Economy of Andhra Pradesh

Economy of Andhra Pradesh

Statistics
GDP	₹6.83 lakh crore (US$100 billion) (2016-17 est.)
GDP rank	8th
GDP growth	13.2%[1]
GDP per capita	₹1.03 lakh (US$1,500) (2015-16)[2]
GDP by sector	Agriculture 24% Industry 20% Services 56% (2015)[1]
Labour force by occupation	Agriculture 55% Industry 10% Services 35% (2015) [1]
Public finances
Public debt	27.9% of GSDP (2016-17 est.)[1]
Budget deficit	3% of GSDP (2016-17 est.)[1]
Revenues	₹1.11 lakh crore (US$16 billion) (2016-17 est.)[1]
Expenses	₹1.36 lakh crore (US$20 billion) (2016-17 est.)[1]
All values, unless otherwise stated, are in US dollars.

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 priority areas of the state in the economy include Food processing, Software exports, 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

PVP Mall in Vijayawada

In 2014–15, the state ranked eighth in GSDP at current prices, which stood at ₹5,200.3 billion (US$77 billion). It recorded 12.03% growth compared to previous fiscal which was ₹4,641.84 billion (US$69 billion). While, at constant prices, the GSDP of the state for 2014–15 was ₹2,645.21 billion (US$39 billion), compare to ₹2,467.24 billion (US$37 billion) of 2013–14.^[3]

In 2012-13, the Gross State Domestic Product (GSDP) of Andhra Pradesh at constant prices stood at ₹2,359.3 billion (US$35 billion) and the Gross State Domestic Product at current prices for the same fiscal year stood at ₹4,193.91 billion (US$62 billion). The per capita income of the state increased by 6.26% from ₹25,959 (US$390) (2004–05) to ₹42,186 (US$630) (2012-13).^[4]

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 billions of Indian Rupees.

1999-00 to 2006–07
Year	GSDP (Current prices) (in billions)	Growth Rates
1999–00	1294.03	12.12%
2000–01	1450.9	10.82%
2001–02	1571.5	8.31%
2002–03	1681.43	7.00%
2003–04	1908.8	13.52%
2004–05	2104.49	10.25%
2005–06	2360.34	12.16%
2006–07	2691.73	14.04%

Recent years
Year	GSDP (Current prices) (in billions)	Growth Rates
2013–14	9,013,300	12.12%
2014–15	16,866,950	10.82%

Source: GSDP (Current Prices)^[5]

Per capita income

The per capita income figure gives a better idea of the standard of living of the people. In 2014–15, the state is ranked eighteenth with 90517 in terms of GDP per capita at current prices. It recorded a growth of 11.20% compared to previous fiscal which was 81,397.^[6]

Agriculture and aquaculture

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 ₹54.599 billion (US$810 million) at constant prices (2012–13).^[4]

Aquaculture

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.^[7] The geographical location of the state allows marine fishing as well as inland fish production. Cyclones may do less damage to aquaculture than to crop production. Hence, farmers are getting attracted towards this industry. It grew from ₹3.46 billion (US$51 million) to ₹5.61 billion (US$83 million).^[8] The Waterbase Limited is an aquaculture unit located at Nellore, it encourages scientific shrimp farming.^[9] Most exported marine exports include Vannamei shrimp.^[10]

Industries

Hindustan Shipyard at Visakhapatnam

Map of Sugar industries in Andhra Pradesh

The domestic product of Industrial sector accounts for ₹507.45 billion (US$7.5 billion).^[4] 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.

Industrial estates

As of June 2013, the state had 39 operational special economic zones (SEZs). 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 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:

• Red Chilli – Guntur district,
• Mangoes – Krishna district,
• Mango pulp and fresh vegetables – Chittoor

Infrastructure

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.

Dr Narla Tata Rao Thermal Power Station

Transportation

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. The state also has domestic airports at Vijayawada, Rajahmundry, Tirupati and Kadapa.

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 and Kakinada port are privately built and owned deep water ports.

Communication

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

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

Gross state domestic product (GSDP) of industries was estimated at US$137.3 billion for 2012–13. 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 has varied geological formations with a rich variety of industrial minerals and building stones.^[11] 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.^[11]

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.^[12]

Power

The state is a pioneer nationwide in hydro electricity generation, encouraging privates sector in power generation and efficient use of its coal based thermal power stations. The state has become power surplus with excess power generation being exported to other states.

Thermal (natural gas and coal based) and renewable power plants totalling to 21,000 MW are installed in the state by the year 2015. Thermal power plants with total capacity of 9,155 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 (1600 MW), Vijayawada Thermal Power Plant (1760 MW), etc. Hydel power plants are having a capacity of 1798 MW.^[13]

Tourism

Araku Valley View

The state provides a budget for tourism, financially supporting various projects.^[14] The state has helped develop religious tourism via the State Tourism Department (APTDC).^[14] 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 Visakhapatnam, Vijayawada.

Economic timeline

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.

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.^[15]
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 Andhra resident 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.^[16]
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.

References

1. "Andhra Pradesh Budget Analysis 2016-17" (PDF). PRS Legislative Research. Retrieved 19 November 2016.
2. "AP stands 1st in India in GSDP growth rate". The Times of India. Retrieved 19 November 2016.
3. "Indian states by GDP". Statistics Times. Retrieved 21 February 2016.
4. "Economy" (PDF). AP state portal. pp. 64–65, 92. Retrieved 21 June 2014.
5. "Statement : Gross State Domestic Product at Current Prices". Ministry of Statistics and Programme Implementation. National Informatics Centre. Retrieved 21 February 2016.
6. "Indian states by GDP per capita". Retrieved 21 February 2016.
7. AP top producer of shrimp: MPEDA - The Hindu
8. M.A.Mannan (3 January 2013). "Fishing for a fortune". Krishna, West Godavari and Nellore: The India Today Group. Retrieved 16 July 2014.
9. "Waterbase India". waterbaseindia. Retrieved 18 July 2014.
10. "Vannamei Hatcheries". Coastal Aquaculture Authority. Retrieved 16 July 2014.
11. "Industrial & Fertilizer minerals" (PDF). Geological Survey of India portal. CGPB Committee-IV. pp. 17–44. Retrieved 2014-06-09.
12. "Krishna Godavari Basin: Oil & Gas Resource". kgbasin.in. Retrieved 7 June 2014.
13. "APGENCO projects" (PDF). Andhra Pradesh Power Generation Corporation. Retrieved 3 June 2014.
14. "Industry, Infrastructure and Employment (White Paper), July 2014 - Tourism Sector" (PDF). AP State Portal. July 2014. pp. 13–14. Retrieved 14 July 2014.
15. 1. Mahendra S & Ravi, C, "Macroeconomic Scene: performance & Policies, Economic & Political Weekly, 22–29 March 2003, Pp. 1143–1157.
16. 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.