Partake of growth pie together

Andhra Pradesh and Telangana States are embarking upon first full-fledged budgets. The two States have their own share of woes and grievances. But, keeping apart the political rhetoric, both have have immense economic potential to harness. Budget is a serious economic exercise. It is the time for an incisive analysis of the economic situation to work out a plan for fiscal and economic rejuvenation of the States.

The gross state domestic product (GSDP) forecast in Telangana for the fiscal year 2014-15 is estimated at 5.3 per cent as against the growth rate of 4.8 per cent in 2013-14 at constant 2004-05 prices. The growth shows an encouraging trend in the new state of Telangana. This was acknowledged in the Governor’s address to the joint session of Telangana legislature.

Interestingly, Andhra Pradesh also expressed a similar optimism. The Governor in his address to the Andhra Pradesh legislature on the eve of the commencement of the budget session makes the following observation, “The growth matrices of the important sectors of the State’s economy have been quite satisfactory in the current year… The State of Andhra Pradesh as per advanced estimates has recorded a growth rate of 7.21 per cent in 2014-15.”

But, the sectoral growth composition of the two Telugu States presents a different picture. In Telangana, despite a decline in agricultural growth, due to adverse monsoon, other allied sectors like livestock, forestry and fisheries have registered a good growth rate. Growth momentum in industrial (4.1%) and services sectors (9.7%) has made a major contribution to the increase in the overall GSDP growth.

But, unlike in Telangana, according to Governor’s address, in Andhra Pradesh all the three sectors – Agriculture, Industry and Services – have shown an encouraging growth for achieving comprehensive development.

In fact, the growth performance of Andhra Pradesh is better than the All India performance. The Governor’s address claims, “The central government revised the base year for compiling the estimates of the nation’s economy from 2004-05 to 2011-12. With the new base, the growth rate of Andhra Pradesh for 2014-15 is likely to further go up more than 1.2 per cent thus exceeding our national average growth rate of 7.4 per cent by one per cent if not more.”

The sectoral growth comparisons of the two Telugu States reveal that except in the services sector, Andhra Pradesh outperforms Telangana in agriculture and industrial sector growth rates. Andhra Pradesh with its overall growth rate of 7.2 per cent is way ahead of 5.3 per cent GSDP growth rate in Telangana. But, significantly Chandrababu Naidu claims that Andhra Pradesh is not in a position to compete with Telangana. While K Chandrasekhar Rao says that Telangana is a rich state.

However, the per capita income of Telangana is higher than that of neighboring Telugu state. The per capita income of Andhra Pradesh currently stands at Rs 90,517. Calling it an impressive level, the Governor’s address claims that it is expected to grow even faster. On the contrary, the per capita income in Telangana in 2014-15 is expected to be Rs 1,03,889 as compared to Rs 95,361 during 2013 -14 .

This data, officially acknowledged, reveal that the two Telugu States despite political rhetoric continue to grow even after bifurcation. Interestingly, during and after bifurcation, the political leaders of Andhra Pradesh continue to harp on the loss of industries to Telangana due to Hyderabad remaining with Telangana after the bifurcation. But, the official data of the two States reveal that industrial growth in Andhra Pradesh is better than that in Telangana. The industry in Telangana grew at a rate of 4.1 per cent as compared to 5.25 per cent in AP.

The services sector in AP grew at a marginally lower rate as compared to Telangana. Even the manufacturing sector has also shown decent performance. The political claims are thus at complete variance with official data put out by their own governments.

The two Telugu States, however, have many common problems, too. Agriculture in the two States suffers from chronic problems. The adverse rainfall situation which prevailed during the Kharif and the Rabi seasons of 2014-15 affected the sowing areas and consequently production of foodgrains in Andhra Pradesh. The production of foodgrains is projected at 111 lakh tones in AP which is a fall of 4.7 per cent over last year. Even the production of oil seeds experienced a decline in AP. The situation of agriculture is no different in Telangana if not worse.

But, both the Telugu States have their own strengths. For instance, Telangana contributes one-third of the poultry production of the country. AP produces one egg out of every five eggs produced in the country. Thus, AP occupies second position in egg production. Similarly, the livestock sector contributes nearly 6.5 per cent to the Andhra Pradesh economy. This sector has added Rs 33,600 crore in 2013-14 to the state economy. Andhra Pradesh is also one among the top producers of the meat. It stands first in India in total fish/prawn production and value of fish/prawn produced in India.

Telangana also has its unique economic strengths. Telangana accounts for 33 per cent of India’s total pharma production. The State also contributes around 15 per cent of software exports from the country.

The two Telugu States can build upon their individual strengths and complement each other’s endeavor in areas where they are weak. This requires political sagacity and economic perseverance. The parochial issues should not be allowed to hinder the progress of Telangana and Andhra Pradesh. The agonising legacy of the bifurcation dispute needs to be laid to rest to rebuild the future of the two states. The Telugu people have to reconcile to the reality rather than submerge in emotional animosity. The governments should shun orchestrated helplessness, which is not the reality even according to official data as put out in the Governor’s address to the joint session of the legislature of respective States.

By: Prof K Nageshwar