This is a tale of two warring chief ministers. One, K Chandrasekhara Rao, or KCR, was elected for delivering on his huge promise of getting statehood for Telangana. The other, N Chandrababu Naidu, was elected because people felt he had a vision for the truncated state of Andhra Pradesh, from which Telangana had been carved out, and could work with the Centre to get things done, including building a new capital. But the two men do not get along and are projecting their personal rivalry into a competition between their states.

In mid-August, the Telangana government announced a new liquor policy, completely waiving VAT. Not to be outdone, the AP government suggested it might also announce something similar, although it may face a backlash: sentiments against cheap liquor are stronger in that state than in Telangana.

If AP does go ahead, though, it will hardly be the first tit-for-tat announcement. When employees of the Andhra Pradesh State Road Transport Corporation went on strike in May this year, Naidu conceded to an increase of 43 per cent in their salaries. The eight-day strike cost the government around Rs 100 crore and the wage increase will mean spending of Rs 960 crore more a year.  Outdoing the AP government on the same day, although just barely, KCR announced a salary increase of 44 per cent for Telangana State Road Transport Corporation employees, besides regularising the services of 4,230 contract employees.

In February 2015, KCR had already raised the salary of all state government employees by 43 per cent. The AP government decided to match it, well above the 29 per cent that the pay revision committee had recommended, leading to an additional annual burden of almost Rs 7,000 crore.

Electricity was the next competitive arena. AP has a power surplus after the state was divided, but Telangana has a deficit and had therefore imposed huge cuts on industry during the kharif season in order to keep farms going. Telangana also had to convince farmers to stay off paddy cultivation, to reduce demand from the farm sector and ensure that Hyderabad had no cuts in summer.

Naidu also grandly announced that he will supply power 24-by-7 across the state but his government is paying for much more power than it is receiving. This is because it has given guarantees to various power projects but these are not producing at full capacity. They are underutilised because Reliance’s Krishna Godavari Basin is not producing the gas they need as fuel because of disagreements in pricing.

Holier than thou

Even the sacred is not sacred territory. The Tirupati-Tirumala Devasthanam, which attracts devotees from across the country, is in AP, as is the region’s second-most popular holy site, the Sri Kalahasthi temple, in Chittoor.

KCR decided Telangana needed an equally high-profile temple. He undertook to develop and upgrade Yadagirigutta, a temple on a simple hillock about 50 km from Hyderabad. In order to outdo Tirupati, which is surrounded by seven hills, he has decided his plan will include several hillocks round Yadagirigutta to take the count to eight.

He plans to increase the height of the gopuram, or temple tower, plate it with gold, plant trees on 500 acres surrounding it, set up pilgrimage centres and other facilities on 2,000 acres and build a four-lane highway from Hyderabad.

Fortunately, this year the Maha Pushkaram, a holy dip in the Godavari that takes place once in about 144 years, in the Telangana area was peaceful, in contrast with the Andhra portion, where the event began disastrously with 29 people dying in a stampede in the first hour itself. Granted that far fewer pilgrims came to Telangana than to AP, but that is small consolation for the families of those who died. More than 30 million people participated altogether, with more than 23 million of them taking the holy dip in AP.

Attracting investment

Showcasing its prize catch of Hyderabad, Telangana has held massive overseas roadshows to attract investment, especially in technology, manufacturing and pharmaceuticals, besides announcing incentives for start-ups. This began in May with a highly publicised visit to the US by KT Rama Rao, KCR’s son, who is the IT minister.

Internet giant Google, which already has huge facilities in Hyderabad, said during Rama Rao’s trip to the US that it would expand its investment and footprint. According to Rama Rao, Google’s Rs 1,000-crore investment and a campus of more than two million square feet would make it Google’s largest campus outside the US. It would also create 6,500 jobs.

Online retailer Amazon is setting up a centre on the outskirts of Hyderabad in April. Spread over nearly 280,000 sq ft, the centre will enable Amazon to store items and deliver goods faster to its customers. DLink, a Taiwan-based firm and a global leader in networking and connectivity products, signed an agreement to set up a global research centre in Hyderabad. DLink with also help the state government  upgrade its networking infrastructure and set up public wi-fi spots.

The ITC conglomerate said in June it would invest more than Rs 8,000 crore in Telangana, predominantly in paper, while the GMR group is constructing a convention centre near Hyderabad airport, involving an investment of more than Rs 750 crore.

Without a capital or even a city to match Hyderabad, AP is projecting Sri City in Chitoor district as the urban centre of the future, besides Visakhapatnam, Vijayawada and Anantapur. Japan’s SoftBank, in partnership with Bharti Enterprises and Foxconn, promised in June to invest more $20 billion in solar and hybrids energy.

Foxconn, also known as Hon Hai Precision Industry, a Taiwanese electronics firm, the world’s largest contract manufacturing company, which makes the BlackBerry, iPad, iPhone, Kindle, PlayStation and Xbox One, among other items, said in early August that it would set up a manufacturing unit in Sri City to produce Xiaomi’s Redmi2 Prime phone for the Indian market. Airbus and Essel are also likely to invest in defence and aerospace parks.

Not to be outdone, the Telangana government is also in talks with Foxconn to get it to manufacture Apple phones or tablets in Hyderabad, which has an international airport and a metro in the works. To catch up with Hyderabad, AP proposes to set up airports and metros.

The two states have also announced mid-sized irrigation projects to prevent farmers’ suicides, and are goading the Centre to set up research institutes and educational institutions in their states.

But without a capital, and the Centre refusing to give the state special status or grants, AP is realising that implementing its plans will be an uphill task. With its head start, Telangana is ahead in the race, for now.

Good vs bad competition

But fighting to attract investment is vastly better than the negative competition that the two leaders are also indulging in. Naidu suffered a major jolt in the cash-for-votes scam earlier in June, when his party leader, Revant Reddy, was caught on videotape giving a bribe of Rs 50 lakh to an independent MLA for his vote for the Rajya Sabha elections. KCR has filed a case against Naidu in this connection. A local television channel belonging to KCR’s family later released tapes that it claimed had Naidu’s voice assuring the MLA.

When asked about this, Naidu accuses KCR of tapping his phone. The Telugu Desam Party registered cases accusing his government. See this story for more details.

The animosity between the two appears to be so strong that KCR skipped a dinner that the governor of both states, ESL Narasimhan, hosted in July in honour of the Indian president. Even though the governor had personally invited KCR he apparently did not wish to come face-to-face with Naidu.

Hyderabad-based Sriram Karri is the author of the novel, Autobiography of a Mad Nation, which appeared on the long-list of the MAN Asia Literary Prize.