Industrial sector in Bangaru Telangana

Industrial sector plays a vital role in employment generation, providing a higher standard of living and achieving balanced economic development. Apart from contributing around 27 percent of State’s GVA, industrial sector, comprising of Manufacturing; Electricity, gas, water supply & other utility services; Construction and Mining & Quarrying. It provides employment opportunities to 17.8 percent of the total workforce in the State. Presently, Telangana has diversified its industrial base, with the thrust on high-tech sectors including pharmaceuticals, biotechnology, and nanotechnology. Traditional sectors such as textiles, leather, minerals, and food processing are also playing an important role in industrialization process through backward and forward linkages to large scale industries in the State.

As the State progresses on the development front, there is a trend of people shifting from agriculture to non-agricultural sector, most of who are either semi-skilled or unskilled. While service sector could absorb the educated and skilled labour force, it is important that we develop the industrial sector to generate employment opportunities for semi-skilled labour force which is on the rise. Thus, the growth of the industrial sector is a key for solving the problem of unemployment in the State. It is also important that in order to garner the benefits arising out of the increase in working for age population due to change in demographic profile and increase the number of skilled workers as a result of various skill imparting schemes; we need to develop the industrial sector.

Giving further boost to industrial sector in the State, Government has initiated measures on following four fronts: making Telangana a business-friendly state, created dedicated cells for facilitating investment projects, providing various kinds of incentives to encourage the first generation entrepreneurs in the State and providing additional incentives to SCs, STs and Women-owned enterprises.

I. Growth and performance of Industrial Sector in Telangana

There is a high fluctuation in growth performance of the industrial sector in Telangana in recent years. Manufacturing sector contributes about 57% in total industrial sector GVA in the State, as a result, growth in the manufacturing sector has a high impact on the industrial sector. The industrial sector in Telangana State is likely to register a growth rate of 8.3% percent during 2015-16 (AE) (see Figure below), during the same period manufacturing sector is likely to grow at 9.5%. A trend analysis reveals that industrial sector growth has picked up over a period of time, putting on a high growth trajectory.

Other components of the industrial sector, electricity, gas, water supply & other utility grew at 8.4%, Mining grew at 6.9%, and construction grew at 6.2% in the year 2015-16 (see Table below).

Table: Industry Sub-Sectoral growth during period 2011-12 to 2015-16

Sector	2012-13	2013-14	2014-15	2015-16
Mining and quarrying	4.1%	-4.3%	21.7%	6.9%
Manufacturing	-14.7%	5.3%	5.8%	9.5%
Electricity, gas, water supply & other utility services	-31.9%	35.9%	-14.7%	8.4%
Construction	1.8%	-3.5%	4.9%	6.2%
Total Industrial Sector	-10.1%	3.4%	6.3%	8.3%

Structure of Industrial Sector in Telangana

The Annual Survey of Industries (ASI) is the major source of industrial statistics. The structure of industry sector in the State could be analysed using ASI data of the State from 2008-09 to 2012-13. ASI covers all units registered under the Factories Act, 1948 i.e., those employing 10 or more workers with power and 20 or more workers without power respectively.

The number of factories increased from 7,357 in 2008-09 to 10,279 in 2012-13, registering a growth of 40 percent in the number of factories in the State. Details are shown in the following table:

Table 4.2: Important Economic Indicators of the Industrial Sector

Sl. No.	Characteristic	2008-09	2009-10	2010-11	2011-12	2012-13
1	Factories	7,357	7,729	8,980	9,005	10,279
2	Fixed Capital	37,710	39,193	52,672	54,094	59,521
3	Employees (including workers)	7,07,487	6,56,438	7,09,863	7,00,357	7,07,738
4	Emoluments	5,042	5,642	7,172	8,267	9,757
5	Total Input	70,246	71,023	1,12,300	1,18,287	1,20,647
6	Gross Value Added	24,117	24,373	31,034	36,476	33,975
7	Net Value Added	21,584	21,428	27,394	31,986	28,728

Source- Annual Survey of Industries, Directorate of Economics and Statistics, Government of Telangana.

Note – The Factories and Employees are in number and the fixed capital, emoluments, total Input, GVA, and NVA are in Rs. crore.

Type of Industries: Industries have been classified as corporate, non-corporate sector and others. The ‘non-corporate sectors’ are mainly individual and partnership companies, while the ‘corporate sector’ are private limited companies and ‘other sector’ include khadi & village industries, handloom, cooperative societies & others. Though the number of non-corporate factories is twice the number of corporate industries, the number of employees, net value added and capital formation is high in the corporate sector in the State . While 97 percent of total net value addition is done by the corporate sector, non-corporate sector, and other sector accounts for mere 3 percent. The Gross Fixed Capital Formation (GFCF), which is an indicator for investment in the Sector, reflects that around 97 percent of the total investment in the State is in the corporate sector (see Table 4.3).

Table 4.3: Distribution of Industries by type of Organizational 2012-13

Type of Organization	Number Factories	Number Employees	Net Value Added (Rs. Crore)	Gross Capital Formation (Rs. Crore)
Non-Corporate Sector	7,018	2,83,115	2,937	958
Corporate Sector	3,214	3,97,048	25,606	9,580
Other Sector	47	27,575	186	22
TOTAL	10,279	7,07,738	28,728	10,559

Source: Annual Survey of Industries-2012-13, DES.

Around 57% of the total factories in the State have employment size of less than 50 and 5.96 % factories have employment size of 500 and above. It is also observed that with the increase in investment levels, the output value is also increasing, indicating that large factories have a lion’s share of total output in the State.

G.Rajendera Kumar