Economy of Andhra Pradesh
The economy of Andhra Pradesh is mainly driven by agriculture. Two important rivers of India, the Godavari and Krishna, flow through the state, providing irrigation. Rice, sugarcane, cotton, mirchi (chilli pepper), mango and tobacco are the local crops. 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, the world's highest masonry dam.
The state has also started to focus on the fields of information technology and biotechnology. In 2004–2005, Andhra Pradesh was in fourth position behind Maharastra, Karnataka, and Tamil Nadu, in the list of top IT exporting states of India. The IT exports from the State were 180 crore in 2004. The IT sector is expanding at a rate of 52.3% every year. The IT exports reached 1900 crore in 2006–2007 and ranked fourth in India. The service sector of the state already accounts for 43% of the GSDP and employs 20% of the work force.
Andhra Pradesh, India is a mineral-rich state, ranking second in India in terms of mineral wealth. The state has about one third of India's limestone reserves, estimated at about 30 billion tonnes.
The state ranks first nationwide in hydro electricity generation with national market share of over 11%. The offshore Krishna-Godavari basin gas reserves of 60 Trillion cubic feet provide a third of the nation's gas needs.
Andhra Pradesh's gross state domestic product for 2009 was estimated at $62 billion in current prices. This is a chart of trend of gross state domestic product of Andhra Pradesh at market prices estimated by Ministry of Statistics and Programme Implementation with figures in crores of Indian Rupees. Accordingly, the state ranks fourth in terms of overall gross state domestic product and fourth in per capita gross state domestic product among the major states of India.
|Year||State GDP (Rs. crore)||In Constant Dollars ($ Billion)||Growth Rates in Constant Dollars|
- 1 Special economic zones
- 2 Economic statistics
- 2.1 Investor profile
- 2.2 State priority areas
- 2.3 Investment strengths
- 2.4 Infrastructure
- 2.5 Exports
- 2.6 Agriculture
- 2.7 Industries
- 2.8 Resources
- 2.9 Tourism
- 3 Economic timeline
- 4 References
Special economic zones
State priority areas
- Reform-oriented state,
- Improved governance and administration;
- Fourth largest market in the nation;
- Relatively high purchasing power
The State is well connected by road, rail, air and sea. Visakhapatnam is a major port in the State. Hyderabad, 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.
The State was plagued with transmission and distribution losses, leading to a power crunch. It initiated reforms in the power sector. Yet, some SSIs still face the problems of erratic supply of power and report that power tariff is high in the State.The installed power capacity of the state is 13920.58 MW.
AP has been one of the first States to encourage private sector participation in infrastructure development. The State has a total length of over 2,05,000 km 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. 4th place in road density in India followed by maharastra,uttar pradesh,odissa.
Andhra Pradesh has a World class airport in Hyderabad, Rajiv Gandhi International Airport. Rajiv Gandhi International Airport is the second public-private partnership venture in the Indian airports. Hyderabad international airport has been named amongst the world's top five in the annual Airport Service Quality (ASQ) passenger survey along with the ones at Seoul, Singapore, Hong Kong and Beijing. Apart from Hyderabad, there are airports at Visakhapatnam, Tirupathi, Vijayawada and Rajahmundry. Hyderabad has an air-cargo complex with customs clearance. Direct flights to Singapore, Sharjah, Kuwait, Muscat, Malaysia, Dubai and New York operate from Hyderabad. Andhra Pradesh share in All India Air traffic is around 5.29 in domestic traffic and 3.3 in International passenger traffic. The average per month domestic passenger traffic is 119,000 and that of International passengers is 36,000. Average cargo handled per month is around 2052 Tonnes.
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 also located in Visakhapatnam, is India's deepest port. Inaugurated in July 2009, it has a depth of 21m. Krishnapatnam Port is a privately built and owned all weather, deep water port located in the Nellore District. It is India's largest private sector port. It was inaugurated on 17 July 2008.
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's share in All India cell phone subscribers is 7%.
Industrial estates, and industrial parks
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. The existing parks are Software Park at Hyderabad, Hitec city for software units, Apparel Park at Gundlapochampalli, Export Promotion Park at Pashamylaram, Visakhapatnam Export Processing Zone, Bio-technology park at Turkapally.
