Telangana – World’s most expensive divorce settlement

 Listen to this new song being sung by Andhrites. (I will give the name of the song and the lyrics later)

 India’s first Prenuptial Agreement : Flashback to the fifties

“Telangana is like an innocent baby being married to a mischievous boy, an Andhrite. They should live together for long. If this baby demands divorce, it should be granted.” – Nehru in Nizamabad

This quote is often used by Telangana leaders in support of their demand for a separate state and sadly enough only occasionally refuted by the Andhra leaders. Full story on this can be read here. (http://www.visalandhra.org/2011/08/11/nehru-speech-in-nizamabad-on-merger/ ) This was also quoted by Sushma Swaraj in the parliament. You can listen the relevant parts from 3.5 onwards.

The “Gentlemen’s Agreement” between Telangana and Andhra leaders, can be considered as India’s first documented pre nuptial agreement.  Albeit not between a couple but two regions desiring to enter into an alliance. (A union resulting in a State, or a State into a Union, or a state of a becoming to a State of being – could not resist this)  Unfortunately while it covered a number of issues considered relevant at that time, it did not cover the crucial aspect of either a divorce nor provide for a methodology for settlement of assets in such an eventuality. In other words, the Nehru’s advice (or as Andhra leaders would say ‘alleged’ advice) did not find its way into this agreement.

Top divorce Settlements & Madonna

If one were to see the list of most expensive divorce settlements in the world (http://en.wikipedia.org/wiki/List_of_most_expensive_divorces) , Madonna is the only woman in the entire list, who paid her ex husband, rest are all men who paid their ex wives!

Lets move onto divorce settlements from prenuptial agreements. Broadly speaking there are two kinds of divorces “No Fault” Divorce and “At Fault” Divorce. As the name suggests No Fault divorce is by mutual consent and no grounds are required and ‘At Fault’ divorce requires grounds such as “ abandonment” “cruelty” “adultery” “desertation” etc.

“When the Vajpayee government formed Chattisgarh, there were celebrations in Madhya Pradesh. Similarly, people in Uttar Pradesh celebrated the formation of Uttarakhand, and sweets were distributed in Bihar when Jharkhand was formed”  Narendra Modi in Hyderabad.

The above three states were formed by mutual consent and were “No Fault” divorces. Accordingly there were no major issues in the settlement. Splitting of assets was done in a friendly manner.

Given the accusations by Telangana leaders and the post announcement agitations by Andhra leaders it is obvious that this divorce is surely an “At Fault” one! Who is at fault (or not at fault) has been dealt with in greater detail in the Sri Krishna Committee’s report and accordingly I will not go into the merits of the same here.

Telangana separation:  Worlds most expensive divorce settlement

The time has therefore come to settle the divorce in an amicable manner.  The continuation of agitation for a united Andhra, is meaningless. More so, if a spouse does not want to remain married, it is demeaning to run after such a reluctant spouse. Any self respecting Andhra leader should stop shouting “Samaikya Andhra” and start focusing on the key issues that warrant their immediate attention. The time for rapprochement was over quite some time ago. The only thing that is left is to work out are the modalities of the separation especially of the common properties i.e. Hyderabad.

Four key issues need to decided,

a) What is the sharing proportion?

b) Who is the bear the cost?

c) What is the amount to be settled?

d) What are the terms of payment?

Let us examine each of the issue in greater detail:

a) What is the sharing proportion?

Here I would like to quote from Kishan Reddy’s (BJP floor leader and a strong votary of separate state for Telangana) article in The Hindu, published in January 2010 (http://www.thehindu.com/opinion/op-ed/telangana-inevitable-and-desirable/article80961.ece

“The people of the Andhra and Rayalaseema regions feel that the benefits reaped from Hyderabad must be accessible to all those who have been equal stakeholders in the city’s development”

Keeping aside the arguments by Andhra leaders, that every sector in Hyderabad be it the Hotels, Hospitals, Software, Cement, Finance, Power, Infrastructure, Construction, Pharma, have all been built by entrepreneurs from their region, (which of course is countered by the Telangana leaders as one of exploitation of their resources) one has to admit that the capital of a Sate is a common property that has to be shared by all regions equally, independent of that regions contribution to the same.

While the law on divorce settlements is varied and evolving, a broader trend is to follow the community property model of property and debt divisions. This model classifies all property as either communal or individually owned by one of the spouses. In general, all communal property is divided equally between the two spouses at the time of their divorce.

