Scam Andhra - Implosion: India's Tryst with Reality - page 262

the contractors were cronies and they parked the money in real estate, and YSR added to
the hype to it by announcing the new projects, many of which were located at places where
the cronies had already bought land,' says a local journalist.
Politicians whose real-estate businesses thrived during the YSR years included
Lagadapati Rajagopal and his Lanco group, whose family businesses include power pro-
jects, real estate, infrastructure and one of the country's biggest real estate mixed-devel-
opment projects costing $1.5bn and covering 108 acres. 43 Congress politicians who were
reported to have been awarded irrigation contracts during the YSR regime included three
more MPs - T. Subbarami Reddy, Kavuri Sambasiva Rao and Rayapati Sambasiva Rao.
Irrigation projects of various sizes and associated road works contracts also went to state
ministers and other MLAs. Andhra Congress MLAs' real estate business also thrived. Oth-
er Congress leaders benefited from a Rs 3,000 crore Hyderabad outer ring road project and
won other contracts for roads and building works.
State-owned sites were auctioned at extraordinarily high prices, triggering a real estate
frenzy and enabling what one source calls 'influential people', who had already bought
nearby land at low prices from mostly poor private owners, to sell at massive prices. In July
2006, for example, an auction of undeveloped land at the Golden Mile project in Koka-
pet, near Hyderabad's financial district, yielded Rs 14 crore per acre, which matched prices
in the city's long-established prime central district of Jubilee Hills. 44 Many of these land
deals are now in litigation. The government started an astronomically high number of 103
special economic zones that drove up real estate values. 45 A project called Fab City in Ma-
heshwaram near Hyderabad was given a high-profile launch in 2005 as a centre for inter-
national semi-conductor companies, which led to land being bought at inflated prices. The
lead company in this project, SemIndia, was to have brought in $3bn to make this a hub of
microchip manufacturing, but after all the hype, the project was gradually watered down.
A month after he came to power, YSR flagged off his regime with a project called
Jalayagnam ( jal meaning water, and yagnam being an offering to the gods), which was ex-
ceptionally large-scale and ambitious with an estimated cost of some Rs 46,000 crore. 46 It
included constructing dams, canals, water supply systems, power plants and lift irrigation
schemes to pump river water from the Krishna and Godavari rivers up gradients and irrigate
seven million acres of dry land in the state, mostly in the Rayalaseema and Telangana areas.
YSR, in effect, had planned Jalayagnam both to boost his populist image as a chief min-
ister who cared for the rural poor by building long-delayed irrigation schemes promised in
his election manifesto, and as a sop to contractors who were part of broader schemes with
his son Jagan. Many of the projects had not received environmental clearances, and some
were subject to disputes with neighbouring states over sharing river waters. Tens of thou-
sands of people were to be displaced. Financing was helped by allocations from the central
government, plus state funds from real estate auctions around big cities.