Many other parks are proposed, such as leather parks at various places in the districts; food parks – one each in the 3 regions of Telangana (processing of poultry products/processing of coarse grain & millets/spices);Coastal Andhra (value added rice products, dairy products, horticultural products, marine products, labour oriented, export oriented industry); and in Rayalseema region (processing of vegetables – onion, tomatoes, fruits, spices – coriander, edible oils, labour oriented, export oriented industry. Agri Export Zones for the following produce are proposed at the places mentioned against them:
- Red Chilli – Guntur district,
- Mangoes – Krishna district,
- Gherkins – Mahaboobnagar, Rangareddy, Medak, Karimnagar, Warangal, Anantapur, Nalgonda.
- Mangoes and grapes Hyderabad, Rangareddy, Medak, Mahaboobnagar,
- Mango pulp and fresh vegetables – Chittoor
Other parks coming up are Gems and Jewellery park, Visakhapatnam Exim park.
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. IT exports alone from Andhra Pradesh for 2007–08 is Rs.26,122-crore mark, up from Rs.18,500 crore recorded last fiscal, according to Hyderabad Software Exporters Association (HYSEA).
Agriculture is the main occupation and 60 percent of population is engaged in agriculture and related activities. Rice is the major food crop and staple food of the state. Other important crops are Jowar, Bajra, Maize, ragi, small millets, pulses, tobacco, cotton and sugar cane. The state has 23 percent area covered with forest.Agriculture has been the chief source of income for the state's economy. Four important rivers of India, the Godavari, Krishna, Penna, and Tungabhadra flow through the state, providing irrigation. Rice, sugarcane, cotton, Chili pepper, mango, and tobacco are the local crops. 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, the world's highest masonry dam.
Agriculture plays a pivotal role in the economy of Andhra Pradesh and the better performance of this sector is vital for inclusive growth. Although its contribution to gross state domestic product (GSDP) is around one-fourth, agriculture provides employment to nearly 60 per cent of the work force. Andhra Pradesh was among the very few states in the country which went in for the Green Revolution in rice cultivation in the 1970s. The share of agriculture in GSDP and employment are higher in A.P. as compared to all-India. The per capita value of GSDP from agriculture is relatively higher in the state when compared to all- India. Average per capita agricultural income in the state was Rs.3618 while it was Rs.3360 in all-India at constant (1993–94) prices in the triennium 2002–05. There have been significant changes in the structure and performance of the agrarian economy in the state. In recent years, the state has also been facing a crisis in agriculture with a high incidence of suicides by farmers.
Land reforms, in spite of all the limitations in implementation, did play an important role in changing the agrarian structure in Andhra Pradesh. The early land reform measures in the state were a combination of two administrative histories, of the Andhra region and the Telangana region which had formerly been under the Nizam. Following the pattern at the all-India level, the land reforms in Andhra Pradesh had three components: abolition of intermediaries, tenancy reforms, ceiling legislation and the other government initiatives.In 1977, the government of Andhra Pradesh enacted the Assigned Land Prohibition Act which ruled that land that had been 'assigned' by the government to the landless and tribals could not be resold and used for purposes other than agriculture3 . To improve women's access to land and landed property Andhra Pradesh along with Karnataka and Tamil Nadu amended the Hindu Succession Act, 1956, to legally protect the right of women to property including land.
With respect to tenancy, the Hyderabad Tenancy and Agricultural Lands Act was enacted in 1950 which gave protection to nearly six lakh tenants who held over 7,500,000 acres (30,000 km2) of land, constituting 33 per cent of the total cultivated area. This was considered one of the progressive acts of legislation in the state. The AP (Andhra Area) Tenancy Act 1956 was passed to ensure that a tenant was not evicted from his/her holding except by going to court. This legislation has given a mixed result as it often led to concealed tenancy (Reddy, 2006). Legislation on ceilings on agricultural holdings was enacted in two phases, 1955–72 and 1972 to the present.
The Andhra Pradesh Land Reforms (Ceiling on Agriculture Holdings) Acts were passed in 1961 and 1973. As in most states, the first round of legislation in 1961 was a miserable failure but the second one in 1973 had some impact. Against an estimated surplus land of 2,000,000 acres (8,100 km2), only 790,000 acres (3,200 km2) were declared surplus, of which 647,000 acres (2,620 km2) were taken possession by the government and 582,000 acres (2,360 km2) were distributed among 479,000 beneficiaries till August 2004 (GOAP, 2004). This amounted to about 4 per cent of the net sown area.
