Outsourced urban governance as a state rescaling strategy in Hyderabad, India

In the years since liberalization, state power has been rescaled in India's polity and this is both a cause and consequence of greater inter-state competition for footloose capital. In this context, some state governments are designing special regulatory tools to attract and concentrate investments by easing ‘doing business’ for private investors and leveraging land resources—primarily in their largest cities. Equally important, they ensure public investments are channelled to these select spaces and that resources are available for maintaining high standards of infrastructure. In Hyderabad, the ‘Industrial Area Local Authority’ (IALA) is a powerful tool that allows privatised management by state and non-state actors of recently constructed productive spaces, mainly concentrating globalised service sector activities, including by collecting local tax revenues and various development charges to be spent exclusively within the industrial area. In this way, governance and fiscal functions are outsourced to non-elected bodies, outside the purview of democratic institutions. By essentially replacing municipal authorities, the IALA framework produces new forms of governance at the same time that it generates fragmentation of the institutional fabric of urban spaces. In effect, it creates a tool for by-passing urban politics, or in the case of periurban spaces does not allow an urban politics to emerge. Building on recent research, this paper examines the implications of IALAs in Hyderabad on urban governance and local state sovereignty.