Economy of Andhra Pradesh

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Visakhapatnam, a major commercial city in Andhra Pradesh

The growth in the state of Andhra Pradesh was mainly driven by agriculture, industry and service sectors. The state has well-developed social, physical and industrial infrastructure and virtual connectivity. The priority areas of the state in the economy include Food processing, Software Export, Financial Services, Electronics, power, Textiles and Tourism.

The Godavari and Krishna are the two important rivers flowing through the state providing irrigation. The state has also started to focus on the fields of information technology and biotechnology. Andhra Pradesh is a mineral rich state with largest limestone and also offshore Krishna-Godavari basin gas reserves of 60 Trillion cubic feet.

GSDP[edit]

In 2012-13, the Gross State Domestic Product (GSDP) of Andhra Pradesh stood at INR2359.3 billion (US$39 billion) and the per capita income of the state increased by 6.26% from INR25,959 (US$430) (2004–05) to INR42,186 (US$690) (2012-13).[1]

This is a chart of trend of gross state domestic product of Andhra Pradesh at market prices by Ministry of Statistics and Programme Implementation with figures in crores of Indian Rupees. Accordingly, the state ranks fourth in terms of overall gross state domestic product[2] and fourth in per capita gross state domestic product among the major states of India.

Year State GDP
(Rs. crore)
In ($ Billion) Growth Rates
1980 8,191 $10.2
1985 15,266 $15.2 50%
1990 33,336 $25.64 67%
1995 79,854 $24.2 -4%
2000 1,40,119 $33.2 37.5%
2007 2,29,461 $48.2 45.5%(7 yr)

Growth of different sectors 2012–2013[edit]

The sectoral composition of GSDP growth for 2008–09 in Service sector with 10.06% has maintained the same growth tempo, while the Agriculture sector with 2.27% and industry sector with 0.12% have recorded little lesser growthrate. At All India level (GDP), the Sectoral Growth rate in Service sector is 9.67%, while in Agriculture Sector, it is 1.60%. In these both sectors, our State Growth rate is higher than All India level. The relative decline in agriculture growth during 2008–09 is due to a very high base effect during the previous years especially last year i.e. 14.85%. However, the foodgrain production has reached a peak of 20,404,000 tones during the year 2008–09.

Per capita income[edit]

The per capita income figure gives a better idea of the standard of living of the people. The Per Capita Income of Andhra Pradesh at current prices is estimated at Rs.39,597 in 2008–09 as against Rs.35,864 in 2007–2008.

Public finance[edit]

The finances of Government of Andhra Pradesh are robust due to efficient public finance management. The State is well in advance in eliminating revenue deficit and achieving other fiscal targets enacted in APFRBM Act, 2005. The State revenue receipts stood at Rs.696.85 million in 2008–09 (RE) of which the State own revenue is Rs.44,138 crore. The revenue receipts under State own taxes during the year 2008–09 (RE) stood at Rs.35,739 crore as against Rs.28,794 crore in the previous year registering a growth rate of 24.12%. Total expenditure (revenue + capital) stood at Rs.85,363 crore for the year 2008–09 (RE). The capital expenditure constituted 20.78% of the total expenditure (revenue + capital). Revenue Surplus for 2008–09 (RE) is Rs.2,066 crore. The Fiscal Deficit is Rs.10,427 crore which 2.81% of GSDP./

Agriculture and aquaculture[edit]

A view of Paddy field

Agriculture has been the chief source of income and main occupation for the state with 60% of population engaged in agriculture and related activities. Rice is the major food crop and staple food of the state. Other important crops are sugarcane, cotton, mango, tobacco, Maize, pulses etc. Four important rivers of India, the Godavari, Krishna, Penna, and Tungabhadra flow through the state, providing irrigation. Recently, crops used for vegetable oil production such as sunflower and peanuts have gained favour. There are many multi-state irrigation projects in development, including Godavari River Basin Irrigation Projects and Nagarjuna Sagar Dam.

