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Economic cost of Andhra's bifurcation

Divided states set to lose top ranks in size parameters

Prashanth Chintala  |  Hyderabad 

Undivided Andhra Pradesh (AP) was the fourth largest state in India in area and fifth in population. It was ranked third in absolute size of gross domestic product (GDP) and 11th in the country on per capita income.

The gross state domestic product (GSDP) in 2012-13 at current prices was Rs 738,497 crore. Per capita income was Rs 77,277. In the 11th Five Year Plan (2007-12), AP registered an annual growth rate of 8.18 per cent against the national GDP growth of 8.02 per cent (at constant prices).

AP's economy since reorganisation in 1956 has progressed harmoniously with the national trends. It broke past the conventional growth trends in 1980-81 and turned vibrant over a period of time. The average annual growth rate of the state, a little over three per cent till 1980, increased to 8.2 per cent in the 10th Plan (2002-07).

However, this story is likely to be different from Monday, when it splits into Telangana and residual Andhra Pradesh (the coastal Andhra and Rayalaseema regions). As of now, Telangana ranks 13th among states in absolute GDP and per capita. Residual Andhra also ranks 13th in GDP and is 10th in per capita GDP.

In Telangana, Hyderabad, with a large concentration of economic activity, is going to be the main source of revenue. In 2012-13, of the state's own tax revenue of Rs 51,441 crore, as much as Rs 11,730 crore came from Hyderabad. Revenue from the rest of Telangana was Rs 17,577 crore, while residual Andhra accounted for Rs 22,134 crore.

Hyderabad also accounts for 99 per cent of the total of Rs 55,000 crore information technology (IT) and IT-enabled services (ITeS) export from the state. Of the 72 notified special economic zones (SEZs) in AP, 37 are in Hyderabad and its surrounding Rangareddy district. The Hyderabad and Rangareddy districts account for 44 per cent of the registered manufacturing and 39 per cent of construction activity in Telangana.

Manufacturing activity in Telangana has not seen much progress except in Hyderabad, Rangareddy and the adjoining Medak and Nalgonda districts. The hinterland's mainstay is mining, poultry, food processing, dairy and farming. State-owned Singareni Collieries is located in the region.

With an international airport, world-class educational and scientific institutions, a growing industry and the upcoming Rs 16,500-crore metro rail project, a central location and suitable weather, experts say Hyderabad will grow on its own. But if there has to be all-round progress across Telangana, the people in power have to ensure the development of other districts.

If Hyderabad is endowed with a modern airport, coastal Andhra has state-of-the-art seaports at Krishnapatnam, Kakinada and Visakhapatnam. While the Rs 7,300-crore Krishnapatnam is the largest private sector port on the east coast, Gangavaram in Visakhapatnam is a multipurpose all-weather and the deepest private port. Besides, residual Andhra has four airports - Tirupati, Vijayawada, Rajahmundry and Visakhapatnam.

The Chennai-Bangalore industrial corridor passes through Chittoor, in Rayalaseema. The district also boasts Sri City, the largest SEZ in the state and attracting investments from many multinational companies. Nellore is set to emerge as the largest power producer in the state, with several projects proposed to be set up in the district.

A Petroleum, Chemical and Petrochemicals Investment Region is coming up in the Visakhapatnam-Kakinada region. Apart from a steel plant, Visakhapatnam has a pharma city, where several pharmaceutical units are located. Krishna, Guntur, East and West Godavari districts, endowed with good irrigation facilities, are known as rice bowls of India.

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First Published: Mon, June 02 2014. 00:40 IST