Explained: Andhra Pradesh Chief Minister Jagan Reddy’s 'War' On Telugu Film Industry

Contrary to popular perception, it’s not the Bollywood but regional cinema that rules the roost in Indian film industry. The latter, led by Telugu and Tamil movie industry, contributed 47 per cent to the Indian film industry’s overall revenues in 2019 while the former’s share was 40 per cent and total revenues of both stood at around $2.7 billion in FY 2018-2019 as per a report released at the FICCI Frames Summit in 2020.

South Indian movies contribute a huge chunk but even in the south, it‘s the Telugu industry (popularly called Tollywood) which rakes in substantial revenue. The craze among fans for their favourite actors is on a whole different level when it comes to Telugu and Tamil film industry where they are treated as demi-gods and many megastars have gone on to become highly successful politicians such as former Andhra Pradesh chief minister N T Rama Rao and ex Tamil Nadu chief minister M G Ramachandran.

So, it’s surprising that the Andhra Pradesh government led by Chief Minister Y S Jaganmohan Reddy has decided to go to war with the Telugu film industry especially at a time when the theatres have opened up fully and movie business is expected to resume after almost two years of Covid-19 induced shutdown which has proved especially devastating for the box office and tens of thousands of people that rely directly and indirectly on this industry.

In the past few days, scores of theatres across the state have faced the government’s heat for not complying with the officially mandated pricing on movie tickets and food items served inside the cinema halls. While some owners have collectively and voluntarily decided to shut theatres down due to unviability in operating them due to highly restrictive pricing policy, many others have been raided and shut down by the authorities after they were found violating the rules.

Choking The Industry Using The Law

On 8 April, the Andhra government issued an order (GO 35) fixing the maximum ceiling rates for movie tickets. For municipal corporation areas, the highest price was capped at Rs 250 for premium multiplex theatres and lowest price was fixed at Rs 20 for non-AC economy theatre. Similarly, for municipality area, highest price was fixed at Rs 150 and lowest at Rs 15. For nagar panchayats, highest cap was Rs 120 and lowest Rs 10 and for gram panchayats, highest price was fixed at Rs 80 and lowest at Rs 5.

“Any violation of the maximum ceiling rates will render the management liable for appropriate action by the Licensing Authority. The Licensing Authority will issue show cause notice and provide opportunity for personal hearing before taking penal action,” the order read.

Moreover, the order mandated that the theatre managements make provision for online ticketing where prices couldn’t be more than the maximum ceiling rates as fixed based on the area in which theatres were located.

Not only that, it also ordered that the maximum retail price of any item should not be exceeded while selling refreshments to the customers, and theatres were also required to provide free drinking water and clean rest rooms.

Last month, the state assembly passed the Andhra Pradesh Cinemas (Regulation) (Amendment) Bill 2021 with more regulations to choke the industry. The biggest of them all is introduction of online ticketing system which will be run just like how the Indian Railways online ticketing system IRCTC operates. The A.P. State Film, Television and Theatre Development Corporation will run the online portal through which tickets will be booked. The government has basically become the middleman between consumers and theatres. The government will sell the tickets and transfer the payments to the theatres on a daily basis through an RBI gateway.

Moreover, the number of shows have also been capped at four. This also means that there won’t be any ‘benefit shows’ a concept hugely popular in Telugu industry where tickets of early morning shows for first three-four days of the film release are sold at premium to cash in on the initial hype. Given the craze among people to not miss the early shows of their favourite stars, this is a major driver of revenue for theatres and film industry. As if capping of prices wasn’t enough, fixing the number of shows to only four and their timing schedule, running a theatre will become a burden. It’s not surprising that many owners are voluntarily shutting down cinemas.

However, the government argues that these measures will help keep a check on tax evasions and enhance the movie theatre experience in the state. Large gaps between the taxes and film collections is cited as a major reason for the crackdown. There has been a huge mismatch between the cinema collections, the revenues claimed to be earned by producers and distributors and the GST payments made to the government, the minister for Transport and Information and Public Relations Perni Venkataramaiah, who tabled the bill in the assembly, said.

The Reason For Crackdown?

As per one report published in a Telugu portal citing "highly placed sources" when CM Reddy made enquiries about benefits or revenue the state government gets by granting favours to the film industry, he was "shocked to know that what the state government would get from the film industry in the form of entertainment tax was pittance" and that the tax revenue from the films to the state has been not more than Rs 15-20 crore.

“Even during the years of big-ticket films like Baahubali, which claimed to have grossed nearly Rs 1,000 crore, the tax revenue to the state was not more than Rs 20 crore, which is not even equal to the remuneration paid to a popular hero for a single film,” the article says quoting a source in the government.

But there also seems to be political angle behind Reddy’s moves against the industry which has historically been perceived as close to the main opposition party Telugu Desam of Chandrababu Naidu.

Pawan Kalyan, a big movie star and another opposition leader whose party Jan Sena is in alliance with the Bharatiya Janata Party, has been a vocal and fiery opponent of Chief Minister Reddy. When his movie Vakeel Saab was released early this year and he used the pre-release functions to target the ruling dispensation, the government denied permission to hike rates of movies and to increase daily number of shows, favours that are usually granted to big budget movies. Kalyan again attacked the Reddy government in harsh terms during release of his nephew’s movie.