Another model would be to do it based on population. Some of the assets, especially financial were done on this basis, when Chattisgarh was formed. One can refer to para 39 of the Madhya Pradesh Reorganisation Act 2000 at this link (http://cgfinance.nic.in/Rules%20&%20Act/Reorganisation%20Act-2000/Reorganisation%20Act,2000(English).PDF)

While division equally or in proportion to the population have their respective merits and demerits, both the options recognize that the benefits of the capital of a State belong to all the regions.

b) Who is to bear the cost?

The question arises as to who should bear the cost of separation, Centre or Telangana/ Hyderabad?

Here again, I would like to quote from the same Op-Ed article written by Kishan Reddy.

“Pragmatism would dictate that the special package be funded through some form of cess on the city of Hyderabad for a limited period rather than running to large financial institutions for loans, as has been proposed by some political entities”

While such an offer coming from a Pro Telangana leader is most welcome, it has an additional complication of imposing a burden on the ‘settlers’ from Andhra, who are not keen on a separation and yet have to pay for the cost of such separation!

One way out of this would be to raise Telangana bonds, which are then subscribed to by the people who want the separation. Eventually every body in the state is liable, but at least the initial outflow would be funded by the people who are seeking a separate state.

It may be noted that the original reason for a separate Telangana was the lack of development in that region. When this allegation could not be backed up with the facts, the narrative shifted to the need for ‘Smaller states’. This very subtle and strategic shift also had a corollary intent of making a case for the  centre to bear the cost of separation. Unfortunately the second argument will not hold much water; as such a view of an ideal size of a state has to be taken holistically across the country and not just in isolation. More importantly, it is unfair to levy such a charge on the rest of the country.

So the innocent but rich baby has to pay and settle the mischievous boy for this divorce! As we shall see, she will beat Madonna by a wide margin!

c) What is the amount to be settled?

We now have to determine the value of Hyderabad. We often hear statements saying we will pay a few thousand crores to Andhra to build another capital. Approaching this issue from the amount required to build a capital is wrong. What Andhraites are losing is not the infrastructure for the capital but something which is far more valuable that they have helped in building. The value of Hyderabad can be determined only if all the components that make it are properly understood. These are

  1. Political Infrastructure:

 The Secretariat, Assembly, Government quarters, High court etc.

  1. Urban Infrastructure:

 Airport, ORR, Access, Malls, Hotels, Hospitals, etc.

  1. Economic Infrastructure:

 Manufacturing and Services industry in and around Hyderabad that acts as the economic engine of the entire State.

  1. Soft Infrastructure:

 Its history, brand, tourism, etc.

The value one can ascribe to the political infrastructure is very small when compared to the overall value of Hyderabad.  So it is not enough to say, we will give a few thousand crores to build a capital.  Sure, the political infrastructure can be readily and easily built, but what can never be easily done is the other infrastructure. The loss of these three other kinds of infrastructure is of permanent nature and Andhraites need to be compensated for the same. The compensation therefore should not be looked at as the cost of building alternate political infrastructure but the permanent loss to Andhraites of Urban, Economic & Soft infrastructure, that they have also contributed to building.

Lets now make an attempt to calculate the value of Hyderabad.  The current revenues from Hyderabad of City, State, Centre taxes amount to around 90,000 crores. (Roughly around 55% of the State revenues). If one were to provide for the annual outlay of Hyderabad of 3500 crores, one is left with revenues of 86500 crores towards the development of the State.  A discounted cash flow of these revenues assuming a growth rate of 4% and cost of capital of 8.75%, would result in a value of Hyderabad being around 11 lakh crores. 50% of this would belong to Seema Andhra amounting to 5.5 lakhs crores.

d) What should be the payment terms?

This should be entirely the call of the people of Andhra. Given the fact that the divorce is being imposed upon them, the terms of payment have to be solely at the discretion of Andhrites so that they can develop their capital and State in the manner they want.  Even if one were to assume 25% down payment, this would amount to a whopping amount of 1.375 lakh crores. Where would the Telangana state get this kind of money? Especially if the amount involved is equivalent to the Annual budget of the entire Andhra Pradesh state! Even though the future cash flows can service the down payment, raising this kind of money in any market would be a herculean if not an impossible task.

The larger issue that arises from the above analysis is the above cost worth it the separation? Does it take into account the emotional cost of this bitter fight? Will the wounds be ever healed? Would Telugus be ever united?

While it is nice to overtake Madonna and in fact top all the other expensive divorce settlements, the eventual cost on the economy may prove to be more expensive and disastrous in the long run.

