Structure of AP economy remains uneven
Andhra Pradesh has taken little advantage of industrialization, except in places like Visakhapatnam and pockets of Hyderabad where public sector...
Andhra Pradesh has taken little advantage of industrialization, except in places like Visakhapatnam and pockets of Hyderabad where public sector units were located
Andhra Pradesh, as the third largest economy in the country in terms of GSDP, is vast enough to attract investors and investments. Therefore, analysts are always interested to know about the expected rates of growth of the economy in general and various sectors vis-a-vis their interests. The address of the Governor on the first day of the budget session has indicated the broad contours of the proposed budget and the state of the economy. He has stated that the growth of GSDP is expected to be 5.29 percent during 2012-2013 which is higher than the GDP at 4.96 percent. The reference to the national income is perhaps to get consolation that we are better than the all-India situation. But the rank of the State in the rates of growth of GSDP has come down during 2010-2011 to 2011-12 and Bihar and our neighboring Tamil Nadu and Karnataka and even Kerala appear to have surpassed us. However, the State seems to have remained one of the stable economies in the country compared to the misinformation about the law and order situation here. Andhra Pradesh has been considered as the 'rice bowl' of India with 75-80 percent of the irrigated water being used for cultivation of paddy. In fact, the emergence of the State as a dominant player in the country is due to the skillful handling of the agricultural surpluses to enter business and from there to become lumpen capital, as per some analysts. The basis for the development of an emerging capitalist class as crony capitalists is due to their proximity to political power in the State. It is here one can ponder over how the resources of the State through budget and non-budget operations have been used to get into the present trajectory of growth. There is a perceptible change in the approach of the government towards various sectors of the economy. This can be examined broadly from the contributions of different sectors of the economy to the State domestic product (GSDP). During the early part of the State's formation (1960-61), the primary sector consisting of agriculture and related areas contributed 70.7 percent of the income and the secondary sector or industry was about to gather momentum and its contribution was limited to 9.1 percent. The rest was added by tertiary sector or services etc. Agriculture has continued to play a dominant role with 57.2 per cent in 1970-71 and 46.6 percent in 1980-81. The services sector seems to have played an equally important role contributing 29.4 percent and 36.8 per cent respectively to the State income during the same period compared to industry that was confined to less than 20 percent. The structure of the economy was balanced, seen from the proportion of income originating from the sectors traditionally classified as Primary, Secondary and Tertiary. Andhra Pradesh has taken little advantage of industrialization, except in places like Visakhapatnam and pockets of Hyderabad where public sector units were located. It has been either agriculture-based or agro-processing related economy for a long time as the State according to some scholars had no traditions of usury, mining, trade, etc for sustained period. Therefore, the successive governments have diverted the State's resources for the development of agriculture and with people-oriented policies like Rs 2 KG rice (with surplus food grains) reduced the poverty levels that were comparable to any industrialized State in the country. Assured irrigation is a precondition for achieving higher rates of productivity and output from agriculture as farmers are considered as the most efficient in India. The government has used the planning process as an important basis to put in resources in irrigation projects. The people are fortunate to have several perennial rivers passing through the State creating opportunities to utilize the runoff for irrigation potential. The Nagarjunasagar Project was considered by Jawaharlal Nehru as a modern temple and it has given the necessary impetus to agrarian development in the four districts which once experienced severe drought and famines before Cotton's initiative. The importance given to irrigation and power could be discerned from the allocations made to this sector in the Plan budget. The highest percent of 60.9 of the total Plan budget was used for irrigation and power in 1969-70 and it has come down to 54.82 percent in 1971-71 and started declining thereafter, indicating the shift in priorities of the government. It was stabilized at around 40 percent in 1992-97 budget and stands at 34.24 percent during the XI plan with a ridiculous amount of 0.45 percent allocations for power (due to privatization). Irrigation and power were almost combined together along with flood control in all budget allocations indicating the highest priority given to agriculture up to 1990s. Subsequently, the allocations for this sector started dwindling and generation and distribution of power were given a different orientation in the government. It was during this period that policies were vetted by international funding agencies and the priorities started changing. However, the lives of the common man, the customer, the worker, the agricultural labourer have not been affected particularly in the rural areas. This can be seen in terms of the poverty figures generated by statisticians on the basis of modified methods given by Tendulkar. It is largely due to the State policy towards agriculture, power and land. The land put to non-agricultural use and the food grains production have grown in inverse direction during the period. The land put to non-agricultural use was 13.51 lakh hectares in 1955-56 and it stood at 27.71 lakh Hcas by 2010-11 while food grains production doubled from 99.9 lakh tones in 1980-81 to 203.4 lakh tones in 20101-11. This was largely due to assured irrigation water. The subsidized water and power to agriculture seem to have made the State self-sufficient and helped some contractors to emerge as national players. A Canadian Research Institute has estimated that the irrigation subsidy was to the extent of Rs 428 million in 1980-81 and increased to Rs 8402 in 1999-2000, contributing Rs 2424, 21778 and 1928 per Hectare under NSP, SRSP and TBP. There seem to be pressure on the government now to offload the subsidy like that for power. We know the consequence of these recommendations on the supply of power. The regulatory mechanisms eulogized by the policymakers to achieve efficiency in the private sector have ultimately resulted in the regulation of the State in determining the tariff in favor of the supplier. This has impacted the economy. Our economy seems to be stable due to our infrastructure and ICT and not necessarily due to reforms. Is this not an occasion for a debate and review of the alien policies that exposed the tyranny of deceit and intellectual bust?