BHARAT BALLOT 09: ANDHRA PRADESH CONGRESS UNLIKELY TO

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SUBJECT: BHARAT BALLOT 09: ANDHRA PRADESH CONGRESS UNLIKELY TO
REPRISE 2004 LANDSLIDE

REF: CHENNAI 107 B) 2008 CHENNAI 394

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1. (SBU) SUMMARY: Andhra Pradesh, India's fourth largest
state, is in the midst of concurrent state and national
elections. The state was a bright spot for Congress in 2004;
the party won an absolute majority in the state assembly and a
substantial majority of Andhra Pradesh's seats in the Lok Sabha
(India's lower house of parliament). But Congress's rival, the
Telugu Desam Party (TDP),has formed a "Grand Alliance" by
pulling away all but one of Congress's 2004 alliance partners in
the state. The presence of a new political party led by a
charismatic Telugu film star turns the elections into a
three-way fight, making them all the more unpredictable. The
implementation of numerous welfare measures, including a popular
health insurance program for poor families, has earned the
Congress government much goodwill, and forced the TDP to lay out
its own populist agenda. Congress still stands a good chance of
maintaining power -- albeit with diminished numbers -- in the
state assembly in spite of anti-incumbency and having lost its
alliance partners. Analysts expect similar results on the Lok
Sabha side, with Congress maintaining a majority but losing 5 to
10 of the 31 seats it is defending. END SUMMARY.

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Andhra Pradesh Background
--------------


2. (SBU) Andhra Pradesh, the largest state in South India, is
most well-known for its capital, Hyderabad. The contrasts
between Hyderabad and the rest of the state are dramatic.
Hyderabad is a glittering information technology hub home to
many of the world's most famous companies: Microsoft and
Google, among others, have chosen to put down roots there. In
addition to IT, Hyderabad is the center of India's growing
pharmaceuticals sector. At the same time, the state has some of
India's most impoverished, drought-stricken rural districts
where thousands of farmers have committed suicide out of
despair. Pervasive rural poverty drives people to the shining
lights of Hyderabad, making the state both a source and
destination for victims of human trafficking. Hyderabad
conjures up images of a rich Muslim history, and the city is
still home to a substantial Muslim minority which is able to win
elections in the old quarter. Despite the capital's Muslim
roots, Andhra Pradesh as a whole is South India's most Hindu
state. One of Hinduism's most important, and richest, temples
is Tirumala (sometimes referred to as the Vatican of Hinduism)
in Tirupati, Andhra Pradesh.


3. (SBU) The majority of the people of Andhra Pradesh are known
as Telugus. Telugu is spoken by approximately 80% of the
state's people, with significant minorities of Urdu, Hindi,
Tamil, and Kannada speakers also living in the state. The state
has a long history of external migration, especially to North
America. The Telugu community is the second largest Indian
ethnic community in the United States, and one study showed that
almost 40% of the Indian software professionals working in the
United States are from Andhra Pradesh. Like India's other
large states, Andhra Pradesh faces separatist pressure.
Telangana -- a historically underdeveloped region composed of

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the state's northern districts (including Hyderabad) -- is home
to a movement for separate statehood. Though they speak Telugu,
the people of Telangana have a distinct culture and history.
The movement also draws strength from the region's economic
backwardness and a prevailing sentiment that its people have
been oppressed by more well-off residents of the state's other
two regions (Rayalseema and coastal Andhra Pradesh).


4. (SBU) Andhra Pradesh's population of over 76 million makes
it India's fourth most populous state. It sends 42
representatives to the Lok Sabha, tying it for third with West
Bengal in terms of number of Lok Sabha seats (only Uttar Pradesh
and Maharashtra have more). The first stage of voting took
place in the northern part of the state on April 16, with the
rest of the state voting in the second stage on April 23.
Andhra Pradesh is also one of only three states that is staging
a concurrent election for the state legislative assembly, making
the political action in Andhra Pradesh especially heated.

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Allies abandon Congress for TDP
--------------


5. (SBU) The rivalry between the Congress party and the
regional Telugu Desam Party (TDP) has long dominated Andhra
Pradesh politics; in fact, no other party besides the two has
ruled the state since its formation in 1956 (TDP first came in
power in 1984 Before that Congress ruled the state). Currently
Congress controls the state government, which is headed by the
popular incumbent Chief Minister YSR Reddy. In 2004 Congress
routed its primary rival, the TDP led by former Chief Minister
Chandrababu Naidu, in the concurrent state and national
elections. Congress won 31 of the state's 42 Lok Sabha seats,
the TDP only 5. Congress did so by aligning with the separatist
Telangana Rashtra Samithi (TRS),as well the state's Communist
Party of India (CPI) and Communist Party of India (Marxist)
(CPM). These parties have abandoned Congress for the 2009
elections, joining Naidu's TDP in what is known as the "Grand
Alliance" (ref A). Congress goes into the elections alone.