Andhra Pradesh was among the very few states in the country which went in for the Green Revolution in rice cultivation in the 1970s. Average per capita agricultural income in the state was INR54.599 billion (US$900 million) at constant prices (2012–13).[1]

Horticulture

National Horticulture Board estimates for 2012-13, for the production of fruits in the state is 133.16 lakh MT and for the vegetable production is 116.91 lakh MT. The state also produces spices and medicinal plants. The total production of spices in 2010-11 was 10.69 lakh MT. Major spice crops grown in the state are Chili pepper and ginger. Total production of medicinal and aromatic crops was 0.79 lakh MT.[3]

Dairy and Livestock

Poultry production in the state stood at 1239 lakh in 2011-12 which include livestock products such as milk, eggs and meat and prominent livestock of cattle, buffaloes, sheep and goats. The state is also known as Egg bowl of Asia which produced 212103 lakhs of eggs in 2011-12.[3]

The APMC Act is functional in the state wand has been amended from time to time, which features provisions for setting up private markets, direct procurement/sale from farmers, fields, contract farming, setting up and promoting agricultural marketing extension units etc.[3]

Aquaculture[edit]

Aquaculture such as cultivating fish, crustaceans, molluscs, Shrimp production etc., are the major occupations of coastal areas. Andhra Pradesh is the largest producer of shrimp in the country, with 70% of the production from the state itself.[4] The geographical location of the state allows marine fishing as well as inland fish production. Fish farming brings in more profits than agriculture. Also, cyclones may do less damage to aquaculture than to crop producion. Hence, farmers are getting attracted towards this industry. It grew from INR3.46 billion (US$57 million) to INR5.61 billion (US$92 million).[5] The Waterbase Limited is an aquaculture unit located at Nellore, it encourages scientific shrimp farming.[6] Most exported marine exports include Vannamei shrimp.[7]

Industries[edit]

Hindustan Shipyard at Visakhapatnam

The domestic product of Industrial sector accounts for INR507.45 billion (US$8.3 billion).[1] The state has also started to focus on the fields of information technology and biotechnology. Several major industries are in operation in Visakhapatnam. Automobiles and Auto components Industry, spices, mines and minerals, Textiles and apparels, IT industry, Bulk drugs and pharmaceuticals, horticulture, poultry farming are the main industries in Andhra Pradesh.

It is the first state to develop an Electronic Hardware Policy in India (2012–17), wherein, the state government plans to provide incentives for setting up more than 200 electronic manufacturing clusters in the state. The state offers a wide range of fiscal and policy incentives for businesses under the Industrial Investment Promotion Policy, 2010–15.

Industrial estates[edit]

As of June 2013, the state had 39 operational special economic zones (SEZs), higher than any other state in the country. There are 272 Industrial estates and industrial development areas in the State, covering an area of 14700 hectares. The State Government is in the process of developing Industrial Parks at different places, for specific groups of industries like Visakhaatnam Export Processing Zone.

Food Processing Industry includes approximately 23000 registered food processing units as per data from the Department of Industries, Govt of A.P (2010). The industries include rice milling, dairy, oil refineries, marine aqua processing, sweetened aerated water units etc. Various Agri Export Zones were set up in the state for produce like mangoes, fresh vegetables, chilli, grapes and gherkins. Apart from these there are Mega Food Parks, Cold Chain Projects as well.[3]

Food parks, one each in the 2 regions of Coastal Andhra (value added rice products, dairy, horticultural, marine etc.); and in Rayalseema region (processing of vegetables, edible oils and export oriented industry). Agri Export Zones for the following produce are proposed at the places mentioned against them:

Infrastructure[edit]

The State is well connected by road, rail, air and sea. Visakhapatnam is a major port in the State. Vijayawada, Tirupati and Visakhapatnam are air-linked. National and international flights link the state with important world locations.

Hydel and thermal power projects in the state meets the power requirements of the State. Number of new power projects are coming up in the State which is expected to generate additional power capacity in the State.

Rayalaseema Thermal Power Station

Transportation[edit]

Sri City Infrastructure, Chittor district

AP has been one of the first States to encourage private sector participation in infrastructure development. The state has a total length of over 146,954 km (91,313 mi) of road network, including national and state highways, district and rural roads. Development of high density corridors on major routes is being undertaken with private participation.

Andhra Pradesh has an International airport at Visakhapatnam. Also, has domestic airports at Vijayawada, Rajahmundry, Tirupati.

Ship at Visakhapatnam seaport

Andhra Pradesh has the biggest seaport at Visakhapatnam, with feeder services to Europe, Russia, USA and the Asia Pacific. Berthing of vessels is available up to 50000 DWT. The cargo handling at Visakhapatnam port during July 2002 – June 2003 was 45.5 million tonnes (14.6% of All India), making it the busiest port in the entire country, ahead of Kandla, Chennai, Haldia and Mumbai. Gangavaram Port is a private deep sea port, located in Visakhapatnam has a depth of 21m. Krishnapatnam Port is a privately built and owned all weather, deep water port located in the Nellore district, inaugurated on 17 July 2008.