Two bodies one Soul

Aristotle when asked what is a friend is believed to have said:

“In the arena of human life the honors and rewards fall to those who show their good qualities. 
What is a friend? One soul inhabiting two bodies.” –

As this is a bitter and contested divorce, if the separation bill has to stand the judicial scrutiny, the manner in which the assets are distributed has to be equitable to both the parties.

Even before the bill has been passed, there is an SLP filed in the Supreme Court (since dismissed as premature). Once the bill is passed, there would a slew of SLP’s challenging the bill. Even though the politicians have failed us in finding an amicable solution, I am pretty much sure that a large Constitutional bench would go into both the causes for the demand as well as the eventual manner in which the separation bill is passed.

One amicable way out would be to make Hyderabad as joint capital on a permanent basis. Andhrites have invested far too much emotional capital into Hyderabad, that any other solution would be a travesty of justice.

Its Stryper not Madonna that we should be listening to.

Let Telangana and Seema Andhra be two bodies with one Soul, Hyderabad.

Listen to the song again- Name is Two bodies, One mind, One Soul

Here are the lyrics.

Verse 1

Too many days go by

When we don’t see eye to eye

We hold the key that will open all the doors

I just wish that we could give just a little more

 Chorus

This time we’ve gotta stick together

Can’t let our hearts turn into stone

We’ll win this fight if we never say never

As two bodies, one mind one soul

 Verse 2

I swore that I’d never give up on you

And you said that you would see this through

So let’s light the fire that will burn the wall to the ground

Let’s find what we thought could never be found

 

Jai Telangana. Jai Seema Andhra. Jai Mana Hyderabad.

8 thoughts on “Telangana – World’s most expensive divorce settlement

  1. Condemn this article that uses recklessly the word Separatists.
    Void of Constitutional Rights and Process, Full of Exploitative and Commercial mentality. With this attitude, whatever good will and gesture Telangana people wanted to extend, I am afraid probably Seema Andhra cronies do not deserve as they had more than their fair share anyway, so must coup up for the exploitation first.
    1. Pay Back all stolen Water
    2. Pay back all stolen Jobs
    3. Pay back all stolen revenues.

    If Seemandhra was to have 50% share of Hyderabad why on earth they included Hyderabad in Telangana in all Revenue and Expenditure allocations so far..

    Heads I win Tails You lose
    is the bottom line of this author and all the Seema Andhra illegitimate demands and practices..

    • Well, who the heck are “Settlers” then?. Some one from a Telangana who settled in other part of India is also usurping a local’s job. Going by your logic, a person from Telangana region, settled in Delhi should be asked to pack his baggage and leave for ONLY Telangana region. I condemn your very thoughts.

    • Dear Mr Gandhi, I meant no offense and none should be taken. This word is often used in the current environment. Be that as it may, I have made appropriate changes in the blog. Since you have taken the trouble of reading the blog and making a comment. May I request you to focus on the issues raised in the blog and rebut accordingly. This will enable us to engage in a more meaningful dialogue.

      • Dear Hari Garu

        Thanks for making the correction.

        Firstly State formation is neither Marriage nor Divorce.
        It is just the growth of family as India grows.
        Bharat Mata will have 29th Daughter and Telgu Talli will have 2 or 3 children

        Secondly your argument that States are formed with mutual consent is far not factually correct, its an administrative decision by Govt of India.

        Andhra State formation much against the wishes of Madras state CM Rajaji and that of Nehru with noble Self sacrifice by Sri Potti Sriramulu Garu to its merger with Telangana of Hyderabad state against the recommendation of State Reorganization Committee then Re-organization of Punjab against the dissenting CM, Maharastrians demand for Maharastra, Re till the Jharkhand formation much against the opposition of then CM Laloo Yadav there are many examples to demolish your false premise on which you built the argument..

        To your amplified and imaginative questions raised the simple answers is :

        a) What is the sharing proportion?
        b) Who is the bear the cost?
        c) What is the amount to be settled?
        d) What are the terms of payment?

        The process is no different from that of earlier state re-organizations and its in the hands of Home Ministry of India of Govt of India to be conducted as per constitution of India and any thing else will be challenged in the court of law by either party..

        So relax and plan and take charge of your destiny and your region (Andhra, Rayalaseema or Telangana)

  2. Thanks for the logical analysis. Just one “emotional” point. Please don’t call “Seemandhra”. It’s not a real name. It’s just something coined by some lazy journalist. It’s Andhra Pradesh! Just because Telangana is split, there is no reason for the rest of AP to change their name!

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