Telangana’s Formula E case is a test of governance, accountability

Over the last month, the Formula E Race case registered by the state Anti-Corruption Bureau (ACB) has dominated the political discourse in Telangana, India’s youngest state. Animated discussions abound, speculating whether Bharat Rashtra Samithi working president K T Rama Rao (KTR), often viewed as the poster boy of Hyderabad’s brand image, will face arrest under the Congress government led by Chief Minister A
Revanth Reddy.

KTR asserts that no corruption occurred and that the race aimed to elevate Hyderabad’s brand image. In contrast, Congress leaders allege corruption and rule violations by the BRS government and hint at impending consequences for KTR. This political tussle has left Telangana’s citizens in a dilemma.

Rs 55 crore, including taxes, tied to the Formula E race pales in comparison to the multi-crore corruption scandals in Indian politics. However, the inquiry goes beyond mere corruption; it serves as a critical examination of political accountability, governance standards, and the delicate balance between development initiatives and financial propriety in India’s rapidly expanding states.

The state’s municipal Administration and Urban Development (MA&UD) department, under KTR’s instructions as then minister, allegedly made these payments without necessary approvals, violating financial procedures and potentially causing a loss of about Rs 55 crore to the exchequer.

KTR asserts that he took these actions to elevate Telangana’s standing and improve Hyderabad’s brand image. The case’s outcome will be closely watched, not just in Telangana, but across India, as it touches upon crucial issues of governance, development, and political integrity.

The case and its impact

In February 2023, Hyderabad hosted a round of the FIA Formula E championship, the city’s first all-electric single-seater race. Held near Hussain Sagar Lake, the event significantly elevated Brand Hyderabad. Later, on October 30, 2023, when BRS was in power, the Telangana government signed a four-year host city agreement with Formula E. Organisers of the race claimed that the inaugural Hyderabad E-Prix in February 2023 generated almost $84 million in positive economic impact for the region—far exceeding the overhead costs invested by Formula E and the Telangana government.

The crux of the case is that ACB is investigating irregularities in the transfer of Rs 55 crore in pounds sterling to London-based Formula E Operations for the event’s second edition, scheduled for February 2024 in Hyderabad. The Congress government’s cancellation of the agreement after it assumed power led to the cancellation of the event.

The ACB is investigating the transfer of Rs 46 crore, excluding taxes, in two instalments in October, prior to the signing of a new agreement to replace AceNextGen as the event sponsor with the Hyderabad Metropolitan Development Authority (HMDA). Following the first race, AceNextGen withdrew, citing financial losses.

The ACB alleged that the transfer of funds violated state secretariat business rules, as it bypassed approval from the finance ministry, the cabinet, and the then chief minister, who also chaired the HMDA.

The ACB is also investigating the lack of accountability for AceNextGen’s withdrawal from the tripartite agreement, which forced HMDA to intervene and use public funds to pay for Formula E Operations. Investigators are also questioning the urgency with which the state government acted in transferring the public funds.

Ahead of the 2023 Assembly elections, Revanth Reddy repeatedly accused the KCR family of treating Telangana as a personal fiefdom, disregarding democratic norms. He charged that the KCR family acted impulsively, circumventing all established procedures in every aspect during its two-term rule. Revanth Reddy’s narrative—that the Assembly polls were a battle between an ‘arrogant’ and ‘corrupt’ KCR family and the four crore people of Telangana—resonated, leading to Congress’ victory and the first Congress-led government in Telangana.

Now, BRS, having struggled in the 2024 general elections while scoring a duck, appears to be in a vulnerable position. The Congress government could potentially use the Formula E Race to further damage the reputation of the already struggling BRS. Until then, KTR & Co will have to do a lot of firefighting to stay ahead in the war
of perception.

If KTR is found guilty, the consequences could be severe, with charges under the Prevention of Corruption Act and BNS sections related to criminal breach of trust and conspiracy. Conviction could lead to imprisonment and fines, severely impacting his ability to hold public office. The conviction of a prominent leader like KTR would likely cause a major shake-up in Telangana’s political scene and destabilise the BRS leadership.

Conversely, an acquittal could vindicate KTR, strengthening his position within the party and allowing him to counter allegations of corruption.

Regardless of its outcome, the Formula E race case raises important questions about governance, transparency in large-scale event management, and the use of public funds. It also highlights the challenges in balancing ambitious development projects with adherence to financial regulations and procedures.