Several major industries are in operation around Hyderabad, which has now been nicknamed as Cyberabad due to its Information Technology foray and location of major software industries in the city. Another industrial location is Visakhapatnam which is also one of the major sea ports of India. The State is promoting Information Technology in a big way and has one of the IT parks in Hyderabad.
Automobiles and Auto components Industry,spices,mines and minerals,Texttiles and apparels,IT industry,Bulk drugs and pharmaceuticals, horticulture,poultry farming are the main industries in Andhra Pradesh.
Andhra Pradesh has the largest deposits of quality Chrysotile Asbestos in India. It accounts for about 93 percent of India's total production of Barites. Other important minerals in the state are copper ore, manganese, mica, coal and limestone.
Charminar, Salarjung Museum, Golconda Fort, Tirupathi, Warangal fort are some of the important tourism locations.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.
The GSDP at current prices(1999–2000) for the year 2009–10 is estimated at Rs.3,64,341 crore as against Rs.3,38,907 crore for 2008–09 reflecting a growth of 7.5%. During last FiveYears, the GSDP of A.P on the average recorded 9.14%, and higher than the Annual Average Growth of GDP (All India) which is 8.49% only. Further,during last three years, the GSDP of AP was consistently more than 10%,which itself is a record. With more than 10% Growth for the past 3 years and due to this high Base effect, further Growth Rate in during 2008–09 is only 5.53%. In spite of Global recession and negative growth trends in the major world economies, the State is able to continue the growth path along with the Nation.
Growth of different sectors 2008–2009
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's 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
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.
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's own revenue is Rs.44,138 crore. The revenue receipts under State's 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./
Economic changes during 1954–1983
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
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.
- 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.
- 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.
- 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.
- 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 during the 1995s
This can be called the three congress CMs(1989–1994) and Naidu era (1994–2004). The salient aspects of this era are
- High level of investment into Hyderabad city infrastructure to support IT export priorities.
- Software exports from hyderabad grew at the same pace as India's over all software export growth and elevated Hyderabad to the 9 th largest software exporting city in India.
Economic changes in the new millennium
This can be called the YSR era (2004–2009). The salient aspects of this era are
- 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).
- Large scale investments into irrigation, rural development, roads, telecom, energy generation and health care
- "Agriculture dept. of Andhra Pradesh".
- "Key Sectors of Andhra Pradesh".
- 1. Mahendra S & Ravi, C, "Macroeconomic Scene: performance & Policies, Economic & Political Weekly, 22–29 March 2003, Pp. 1143–1157.
- 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.
- 13. -----, STPI Report on IT & ITES Sector development in Andhra Pradesh, Hyderabad, A.P.
- 1. Mahendra Dev .S & Jos Mooij, "Social Sector Expenditures in the 1990s – Analysis of Central and State Budgets", March 2002, pp 853–866. 36
- 2. RV, "Sweet Dreams Andhra's Vision 2020", Economic & Political Weekly, 13 February 1999.
- 3. Sankar .T.L., "Power Sector: Rise, Fall & Reform, Economic & Political Weekly, March 2003, pp. 1171–1178.
- 4. World Bank, "Andhra Pradesh: Agenda for Economic Reforms", Report no. 15901-IN, World Bank, Washington, DC, USA.
- 5. -----, Financial Express, 23 December 2002.
- 6. ------, Expert Group Report on Poverty – 2002, Government of India.
- 7. ------, "Report of the 12th Finance Commission, Government of India.
- 8. -----, "Economic Survey – 2005–06", Government of Andhra Pradesh.
- 9. -----, "Pattern of Development in India – A Study of Andhra Pradesh", SER Division Planning Commission Government of India.
- 10. -----, "Electricity Sector: People's charter of power", Loksatta, 14 Jul. 2000, pp. 1–12.
- 11. -----, "White Paper on Fiscal strategy of A.P", Government of Andhra Pradesh, www.ap.gov.in, 2001–02.
- 12. -----, "A.P Economic Survey", Finance & Planning Department, Government of Andhra Pradesh, 2001–02.