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New Entrant Creates Three-Way Fight
--------------


6. (SBU) After years of speculation, Telugu mega-star
Chiranjeevi formed his own political party in 2008. His
decision to go it alone has created a three-way fight pitting
his party against Congress and the Grand Alliance. Dubbed the
Praja Rajyam Party (PRP) (Telugu for "People's Rule"),the party
seeks to supplant the Congress/TDP dominated political order by
putting Chiranjeevi in the Chief Minister's seat. Chiranjeevi's
political rallies have attracted massive audiences, with
estimated figures reaching as high a 500,000 for one event. But
political analysts caution that drawing large crowds in India
does not necessarily translate in to winning votes, making the
PRP's potential impact a wild card in the analysis of Andhra
Pradesh's elections.


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-------------- ---
Popular Chief Minister Has `Pulse of the People'
-------------- ---


7. (SBU) Chief Minister Reddy came to power in 2004 on the back
of a populist backlash against his predecessor Naidu, who was
widely seen as overly focused on industrial development to the
exclusion of Andhra Pradesh's vast, and struggling, rural
economy. In the course of the 2004 campaign Reddy made many
promises most notably that farmers would get free power to
operate their irrigation pumps. He has pleased rural voters by
making good on his 2004 promises (ref B),as well as by
instituting welfare programs far beyond what he staked out in
his 2004 campaign.


8. (SBU) Interlocutors from a government management institute
told us that Reddy and the Congress government are very popular
because "the programs are really helping people out." One said
"YSR (Reddy) has the pulse of the people," and added that he was
"not a Congressman" but he had to admit that programs like the
government's new health care insurance are actually delivering
tangible benefits to poor citizens. The Arogyashree insurance
program allows poor people to undergo major medical procedures,
such as coronary bypass surgery, at private medical hospitals
with the state government picking up the bill.


9. (SBU) A visit to one of Hyderabad's slums confirmed the
reach of the government welfare programs. The slum, located in
an area known as Uppal, consisted of crudely constructed shacks
on a vacant lot abutting a main thoroughfare. Several residents
told us that had either used Arogyashree to obtain treatment for
themselves, or knew of someone who did. One resident said with
pride that she had gone to the Apollo Hospital for treatment
that was paid by Arogyashree. (NOTE: Apollo Hospitals is
India's most prestigious private, for-profit hospital chain.
END NOTE) The residents also told us that they had been offered
homes under Reddy's Indiramma housing initiative but that they
had declined the opportunity due to the fact that the new houses
were in a location far from Uppal.


10. (SBU) Political observers repeatedly cited Arogyashree,
along with Reddy's irrigation and housing programs, as key
factors in the upcoming elections. Journalist Lalitha Iyer told
post that "Congress has delivered" on the sops, adding that even
if only 50% of the money is making it to the people, "they are
happy." She said "YSR will promise the world and when he's
delivered it, he'll go and promise the people the stars in the
sky." The editor of Saakshi, a newspaper established by Reddy's
son to combat the perceived pro-TDP bias of Andhra Pradesh's
major Telugu language paper, said that "85% of the poor people
in Andhra Pradesh have been touched by one of the Chief
Minister's sops. He has made it impossible for anyone else to
come and promise more."


11. (SBU) Naidu's TDP has responded by trying to do just that
-- outbid the Congress by promising even more to the voters.
Naidu says he will expand on the free power to farmers and
health insurance initiated by the Congress government. His

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campaign platform copies the promise of a free color television
to every family in the state that was widely credited with
helping bring the DMK party to power in Tamil Nadu in 2006. But
Naidu has made the biggest splash with a cash transfer scheme
that promises direct payments of $20 - $40 per month to the
state's families depending on income level. Naidu has refuted
criticism of the proposal by citing the success of conditional
cash transfer programs such as Mexico's "Opportunidades" program
in reducing poverty. The question remains whether voters trust
Naidu, who was disdainful of these sorts of programs when he was
Chief Minister, to actually make good on his promise. Iyer told
us that people were skeptical at first, but "they are starting
to believe" that he will implement the program if he comes to
power. Srinivas Reddy, Hyderabad Editor of The Hindu, agreed
that the cash transfer proposal may be winning the TDP votes.
But he noted no one is examining where the money will come from
to pay for the programs.

