Economic growth in Bangaru Telangana

Economic growth in Bangaru Telangana

Economic growth is a necessary condition for eradicating poverty and uplifting the living standards of State’s population. As noted by Prof. Arvind Pangaria,  Deputy chairman of NITI Aayog “Economic growth ‘pulls up\' people into gainful employment and places ever-rising purchasing power in their hands.

Economic growth is a necessary condition for eradicating poverty and uplifting the living standards of State’s population. As noted by Prof. Arvind Pangaria, Deputy chairman of NITI Aayog “Economic growth ‘pulls up' people into gainful employment and places ever-rising purchasing power in their hands. This, in turn, cuts poverty and empowers people to access education, health and other amenities provided by the state as well as through private expenditures. Growth alone provides enhanced revenues that the government can use to alleviate poverty and provide education, health, and other social services.”

State Income or Gross State Domestic Product (GSDP) is the most important indicator in measuring the economic growth of a State. These estimates reveal the extent and direction of changes in the level of economic development. However, economic growth need not guarantee human/social development. For this to happen, Government needs to play an important role in allocating financial resources towards health, education, and social welfare programmes. In this context, the present chapters outline the performance of the Telangana's economic, structure of employment in the State, inflation, and public finance.

Gross State Domestic Product of Telangana

Adoption of new Base Year 2011-12: The Government of Telangana has revised its GSDP estimates adopting the new base year 2011-12, on par with the Central Statistics Office, Ministry of Statistics & Programme Implementation. Periodical change in the base year is to take into account the structural changes that have been taking place in the economy over the years, adoption of latest methodologies, new data sets, and latest survey results and to depict a true picture of the economy through macro aggregates like GSDP, capital formation etc. The estimates of these macroeconomic aggregates are prepared at the prices of selected year known as the base year for examining the performance of the economy in real terms. The estimates at the prevailing prices of the current year are termed as “at current prices” while those prepared at base year prices are termed as “at constant prices”. The comparison of the estimates at constant prices, which means “in real terms”, over the years gives the measure of real growth.

Box-2.1: Revising the Base Year for Estimating GDP Statistics from 2004-05 to 2011-12

The Ministry of Statistics & Programme Implementation (MOSPI), Government of India has revised the base year for estimating Gross Domestic Product (GDP) from 2004-05 to 2011-12, incorporating changes like revisions in the methodology of compilation, the inclusion of new and recent data sources and adoption of latest classification systems etc. Major changes made in this series include (i) comprehensive coverage of corporate sector data by incorporation of annual accounts of companies as filed with the Ministry of Corporate Affairs (MCA), (ii) Improved coverage of activities of local bodies, (iii) Incorporation of the results of the recent NSS Surveys, viz., Unincorporated Enterprise Survey (2010-11) and Employment-Unemployment Survey (2011-12).

Sector Specific Changes made in the Revised Series are:

1. Agriculture, Forestry and Fishing: (i). Segregation of crops and livestock production; (ii). Adoption of Agriculture Census (2010-11) and Livestock Census (2012); (iii). Revision of yield rates of meat & by-products of different livestock species.

2. Mining &Manufacturing: (i) Estimation of value addition from the extraction of sand through an indirect method, in accordance with its use in construction; (ii) Enterprise Approach adopted for mining and manufacturing activity using MCA21 database to account for head offices, ancillary activities, etc.

3. Electricity, Gas, Water Supply & Other Utility Services: Utility services, including sewage, waste management, recycling and remediation activities, brought under the group electricity, gas and water supply;

4. Construction: (i). Study on the inputs in the Construction sector by Central Building Research Institute (CBRI), Roorkee (ii). Incorporation of results of NSS All India Debt & Investment Survey, 2013.

5. Non-financial Services:(i). Use of Consumer Price Indices-Rural, Urban and Combined, instead of the CPI-AL/RL/IW used earlier; (ii). Use of Service Tax as an indicator for growth in the respective service.

6. Financial Services: (i). Comprehensive coverage of financial sector by the inclusion of information from the accounts of stock brokers, stock exchanges, asset management companies, mutual funds and pension funds, as well as the regulatory bodies, SEBI, PFRDA and IRDA.

Source: Press Note on New Series Estimates Of National Income released by MOSPI, GOI on 30.01.2015.

As per new series, sector-wise estimates are presented as Gross Value Added (GVA) at basic prices, while “GSDP at market prices” will henceforth be referred to as GSDP. Estimates of GVA at factor cost (earlier called GSDP at factor cost) can be compiled by using the estimates of GVA at basic prices duly adjusting the production taxes fewer production subsidies. Here it is important to note that the basic price is a price that includes the production taxes minus production subsidies, whereas market price is a price, which includes the Product taxes minus product subsidies. In a nutshell, market price includes the production taxes and product taxes minus production subsidies and product subsidies and equates the price available for the consumer. One of the distinct features of the new series is a compilation of GSDP estimates at market prices instead of factor cost and GVA at basic prices.

GSDP - Outlook for 2015-16: The Government of Telangana has released the GSDP estimates for the year 2015-16 (Advance Estimates). According to the estimates, Gross State Domestic Product at constant prices (2011-12) for the year 2015-16 (AE) is anticipated at Rs.4,68,656 crore as against Rs.4,29,001 crore for 2014-15 (Second Revised Estimates), registering a growth of 9.2%. The GSDP and growth rates of current and constant prices are given in Table 2.1.

Table 2.1: GSDP of Telangana State at Current and Constant (2011-12) Prices


Current Prices

Constant (2011-12) Prices

GSDP (Rs. crore)

Growth (%)

GSDP (Rs. crore)

Growth (%)

2011-12 (SRE)





2012-13 (SRE)





2013-14 (SRE)





2014-15 (SRE)





2015-16 (AE)





Note: SRE: Second Revised Estimates; AE: Advance Estimates

The performance of State’s economy: The share of Telangana's economy in India is about 4.1 percent in 2015-16. A comparison of Telangana's GSDP growth with that of All-India growth reveals that in 2012-13 Telangana grew at 2.41 percent which is much lower than All-India growth rate of 5.62 percent. However, since 2013-14, the growth rate of Telangana has picked up and registered higher growth than All India (See Figure 2.1). This is a clear indication of the proactive measures of the Government to spur economic growth, after the State formation.

G.Rajendera Kumar

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