Communication[edit]

The latest available statistics (as in 2001) show that there were 3003 Telephone exchanges, 3140948 telephone connections, 118 telegraph offices (excluding extension counters, telecom centres, and combined offices) and 78218 public telephones. As at December 2003, it is estimated that there are 1550,000 cell phone subscribers in the State. The State has a share of 7% in All India cell phone subscribers.

Exports[edit]

Tentative estimates reveal that the total exports from AP during the year 2003–04 were to the tune of Rs.15,306 crore. The share of software was 30%, and that of food products was 20%. The value of exports during 2002–03 was Rs.13,614 crore and that during 2001–02 was Rs.12,400 crore.

Resources[edit]

During 2012–13 (at current prices), gross state domestic product (GSDP) of industries was estimated at US$137.3 billion. Andhra Pradesh is one of the store houses of mineral resources with large deposits of Chrysotile, mica Asbestos, barytes and limestone India. It accounts for about 93% of total production of Barytes in India.

Andhra Pradesh with varied geological formations, contain rich & variety of industrial minerals and building stones with largest reserves of granite (estimated at 2.4 billion cubic metres) and beach sand (241 million tonnes) in the country.[8] Other important minerals in the state are copper ore, manganese, mica, coal and limestone. Minerals like coal, oil and Natural gas, barytes, Limestone, diamond, gold beach sand bauxite, ball clay fire clay, dolomite, dimensional stones etc are still under tapped or untapped. The wide variety of minerals from the State is being traded or consumed in Power, Metals, Alloys, Cement, Chemicals, Paint, Cosmetic, Glass, Ceramics, Refractory, Refinery and manufacture of various down stream industries.

Minerals found in the state include limestone, reserves of Oil and Natural Gas, Manganese, Asbestos, Iron Ore, Ball Clay, Fire Clay, Gold Diamonds, Graphite, Dolomite, Quartz, Tungsten, Steatitic, Feldspar, Silica Sand etc. It has about one third of India's limestone reserves and is known for large exclusive deposits of Barytes and Galaxy granite in the international market.[8]

Mining

Mining is identified as one of the growth engines for the overall development of industry and infrastructure. The Tummalapalle Uranium mine in Andhra has confirmed 49,000 tonnes of ore and there are indications that it could hold reserves totaling three times its current size. 700 million tonnes of metal grade Bauxite deposits in close proximity to Visakhapatnam Port.

The Government of Andhra Pradesh is keen to utilize large deposists of KG Basin (Krishna Godavari Basin gas for power production to overcome the energy shortage, create employment opportunities and contribute to economic value and exports.[9]

Power[edit]

The state is pioneer nationwide in hydro electricity generation. Natural gas, one of the cheapest source in power generation is in abundance.[10]

There are both coal based and hydel power plants. Thermal power plants with total capacity of 5610 MW are situated in the state which includes Simhadri Super Thermal Power Plant (2000 MW) of NTPC, Rayalaseema Thermal Power Station (1050 MW), Sri Damodaram Sanjeevaiah Thermal Power Station (800 MW), Vijayawada Thermal Power Plant (1760 MW) and the Hydel power plants are having a capacity of 3693.20 MW. Ramagiri Wind mills is a wind power generation with 2 MW capacity.[11]

Tourism[edit]

Araku Valley View

The state provides the budget for tourism and supported its projects such as Beach Resorts in Visakhapatnam and Machilipatnam, tourism resorts in Araku, Talakona, Horsely hills, development of Belum Caves, and several other projects for its completion.[12] The average growth of domestic tourists arrival in the state for the period 1999-2003 was 17.78% which declined during the subsequent decade 2004-2014 to 8.75%. Similarly, the average growth of foreign tourists’ arrival in the state for the period 1999-2003 is 89.07% whereas the same during 2004-2014 is -3.68%. The tourism sector suffered, recording a CAGR of -8.77% (2005–10) in attracting international tourists.[12]

The State has several religious destinations, developed for religious tourism by the State Tourism Department, APTDC. Some of the famous destinations are Tirumala, Srisailam, Sri Kalahasti, etc. Tirupathi is one of the major source of income in the tourism segment because of the abode of Sri Venkateswara (Lord Balaji). The temple is one of the richest in the world in terms of donations received. Other important sources of income come from the developing tourism centres at Vishakapatnam, Vijayawada.