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`Congress can buy this election'
--------------


12. (SBU) Indian law limits spending to 2.5 million rupees
(approximately USD 50,000) per parliamentary candidates. Our
interlocutors all scoffed at the limit, with one telling us it
is a "joke." Jayaprakash Narayanan, founder of the
reform-oriented Lok Satta party, told us that while his
candidates will adhere to the limit, he expects his opponents to
exceed it substantially. Narayanan said the other parties will
spend 30 to 40 million rupees per candidate (USD 600,000 to
800,000). A leader from the MIM, Congress's last remaining ally
in the state, said that most parties in the state exceed the 2.5
million rupee limit on polling day activities alone.


13. (SBU) The ruling Congress party's cash advantage over the
state's other political parties is a generally asserted, but yet
unproven fact. "Congress can buy this election," said a
well-connected business leader. He added that "YSR has taken
corruption to next level," which means Congress has far more
money to spend than its rivals. The MIM leader admitted that
Congress has used its time in power to amass "a huge cash
advantage."


14. (SBU) Political analysts and academics at a lunch
discussion about the elections agreed that bribes to voters are
common in Andhra Pradesh, which could make the Congress party's
financial advantage decisive. The editor of a major English
language daily said that "the bribes paid to the voters in the
last 48 hours" could decide it. A day before the second phase
of polling, a local documentary film producer working with NGOs
throughout the state noted that every party dramatically
increased their financial outlays in the last 48 hours. His NGO
contacts report that the major parties transferred funds
directly into bank accounts of the widespread Women's Welfare
Collectives (mostly begun during the last Naidu administration),
who then distributed from 2000 - 4000 rupees (USD 50 - 100) to
member families.


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Corruption Doesn't Bother Voters
--------------


15. (SBU) Although Congress's cash advantage is generally
understood to be the result of corruption, our interlocutors all
believed the party would not suffer at the polls on account of
it. One voter told us "corruption is like salt in food, you
expect it to be there." The business contact said that voters
are "accustomed" to corruption, and are satisfied so long as "at
least some" of the government largesse trickles down to them.
The pro-Congress editor of Saakshi cynically noted that "Naidu
started complaining about corruption too early" and now "people
aren't paying attention."

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Telangana Hurts Congress
--------------


16. (SBU) The demand for separate statehood for Andhra
Pradesh's historically backwards Telangana region again occupies
the minds of the chattering clases. Roles have reversed since

2004. The TDP, which used to stand for a "united Andhra
Pradesh," now supports separate statehood for Telangana.
Congress, which promised to support separate statehood when it
allied with the separatist TRS in 2004, is now on the other side
of the issue. The consensus view is that by allying with the
separatist TRS, Naidu's TDP and the Grand Alliance will perform
strongly in Telangana's most pro-separation localities. At the
same time, however, many of our interlocutors cautioned that
separatist sentiment is not as strong or monolithic in Telangana
as the TRS and its supporters claim. They also noted that
Congress could make substantial gains in Andhra Pradesh's other
two regions -- coastal Andhra Pradesh and Rayalseema -- in light
of TDP's decision to embrace Telangana separatism.


17. (SBU) Ajoy Devulapally, the editor of the pro-Telangana
newspaper Prajatantra, was the first of many people to tell us
that separatist sentiment is "lacking." He noted that young
people, in particular, do not care about the statehood question.
Others noted that the desire for a separate Telangana varies
substantially within the region itself. The Saakshi editor said
"only three of the region's eleven districts are 'hardcore'
separatist." According to K.C. Suri, a professor of political
science at Central University of Hyderabad, separatist sentiment
is "widespread" in the Telangana districts closest to Hyderabad
city, but weakens in the districts further from Hyderabad.
Moreover, he added, even in the most separatist parts of
Telangana there remain a substantial percentage of voters --
about 40% -- who are not especially interested in statehood.


