Identifier
Created
Classification
Origin
07CHENNAI398
2007-06-07 11:42:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Chennai
Cable title:  

ANDHRA PRADESH SOFTWARE EXPORTS SOAR; NAIDU FOCUSES ON

Tags:  ECON EINT EINV PGOV IN 
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RR RUEHBI RUEHCI
DE RUEHCG #0398 1581142
ZNR UUUUU ZZH
R 071142Z JUN 07
FM AMCONSUL CHENNAI
TO RUEHC/SECSTATE WASHDC 0985
INFO RUEHNE/AMEMBASSY NEW DELHI 2574
RUEHCG/AMCONSUL CHENNAI
RUEHCI/AMCONSUL KOLKATA 0794
RUEHBI/AMCONSUL MUMBAI 5063
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASH DC
UNCLAS CHENNAI 000398 

SIPDIS

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: ECON EINT EINV PGOV IN

SUBJECT: ANDHRA PRADESH SOFTWARE EXPORTS SOAR; NAIDU FOCUSES ON
POVERTY

REF: 06 CHENNAI 2607

UNCLAS CHENNAI 000398

SIPDIS

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: ECON EINT EINV PGOV IN

SUBJECT: ANDHRA PRADESH SOFTWARE EXPORTS SOAR; NAIDU FOCUSES ON
POVERTY

REF: 06 CHENNAI 2607


1. (SBU) SUMMARY: Andhra Pradesh's information technology sector
continues to boom, with software exports from the state increasing
by almost 50% last year. Despite the growth in IT, politicians of
all stripes, including the state's influential former Chief Minister
Chandrababu Naidu, are worried that the state's growth is not
sufficiently inclusive. Naidu says he is working on a plan to
tackle the problem, but many are skeptical that his new thinking is
only a cynical response to his 2004 electoral defeat. END SUMMARY.


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SOFTWARE EXPORTS SOAR
--------------


2. (U) Software exports from the south Indian state of Andhra
Pradesh hit a new high in 2006, increasing 48% over the previous
year according to media reports. The state is now in fourth place
and has a 14% share of India's overall software exports. The sector
produced 35,000 new jobs in 2006. During a recent visit to
Hyderabad, Andhra Pradesh's political capital and economic hub,
political, business, and media contacts we met all expressed
optimism about continued growth in the technology sector. U.S.
investment in Hyderabad continues to increase: Google recently
announced an expansion of its Hyderabad presence which will increase
its workforce from 1,000 to 4,000; Dupont signed a Memorandum of
Understanding for a $1 billion biotechnology research and
development facility; and California Governor Arnold Schwarzenegger
will lead a trade delegation to the city in November 2007.

--------------
POLITICOS WORRY GROWTH NOT INCLUSIVE ENOUGH
--------------


3. (SBU) Despite strong growth in the IT sector, Andhra Pradesh's
politicians worry that the benefits of economic growth are not
reaching enough of the state's citizens. Chandrababu Naidu, former
Chief Minister and head of the Telugu Desam Party, and the man
widely credited with engineering Hyderabad's IT boom, told Embassy
New Delhi PolCouns during a May 23 meeting that his biggest concern
today is that the common man is not reaping the fruits of economic
growth. He said that he is focused on finding a vision for
distributing the benefits of growth to India's poor, especially in
rural areas. Members of Naidu's party subsequently told post that
he has just begun his examination of the problem.


4. (SBU) Andhra Pradesh's current Chief Minister Y.S.R. Reddy,
whose Congress party swept into the majority in 2004 on a wave of
discontent with his predecessor Naidu's perceived lack of attention
to the rural poor, has committed his government to addressing the
concerns of Andhra Pradesh's rural poor while maintaining the
momentum of the state's IT sector. Even the Chief Minister's
international travel demonstrates this balancing act: in his recent
trip to the United States he addressed the World Agricultural Forum
and later made a swing through Silicon Valley. Suresh Reddy, the
Congress-party Speaker of the Andhra Pradesh Legislature, told post
that his party was looking to "bridge the gap" between rural poverty
and urban economic development by improving rural infrastructure.


4. (SBU) COMMENT: For Naidu to change his focus to rural poverty
shows just how far the political terrain in Andhra Pradesh has
shifted. Naidu's party is widely believed to have lost the 2004
election because many in the electorate, especially in the
agricultural sector, felt left out of the IT-fueled economic growth
that Naidu championed. A media contact and a representative of
Hyderabad's large but disproportionately poor Muslim community both
scoffed at Naidu's new tune, seeing it as a cynical response to his
election defeat. But Naidu is a formidable thinker who successfully
realized the at-the-time audacious vision of putting Hyderabad on
the map along with Bangalore as an IT hub. If Naidu is sincerely
looking to find a way to equitably distribute the benefits of
growth, he could help provide leadership in answering one of India's
most vexing questions. END COMMENT.


5. (U) The message was coordinated with Embassy New Delhi.


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