Economic timeline[edit]

Economic changes during 1954–1983[edit]

This can be called the 29-year era of 12 centrally nominated chief ministers List of Chief Ministers of Andhra Pradesh. Excluding Kasu Brahmananda Reddy term (7 years), average tenure of a chief minister was less than two years. The cumulative growth during this 30-year period for Indian economy is 311%, and for Andhra Pradesh it was 138%.

Economic changes during the 1980s[edit]

This can be called the N. T. Rama Rao Era (1983–1989).An academic study of Andhra's economic activity using official data collected by the state government of Andhra Pradesh, Govt of India and World Bank reveal the following highlights.

  1. A Domestic Demand – Supply based economic policy instead of exports oriented policies during this pre-liberalization period resulted in Constant Currency (inflation adjusted) cumulative growth rates of 151% in seven years, one and half times higher than the cumulative growth rate of the 30 years earlier, and 25% higher than the cumulative growth rates of 20 years that followed.[13]
  2. Education reforms, local government empowerment, irrigation and electricity improvements, corruption controls of this period resulted in cumulative per capita income growth rates (corrected to inflation and population growth) ten times the growth rates for the first 30 years and three times the rates of the 20 years that followed. On average a typical Telugu citizen was 3000% more productive in improving his/her economic condition than in the 30 years earlier and 450% more productive than the 20 years that followed.
  3. Distributional and social indicators (rural education 51%, child labor (−60%), malnutrition (−81%), infant mortality (−37%), female education (77%)) improved at rates that are yet to be repeated.[14]
  4. Fiscal Management Indices (deficit,foreign debt, debt servicing levels etc.) were at their best levels compared to the era the followed when central government allowed higher deficit targets and allowed foreign borrowing directly from world bank as a part of the liberalisation regime.

Economic changes in the new millennium[edit]

This can be called the YSR era (2004–2009). The salient aspects of this era are

  1. The one lakh crore budget. State government budget due to foreign borrowing, real estate sale, higher allowed deficits, central support to development projects grew from Rs.2,000 crore ($2.5 billion) at the beginning of modern era of andhra economics in 1982 to about Rs.1 lakh crore (short scale).
  2. Large scale investments into irrigation, rural development, roads, telecom, energy generation and health care

References[edit]

  1. ^ a b c "Economy" (PDF). AP state portal. Retrieved 21 June 2014. 
  2. ^ http://mospi.nic.in/6_gsdp_cur_9394ser.htm
  3. ^ a b c d "Production Base/Resource Mapping" (pdf). indiafoodprocessing. Retrieved 22 June 2014. 
  4. ^ AP top producer of shrimp: MPEDA - The Hindu
  5. ^ M.A.Mannan (3 January 2013). "Fishing for a fortune". Krishna, West Godavari and Nellore: The India Today Group. Retrieved 16 July 2014. 
  6. ^ "Waterbase India". waterbaseindia. Retrieved 18 July 2014. 
  7. ^ "Vannamei Hatcheries". Coastal Aquaculture Authority. Retrieved 16 July 2014. 
  8. ^ a b "Industrial & Fertilizer minerals" (PDF). Geological Survey of India portal. CGPB Committee-IV. pp. 17–44. Retrieved 2014-06-09. 
  9. ^ "Krishna Godavari Basin: Oil & Gas Resource". kgbasin.in. Retrieved 7 June 2014. 
  10. ^ "Natural Gas in Krishna-Godavari basin". Times of India. 3 Oct 2013. Retrieved 20 December 2013. 
  11. ^ "APGENCO projects". Andhra Pradesh Power Generation Corporation. Retrieved 3 June 2014. 
  12. ^ a b "Industry, Infrastructure and Employment (White Paper), July 2014 - Tourism Sector" (pdf). AP State Portal. July 2014. pp. 13–14. Retrieved 14 July 2014. 
  13. ^ 1. Mahendra S & Ravi, C, "Macroeconomic Scene: performance & Policies, Economic & Political Weekly, 22–29 March 2003, Pp. 1143–1157.
  14. ^ Since 2003, Children's Care International operates the Rainbow Centre in Andhra Pradesh for rehabiliting child slaves, and has also turned attention to increasing fairtrade markets.