AP has to catch up on many fronts: Cess study

Though Andhra Pradesh has been vigorously pursuing reforms since the mid-1990s to step up the growth rate and alleviate poverty, and achieved a significant fiscal correction, breakthrough in IT and participatory management of land, water and forest resources through various initiatives, there is no clear evidence of an improvement in the growth rate of GSDP ( gross state domestic product) in the state in 1990s. While GSDP growth rate on all India basis went up from 5.37 per cent in 1980-91 period to 6.13 per cent in 1993-01 period, it marginally came down in AP from 5.50 per cent to 5.31 per cent.

December 1, 2003

This is one of the major findings of the city-based Centre for Economic and Social Studies (CESS), which has come out with a book on ‘Andhra Pradesh Development : Economic Reforms and Challenges Ahead,’ a compilation of 22 research papers on various issues.

The analysis found that most of the fast growing states like Gujarat, Karnataka, Maharashtra, West Bengal, Rajasthan, and Tamil Nadu improved their GSDP growth rates in the above periods, thus increasing the gap between the fast growing states and AP. The book was formally released by RBI governor YV Reddy.

“The reforms in AP were triggered off by the fiscal crisis in 1995-96. The series of reforms initiated since then earned it a name as a reforming state. But the the initial pre-reform conditions in the state were such that it had not been easy to live up to the expectations created by the reforms. Some of the states endowed with much better economic and social infrastructure initially, are able to move faster in the post-reform period. AP has, therefore, to run faster by augmenting its infrastructure even to retain the same rank as before among states,” said noted economist Ch Hanumantha Rao, the chairman of CESS and former member of Planning Commission, who edited the book along with S Mahendra Dev, the director of CESS.

While appreciating that AP has taken major initiatives in the mid-1990s in regard to reforms in infrastructure, power sector and irrigation to improve efficiency and cost recovery, the book pointed out that though official estimates show remarkable reduction in poverty, especially in rural areas, the alternative estimates show that there was no impressive decline in poverty, and the poverty ratios in the state were closer to the all India pattern.

Mahendra Dev said that reforms undertaken since 1995-96 led to improvement in several indicators of fiscal management and there had been a distinct improvement in the composition or quality of public expenditure in AP in post-reform period. On the rise of fiscal deficit, he said that it was common to all states as well as centre in this period.

Observing that the agriculture and allied sector in the state registered a growth rate of 2.21 per cent in the eighties and its performance was only marginally better in the post-reform period of nineties at 2.47 per cent, he said that the overall performance of agriculture in the last two decades had remained poor and much below its potential.

There was slowdown in the growth rate of industry GSDP from 7.36 per cent in 80s to 6.2 per cent in 90s, and though the share of the industrial sector in GSDP increased somewhat in 90s, this has not been accompanied by the increase in its share in employment.

The book said that the regional disparities in the levels of socio-economic development state declined due to faster increase of area under irrigation in Telangana. However, it said that that the irrigation potential remaining to be exploited is still quite high in Telangana and Rayalaseema regions.

B P R Vithal, another noted economist to whom the book was dedicated on his birthday, said that, “ like any other good report, this book also will not fully please anyone. Truth is never as re-assuring as belief. The anti-reformers will find that development is taking place. On the other hand, the visionaries will find that disparities are increasing faster than welfare.”

Source: Business Standard Ltd.