthinkable, according to experts. They say that Mr. Naidu must play by India's freewheeling democratic rules.

The recent political turmoil is a good example. Soon after the rise in electricity rates was announced, the state's political opposition announced a "hunger strike to the death," attracting widespread media attention and sympathy from urban voters whose electricity bills went up overnight by as much as 80 percent.

On Monday, anti-government protests turned deadly after several thousand demonstrators marched on the state assembly and clashed with the police. At least two persons were killed and more than a dozen injured after the police opened fire.

Serious flooding, which began last week, has also underscored the inadequacies of the state's infrastructure. The floods, the worst in decades, have claimed more than 140 lives.

But in broad terms the floods and political turbulence seem a small bump in the road for Mr. Naidu, who has won widespread support inside and outside Andhra Pradesh for his programs.

He remains firmly in control of the local assembly after winning nearly two-thirds of the seats in voting in October.

President Bill Clinton, who visited in March, praised Mr. Naidu's efficiency and "good governance," adding that the chief minister "was very much known in the U.S. and very much admired."

The world is watching Mr. Naidu and his experiment, waiting to learn whether a state larger in population than most Southeast Asian countries, heavily reliant on farming and light industry, can leapfrog the traditional path to development by focusing on software and the Internet.

So far, many of the early results of Mr. Naidu's experiment are encouraging. The computer industry has grown exponentially since he came to power five years ago, and last year the state exported dollars 220 million worth of software

Mr. Naidu has used computers and the Internet to make official administration more efficient. He teleconferences with officials, bypassing the network of intermediaries that traditionally made policy implementation slow and patchy. He checks up on "district collectors," officials in remote areas who once had the power of sultans.

In Hyderabad, a city of more than 3 million people, Mr. Naidu has facilitated the payment of electricity, water and telephone bills, establishing one-stop payment counters.

"We want to reduce the interface between the government and the common man," Mr. Naidu said in a recent interview. "If I succeed then I can control corruption and increase efficiency."

Mr. Naidu is a tall, intense man who speaks emphatically about his desire to develop the state. A former economics student, he likes to call himself the CEO of Andhra Pradesh.

The fruits of his policies are clear in the ritzy neighborhoods on the outskirts of Hyderabad, in the shops selling name-brand clothes and electronics and in the luxury hotels that cater to the dot-com elite.

Mr. Naidu has introduced a list of long-term goals covering such areas as literacy, health care, women's rights and — most important for the chief minister — wealth.

But Mr. Naidu's critics say that he is too narrowly focused on software and computers, that the state's information technology dreams have captured the imagination of the Indian media and world leaders but cannot alone lift a preindustrial state out of poverty.

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