The Congress won a stunning victory in Andhra Pradesh. It increased its Lok Sabha seats from 29 in 2004 to 33 in the current elections. In the assembly elections, it won 155 – down from the 185 seats it won in the 2004 elections. The main opposition party, Telugu Desam, led by Chandra Babu Naidu, fared reasonably well in the assembly elections. It more than doubled its tally from 46 in 2004 to 93 in the current election. It fought this elections in alliance with Telangana Rashtra Samithi (TRS), a regional party with a single point agenda of carving a separate Telangana state from Andhra Pradesh and the Left parties. The alliance partners of Telugu Desam fared badly. TRS was down to 10 seats from 26 it had won previously, while the Left parties managed to win just 5 seats versus the 13 seats they had in the outgoing assembly. The newly formed Praja Rajyam Party (PRP), led by Andhra Pradesh’s Mega Star Chiranjeevi, managed to get 18 seats.

The people of the state appeared to have voted differently for Lok Sabha and the state elections. Congress vote shares for Lok Sabha stood at 38.95 whereas its vote share in assembly was 36.53, a difference of 2.42 per cent. Clearly there was some anti-incumbency with respect to the state government. About a dozen of incumbent ministers lost the elections.

Chief minister Y S Rajasekhara Reddy (YSR) had instituted a number of popular (and populist) schemes that may have mitigated the anti-incumbency factor – free electricity to farmers, ambitious irrigation projects, the community health insurance scheme (Rajiv Arogyasri) the housing scheme for poor (Indiramma Project), old age and widow pension, scholarships and fee reimbursement to students belonging to weaker sections and rice at Rs 2 a kg.

PRP plays spoil-sport for TDP

The single biggest reason that explains YSR’s beating anti-incumbency was the entry of Chiranjeevi in the electoral fray. His Praja Rajyam Party seems to have played the key spoiler role in the state. Exit polls seem to suggest that it drew away quite a bit – about 16 per cent – of the anti-Congress votes.

The second reason would be the eclipse of the pro-Telangana Party, the TRS, which suffered massive losses in the election. This would indicate that the Telangana movement will take a back seat at least for the next five years and perhaps even longer. TRS seems to have lost the mandate of the people of Telangana. In fact, its ally Telugu Desam, did much better in Telangana, winning 39 of the 59 seats it contested. TRS, in comparison, managed to win just 10 out of 45 seats it contested.

The first decisions that the re-elected chief minister took were to increase supply of free power to farmers from 8 hours to 9 hours a day and increase the maximum quantity of subsidised rice (supplied at Rs 2 a kg) from 25 kg to 30 kg a month. This indicates that the government will try and buy its way into the people’s hearts.

To this freebie spree add the cascading effect of the Sixth Pay Commission hike (the state government staff has not yet got a hike, but given how the Fifth Pay Commission hikes were followed by hikes in state wages, it is reasonable to expect a hefty wage hike this time too soon).

Through tough fiscal times…

The state’s budgeted revenue receipts for 2009-10 is Rs. 79,691 crore. Its interest payments budgeted stood at Rs. 9103 crore (ie. 11.5 per cent of revenue receipts). Budgeted fiscal deficit was Rs. 12,092 crore or nearly 5 per cent of state GDSP. Given the new round of populist schemes and a slowing economy, it appears the state is headed for tough fiscal times.

The other aspect to be worried about is the power situation. Andhra Pradesh had recently ordered a two day per week power holiday for high tension consumers. This was lowered to one day per week after the Andhra Pradesh based gas power plants started getting gas from Reliance’s offshore fields. This power holiday is in spite of AP buying nearly 15 million units per day (or about 6 per cent of its power requirements) from outside the state. A lower than normal monsoon could easily upset this delicate power situation. Add the chief minister’s 9 hour free power to farmers promise and one can be justified in expecting larger power holidays for the industry.