India's silicon valley eyes political change

By Alistair Scrutton

BANGALORE, India (Reuters) - It's been a frustrating time for many businesses in India's IT hub of Bangalore. Endless traffic jams, sporadic power, a chaotic airport and many politicians who just couldn't give a damn.

For four years, Karnataka state, home to India's "silicon valley", was ruled by a chaotic coalition with a regional party. With Janata Dal (S)'s support base among farmers, politicians were criticized for ignoring Bangalore's IT "elites".

The result - more decrepit public transport, four hour commutes, packed roads and blackouts that have taken some glean off this city as it faces increasing competition from other cities such as Shanghai and Manila to attract foreign investment.

Now many executives hope state elections, ending on May 22, may offer hope for the world's "back office", accounting for a third of India's $41 billion software exports, by bringing in politicians to address grievances of businesses.

It is not just about political pie-in-the-sky promises.

Karnataka will hold the first major election under a new constituency map. The first new map in decades, it gives more political weight to urban India and its business workers and could weaken India's traditionally pro-rural politicians as the country prepares for general elections within the year.

"In the last four to five years, a lot was squandered away in Bangalore. What has happened, happened in spite of," said Ashok Kheny, an Indian businessman who has unsuccessfully battled for years to finish a $700 million highway and township project.

The last election four years ago was seen as a rejection of former chief minister S.M. Krishna's pro-urban policies in favor of farmers. Krishna, who promised to convert Bangalore into another Singapore, had helped propel the city into an IT hub.

A similar voter backlash happened in Andhra Pradesh in 2004, where a pro-IT party was thrown out by angry voters, increasing feelings in India that being pro-tech was not a way to win power.

As Kheny talked, aides remarked how it took ten minutes to cross the road to the upmarket hotel for the interview, such was the dense traffic and lack of road crossings.

Kheny returned to India in 1995 after 15 years in the United States to build a highway and townships that would connect Bangalore with the city of Mysore 110 km (70 miles) away. It was a landmark deal, India's first privately-funded highway.

But more than 338 lawsuits later and vocal opposition from Deve Gowda, leader of Janata Dal (S), the consortium has still finished less than 50 percent of the work. The project may now cost around $1 billion due to cost overruns.

"Often in business, perception is more important than the bottom line, and Mr. Gowda has created the perception of being anti-business in Bangalore," said Kheny, managing director of the Nandi Infrastructure Corridor Enterprise consortium.

BOOMING BANGALORE

Bangalore is still booming. Malls and offices sprout up. But the worry is that the pace of the boom is outstripping infrastructure to a degree that companies may move elsewhere.