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INFO RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0047
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
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RUEHLO/AMEMBASSY LONDON 0001
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RUEHKO/AMEMBASSY TOKYO 0001
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RUEKJCS/SECDEF WASHDC
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RUEAIIA/CIA WASHDC
RUEIDN/DNI WASHINGTON DC

UNCLAS SECTION 01 OF 07 HYDERABAD 000040 
 
SENSITIVE 
SIPDIS 
 
AMEMBASSY NEW DELHI 
ALL SOUTH AND CENTRAL ASIA COLLECTIVE 
AMEMBASSY BEIJING 
AMEMBASSY BERLIN 
AMEMBASSY LONDON 
AMEMBASSY MOSCOW 
AMEMBASSY PARIS 
AMEMBASSY TOKYO 
NSC WASHINGTON DC 
SECDEF WASHDC 
HQ USPACOM HONOLULU HI 
USMISSION USUN NEW YORK 
USMISSION GENEVA 
JOINT STAFF WASHDC 
US CENTCOM INTEL CEN MACDILL AFB FL 
NCTC WASHINGTON DC 
 
E.O. 12958: N/A 
TAGS: PGOV PTER PHUM KDEM IN
SUBJECT: BHARAT BALLOT 09: ANDHRA PRADESH CONGRESS UNLIKELY TO 
REPRISE 2004 LANDSLIDE 
 
REF: CHENNAI 107  B) 2008 CHENNAI 394 
 
HYDERABAD 00000040  001.2 OF 007 
 
 
¶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. 
 
------------------------- 
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 
 
HYDERABAD 00000040  002.2 OF 007 
 
 
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. 
 
------------------------------- 
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. 
 
----------------------------------- 
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. 
 
 
HYDERABAD 00000040  003.2 OF 007 
 
 
--------------------------------------------- --- 
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 
 
HYDERABAD 00000040  004.2 OF 007 
 
 
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. 
 
-------------------------------- 
`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. 
 
 
HYDERABAD 00000040  005.2 OF 007 
 
 
-------------------------------- 
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." 
 
------------------------ 
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 
 
HYDERABAD 00000040  006.2 OF 007 
 
 
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. 
 
--------------------------------------------- ------------------ 
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. 
 
--------------------------------------------- --------------- 
Congress Likely To Return In Hyderabad; Lose Lok Sabha Seats 
--------------------------------------------- --------------- 
 
 
HYDERABAD 00000040  007.2 OF 007 
 
 
¶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