B’lore Inc., blase of political party

Narayanan Madhavan

BANGALORE: As rural India cheered the Congress party's national election win, companies in this high-tech city braced for a backlash against a region seen as long pampered by the previous, business-friendly government.

But those fears now seem to have been tempered by a more practical approach in the southern Karnataka state, a booming area that accounted for more than half of India's $12 billion in exports in the last year and is a hotbed of outsourcing business.

In the Karnataka legislature, tech-friendly Congress party candidates lost their majorities in provincial elections that coincided with the national vote. But it returned to power as a member of a coalition that includes the socialist Janata Dal (Secular) party.

A tech-friendly ruler in neighboring Andhra Pradesh also lost power, triggering concerns about support for the industry.

"Voters in both states threw out their ruling party, underlining the need to focus on basic issues such as water for irrigation, rather than on attracting multinational investment and creating software parks," Dave Dickson, who tracks technology issues in developing countries, wrote for the website www.scidev.net.

But the worst fears have not materialized.

Some executives and industry experts said the support for the tech sector would go on, though perhaps with a lower profile.

"They (Congress) cannot negate whatever they stood for in the last five years," said V. Ravichandar, a former member of the Bangalore Agenda Task Force, a public-private panel that outgoing chief minister S.M. Krishna started to boost the city's infrastructure.

Technology executives have also learned that in India, left leaning governments are not necessarily anti-business. The best example of this is in communist-ruled Calcutta, which has developed into the latest information technology center.

"Bangalore has now become a global brand and I am sure whichever government comes to power, its international reputation will continue to grow," said Nandan Nilekani, chief executive of Infosys Technologies India's No. 2 software service exporter.

With Congress as the expected head of a center-left coalition in Karnataka, infrastructure initiatives will likely continue and foreign investment will still be sought for Bangalore.

The outsourcing boom in Bangalore has attracted global tech giants such as International Business Machines Motorola Inc.

AIRPORT HELP

Economic analysts say Bangalore needs a modern international airport to replace the antiquated one now in use.

Ravichandar said coalition pressures and the rural emphasis may affect government behavior. But with Congress now in power both at the national level and in Bangalore, officials could accelerate a $278 million private-sector international airport aimed to be ready by 2006.

"This would be the first test (for the coalition)," he said.

Congress has come to power in Andhra Pradesh state also, but the local chapter there wooed farmers aggressively to defeat the Telugu Desam party of Chandrababu Naidu, who lobbied heavily for international tech companies to set up office in his state.

Bangalore, transformed from a sleepy pensioners' enclave in the past decade, is at the forefront of India's job-spinning services revolution, which has spawned 800,000 workers thriving on high-level skills, low costs and a knowledge of English, a heritage of British colonial rule.

It is now a center for services ranging from software coding to accountancy to call center operations.

After the setbacks suffered by Congress party candidates in Karnataka, the political shift may be in the packaging of policy, not direction, analysts say.

Vivek Kulkarni, a former official who left the Karnataka state government to start his own company, told Reuters the state had promoted technology investments but had not spent much doing it.

"It is basically how you project it," Kulkarni said, indicating that the funds spent on rural development should be better publicised.

"Nothing much will really change. Political parties are maturing and policy-making is also maturing," he added.