Kadapa steel plant: Why Naidu, Jagan keep it alive though it is not feasible

On July 25, Union Minister of State for Home Nityananda Rai told the Lok Sabha that a steel plant in the public sector in Kadapa, a backward district in Andhra Pradesh, was “technically and economically not profitable”.

Responding to queries on the status of assurances made by the UPA government in 2014, while creating Telangana state, the minister quoted the Steel Authority of India’s (SAIL) feasibility report which said the project was not feasible.

Though the minister talked about the feasibility of a public sector plant, it raised doubts over the future of the Jindal South West (JSW) steel plant as well for which Chief Minister YS Jaganmohan Reddy laid the foundation at Sunnapuralla Palle on February 14 this year.

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It was for the second time Jagan laid the foundation for a steel plant in his home district Kadapa.

It was a pleasure participating in the Bhoomi Puja of #KadapaSteelPlant today with @SajjanJindal garu.
My best wishes to the entire team at @TheJSWGroup. pic.twitter.com/2ywGUZLSqC

— YS Jagan Mohan Reddy (@ysjagan) February 15, 2023

He did so first in December 2019 as a gratitude to the people for giving him a thumping majority in the Assembly elections. He laid the foundation for the steel plant in the joint sector with Liberty Steels as a JV partner.  Later, Essar Steels replaced the Liberty Steels. The venture did not take off.

Failed venture

Recently, JSW has been chosen to set up the plant. As there has been not much activity at the site even five months after the foundation, Nityananda Rai’s statement has triggered debate in the district if the foundation was laid with an eye on the 2024 elections.

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In fact, as per the assurance given at the time of the division of the state in 2014, the Centre has to establish a public sector plant in Kadapa district.

The YSR Congress, TDP and Jana Sena were silent on the Centre’s statement. The Left parties and activists were disappointed at the Union minister’s statement.

Congress veteran and former MP Dr N Tulasi Reddy said as long as the BJP, TDP and YSR Congress are in power, the plant will not see the light of the day.

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“The BJP is not interested in the plant as the party is non-existent in the state. A steel plant is not possible without the Centre’s cooperation. TDP and YSR Congress want to exploit the demand because keeping it alive is more advantageous than working to make it a reality,” he alleged.

Political gains

Chalasani Srinivas, activist and a special status movement leader, said the Centre might have manipulated the SAIL to give a report against the Kadapa steel plant. “Captive mines are not necessary to set up a steel plant. Japan set up plants with iron ore imported from India,” he said.

G Praveen Kumar Reddy of Steel Plant Sadhana Samiti, which fought for the steel plant for many years, said Jagan’s foundation stone was aimed at winning Assembly elections in the district next year against growing anti-incumbency.

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“How could Jagan lay the foundation stone for a steel plant without getting any clearance from the Centre?” he asked.

The Centre’s statement again brought the issue to the centre stage in the state.

A steel plant in Kadapa district is a dream that has been consistently fostered by ruling parties since July 2007 when then chief minister YS Rajasekhar Reddy (YSR) laid the foundation for Brahmini Steels, a private sector plant with captive mines licence.

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The promoter was Gali Janardhan Reddy, a BJP MLA from Karnataka. The government acquired about 10,000 acres of land. YSR promised direct employment for 10,000 and indirect benefits to a lakh people.

Centre’s promise

YSR’s death in a helicopter crash in 2009 and Gali’s arrest on charges of illegal mining by CBI led to the premature death of the plant. But people’s dream of a steel plant with 10,000 jobs has not died.

When the UPA government decided to carve out Telangana in 2014, it wanted to placate the Andhra people opposing the division of the state by assuring many things; a SAIL steel plant in Kadapa was one. But the priorities changed with the arrival of Prime Minister Narendra Modi; the Centre shelved the plant stating it was not feasible.

Later, N Chandrababu Naidu, who came to power in 2014, found a political opportunity in the demand after he parted ways with NDA. On December 27, 2018, a few months before the 2019 general elections, Naidu laid the foundation stone for the steel plant at Kambaladinne village. But in the 2019 elections, Naidu lost all assembly seats in the district to YSR Congress.

Six months after assuming office as chief minister, Jagan laid the foundation for a steel plant at another location in December 2019. Nothing happened in the next four years.  On February 14 this year, he roped in JSW and laid the foundation for a second time for the plant.

Why did Naidu and Jagan lay the foundation stones for the plant despite the Centre’s assertion that a steel plant at Kadapa was not feasible?

Fooling voters?

A former MP and minister from Kadapa district said their aim appears to be to keep the issue alive for elections.

“Whether it is feasible or not, the steel plant has deeply entrenched in the minds of the people because of the way it was promoted. A steel plant without a captive mine is not possible. Still, chief ministers are laying the foundations stones for the plant,” he said on the condition of anonymity.

Noted civil rights activist Dr A Chandrasekhar from Anantapur said electoral politics was involved in the promotion of the steel plant which requires huge capital and a long gestation period. “Why do private companies come forward to set up plants unless returns are guaranteed?  Still, there is an electoral advantage from periodically raising the issue,” he said.

Congress leader Dr N Tulasi Reddy said both TDP and YSR Congress were using the demand against each other. “Naidu tried to use the steel plant to defeat Jagan in Kadapa in 2019 and failed. Now It is Jagan’s turn. He is using the same steel plant to come back in 2024,” Reddy said.

Proud to have broken ground for our New Steel Plant in #Kadapa, Andhra Pradesh alongside CM @ysjagan ji.
This plant will be amongst the most modern and green steel plants in the world and will embody the spirit of @TheJSWGroup ! https://t.co/j16HVad66U pic.twitter.com/4SaSL45wYD

— Sajjan Jindal (@sajjanjindal) February 15, 2023