The nexus that breeds Andhra land buccaneers

Deposed Satyam Computer Services chairman B Ramalinga Raju’s undoing - an almost insatiable craving for land - does not come as a surprise to most Andhraites who are familiar with the ways of the Reddys and the Kammas, the traditional landlords, and other high net-worth individuals.

The past four-odd years have been conspicuous in this regard. The period also marked the return of the Congress to power in the state with Y S Rajasekhara Reddy, the Cuddapah strongman, who himself is said to be the tsar of swathes of land across the Rayalseema region, at the helm.

It is worth noting that he surrendered almost 300 acres of family owned land to the state government — free of cost — not very long back owing to restrictions under the land ceiling act.

A new phenomenon in these four years, however, has been the businessman-politician-bureaucrat nexus, which has resulted in the emergence of industrial houses on the real estate scene.

While, veterans in the property market are not able to explain the reasons for this, some point out to the convenient policy regime in the state after the advent of the new Congress government.

While one had seen the previous TDP government too encouraging industries to come into the state with the promise of land at concessional rates, particularly for IT projects, the past four years have seen this practice flourishing with other sectors too jumping into the fray.

And then this has also coincided with the infrastructure boom, which saw several construction groups jump into the fray.

“When the Rajasekhara Reddy government came to power in May 2004, the priority was to take up irrigation projects with a capital outlay of Rs 1 lakh crore under the Jalayagnam brand. For this, the government had no option but to liquidate lakhs of acres of real estate in favour of industrialists. This had a snowballing effect on the entire market with prices skyrocketing for no reason,” the CEO of a property brokerage told DNA.

Not surprisingly, apart from the Satyam-Maytas combine, others big names in the game include Lanco, GMR, GVK, Hetero Drugs, Aurobindo, IVRCL, Indu Projects, Nagarjuna Construction Company and, to some extent, Dr Reddy’s Laboratories have been given out land for their own projects.

These are the lands that have been allotted to them for taking up their own projects under government sanction.

But then privy to information on the prospects of the projects, something akin to insider trading on the stock markets, these industrialists are said to have amassed neighbouring lands for real estate development. 

“They are the land barons now. It is not the traditional property traders but the industrial houses who have built up their land banks across the state with the blessings of the political bosses,” a leading property developer said.

“The problem actually started with the government mandating its infrastructure nodal agency the Andhra Pradesh Industrial Infrastructure Corporation to raise the money required for Jalayagnam by auctioning the land available with it. The land in the possession of APIIC was meant for industrial infrastructure. Instead of developing the land for the industry, it had sold out the land to the companies through a bidding process. The highest bidder was given the land. May be a fair process but meant to benefit the corporates build their land banks,” another realty veteran explained.
Interestingly, software star Infosys Technologies, too, is a beneficiary of the government policy and is now the owner of about 450 acres on the outskirts of Hyderabad which is earmarked for a campus.

“No one knows why Infosys needs 450 acres for a campus. The company talks about a walk-to-work concept. At the end of the day, the property is being handed out to the industrial houses in the name of job creation,” a CEO of a medium size IT company said.

Companies such as Maytas and Satyam were allotted huge chunks of property for special economic zones (SEZs) and other such facilities at subsidised rates.Satyam was in the process of setting up three IT SEZs in the state apart from its existing 120 acre campus on the outskirts of the city at Bahadurpally.

“It’s very difficult to quantify the land in the possession of these barons. While just a portion of it is allotted by the government, the rest is acquired by them privately. Even that is either through general power of attorney agreements or benami. Land allotments in this state are a big scam and no probe will be ever able to bring the perpetrators to the book,” said a Hyderabad-based major property dealer.

Every time a new project has been taken up in the state land prices have shot up without fail in the vicinity even before the projects were awarded be it the Outer Ring Road (ORR), the Hyderabad Metro Rail Project or even the much touted Fabcity and the Hyderabad International Airport project built by GMR group.

Clearly, the new landed gentry in Andhra Pradesh are the industrial tsars and not necessarily the traditional zamindars anymore.