18. (SBU) Telangana is to home roughly 120 assembly seats;
coastal Andhra Pradesh and Rayalseema elect approximately 170.
Telangana elects 17 to the parliament, compared to 25 for
coastal Andhra Pradesh and Rayalaseema. Several interlocutors
suggested that Congress would make up for a poor performance in
the smaller Telangana region with a strong performance in the
rest of Andhra Pradesh. Chief Minister Reddy's comments

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following the first phase of voting on April 16 indicated he was
thinking along the same lines. Hours after voting closed in
Telangana Reddy told reporters that "if the Grand Alliance is
voted to power, we will be treated as outsiders in Hyderabad."
With only Rayalseema and coastal Andhra Pradesh left to go to
the polls, Reddy clearly meant to appeal non-Telangana voters'
anxieties about losing Hyderabad, which is both the state's
political capital and economic heart. His appeal was widely
seen as a sign that Congress was worried that it performed
poorly in the first phase, but some analysts argued that Reddy
had planned to mobilize "united Andhra" sentiment all along to
counter a weaker Congress performance in Telangana.

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Praja Rajyam Not Quite Ready For Prime Time, But Still A Factor
-------------- --------------


19. (SBU) Chiranjeevi's problem, according to our
interlocutors, is that he waited too long to start PRP. His
charisma and ability to pull a crowd is universally
acknowledged: Srinivas Reddy told us "this state is movie-crazy
and he is one of the biggest stars." But PRP has not been able
to pull together the organizational muscle required to
successfully contest Indian elections because he waited until
less than a year ago to start the party. PRP's lack of party
machinery is evident in many other ways, from a dearth of
volunteers to get out the vote to its lack of experienced
candidates.


20. (SBU) Chiranjeevi appears to have realized the PRP's
organizational shortcomings. A senior PRP media advisor noted
that the campaign started too late to launch a planned 24-hour
Telugu-language news channel. The project was cancelled just 45
days prior to the first phase of polling, when a determination
was made that despite Chiranjeevi's star power the channel would
attract too few eyeballs in a competitive media environment.
Further the time and money used to launch could be spent to
greater effect on PRP get out the vote efforts.


21. (SBU) Caste makes PRP a factor, despite its poor
organizational strength. Although he repeatedly has said PRP is
not a caste-based party, it is inextricably linked to the Kapu
caste from which he hails. Since the state's formation the
Reddy caste has dominated Andhra Pradesh politics through its
association with the Congress party. The Reddy's rival caste,
the Kammas, found their political voice with the formation of
the TDP. The Kapus, who have long felt left out of the state's
Reddy/Kamma dominated system, are the single largest caste group
in Andhra Pradesh. Professor Suri said that PRP has
"consolidated" the Kapu vote. He added that Kapu support
provides PRP with a solid base from which to begin, but he
believes Chiranjeevi has failed to extend his appeal far enough
beyond the Kapus to make PRP a true contender.

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Congress Likely To Return In Hyderabad; Lose Lok Sabha Seats
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22. (SBU) In a meeting weeks before the voting, a very relaxed
senior official told us that Chief Minister was "very confident"
of his prospects for another term. The Chief Minister's
confidence was shared by the vast majority of our interlocutors,
all of whom felt that in the state elections Congress would
return to power. All agreed that Congress would not be able to
replicate its 2004 results, when it won an absolute majority on
its own (185 of the state's 294 assembly seats). The best case
we heard was Congress winning a slight majority of 150 to 155
seats on its own. The worst case had Congress falling short of
the 148 needed for the majority by winning only 110 to 120
seats, but managing to assemble a coalition government by
drawing in votes from the PRP or other smaller parties. Only
one interlocutor, Lalitha Iyer, left open the possibility of the
TDP taking control of the state government. "Don't count Naidu
out yet," Iyer warned. With control of the state government at
stake, the Lok Sabha elections did not figure much in people's
minds. Those analysts who were willing to offer a prediction on
the national results said Congress would likely lose 5 to 10 of
the 31 Lok Sabha seats it is defending.


23. (SBU) COMMENT: Chief Minister Reddy is clearly popular.
We frequently heard praise for his far-reaching welfare
programs, along with less urgent mentions of widespread
corruption in the Congress administration. Congress is in a
tough three way contest against the TDP-led Grand Alliance and
the new-to-the-scene PRP. The big, unanswerable question
concerns the impact Chiranjeevi's PRP will have on the race.
Some contacts say PRP is making an impact; others say it is hard
to tell because he is hoping to mobilize unpredictable
first-time voters. In closely fought first-past-the-post races,
Chiranjeevi's performance could be deciding factor in this
critical state. END COMMENT.
KEUR