Why is Chandrababu Naidu prioritizing Lulu group?

Andhra Pradesh Chief Minister N. Chandrababu Naidu has once again sparked debate over his governance style and corporate preferences, following his government’s decision to allocate prime government land in Vijayawada to the UAE-based retail giant, Lulu Group. The move, though not entirely unexpected given Naidu’s history with pro-business policies, has reignited allegations of crony capitalism, quid pro quo, and undue concessions at the cost of public assets.

On Sunday, the state government issued an order allotting 4.15 acres of RTC (Road Transport Corporation) land in the heart of Vijayawada to Lulu International Shopping Malls Pvt. Ltd. (LISML) under the Andhra Pradesh Tourism Land Allotment Policy 2024–2029. This plot, with a market value running into hundreds of crores, is being leased to the group for 99 years.

What has raised eyebrows, even among policy observers and economists, is the unusually generous set of incentives accompanying the allotment:

1) No lease payment is required for the first three years — the period set aside for construction.

2) The lease rent kicks in only after commercial operations begin, effectively giving the company a grace period without any financial liability to the state.

3) The land can be used as collateral to raise loans, a provision that the government itself has acknowledged.

4) The proposed investment by Lulu — a Rs156 crore mall spanning 2.32 lakh square feet — is being criticized as underwhelming in comparison to the value of the public land being given away.

This is not an isolated instance. In an earlier decision, the Naidu government had allotted 13.74 acres of land in Visakhapatnam to Lulu Group at a nominal rate, also under a long-term lease. In both cases, the lands are in highly strategic and commercially valuable areas.

The pattern has become familiar: government land is offered at concessional rates, investors are provided with substantial incentives, and in return, the state claims credit for bringing in “global investment.”

Critics cry foul

Opposition leaders and policy critics see this as another case of Chandrababu Naidu’s pro-corporate governance model taken too far. While Naidu has often positioned himself as a reformist and a champion of economic development, detractors argue that these deals disproportionately benefit private companies at the expense of public resources.

“Allocating public land for a private shopping mall doesn’t constitute a transformational investment,” said a political analyst. “Especially in cities like Vijayawada, which already have multiple malls and retail infrastructure.”

The suspicion is not just about the optics. Questions are being raised about why Lulu Group, in particular, seems to be receiving special treatment. The group, led by businessman M.A. Yusuff Ali, is a global retail powerhouse — capable of investing in land and projects independently. The state’s decision to offer such incentives raises concerns about whether there is more at play than just business promotion.

The Quid Pro Quo questions

The recurring nature of these land allotments, especially at nominal rates, has led to murmurs of potential quid pro quo arrangements. While no concrete evidence of graft has surfaced, the scale and manner of these deals are being closely scrutinized by opposition parties and civil society alike.

Some even speculate that there may be political or financial considerations motivating such preferential treatment, especially in a state where land and infrastructure projects have often been mired in controversy.

Supporters of Naidu argue that this is in line with his long-standing vision of turning Andhra Pradesh into an investment magnet. They point to his track record — including the development of Cyberabad during his previous tenure in united Andhra Pradesh — as evidence of his commitment to modernizing the state.

But the counterargument remains: is it good governance to lease away high-value land for a mall, with no immediate return, especially when critical public services are underfunded?

At the core of the debate is a larger question — how should public assets be used? While attracting private investment is key to economic growth, should it come at the cost of long-term public value? Can public land be used to subsidize already wealthy corporations in the hope of job creation and tax revenue? For now, the Lulu Group stands to benefit enormously from the arrangement, and YSR Congress leaders have begun targeting Naidu, accusing him of facilitating “corporate loot.”