Return to the roots

Published : Dec 07, 2007 00:00 IST

Andhra Pradesh turns its focus from IT to the agricultural and manufacturing sectors, its traditional mainstays.

in HyderabadPaddy stocks at

WITH the States economy promising to show an upward trend, thanks to the buoyancy in the agricultural sector, Andhra Pradesh is now concentrating on its traditional strengths after a gap of two decades. The State government is trying to encourage local entrepreneurs to invest in the manufacturing sector, once the backbone of industrial development in the State. All these years, it had lagged behind in attracting investments in the sector.

The State was traditionally known as the pharma capital of the country. It was also a leader in terms of the number of defence establishments it had. Its dominance in these areas diminished ever since it gave importance to the information technology industry, which was mostly in the service sector.

The decline of the manufacturing sector, in turn, affected overall economic development. While States such as Tamil Nadu, Karnataka and Maharashtra could attract investments owing to their strong base of ancillary industry, Andhra Pradesh lagged behind. In a change of priorities, the government is now promoting investments from within the country instead of running after elusive investments from abroad.

The State is trying to persuade the Centre to promote resource-specific investments in the public sector. Its aim is to make a 25 per cent contribution to the gross state domestic product (GSDP) from its manufacturing sector during the Eleventh Five Year Plan. Once the target is achieved, the State can achieve the magical 10 per cent annual growth in the economy. This requires a lot of effort, and we are concentrating on harnessing the investment potential of local entrepreneurs, said D.A. Somayajulu, the governments adviser on industrial and agriculture affairs.

The administration is already upbeat about the clearances obtained for expanding Visakhapatnam Steel Plant, setting up a mega refinery of the Oil and Natural Gas Corporation (ONGC) near Kakinada, and tapping the bauxite mining potential near Visakhapatnam. While Jindal South West signed a memorandum of understanding for bauxite mining at an estimated cost of Rs.7,500 crore, a firm from Ras-al-Khaimah, an emirate of the United Arab Emirates, is planning a Rs.7,500-crore project. Bharat Aluminium Company Limited (Balco) and National Aluminium Company Limited (Nalco) are the latest entrants in the race to the mineral resources of north coastal Andhra.

The resolution of the impasse over the pricing of gas from the Krishna-Godavari basin by Reliance Industries Limited, officials say, would spur industrial activity. Reliance, ONGC and the Gujarat State Petrochemical Corporation would be able to extract 40 million metric cubic metres of gas a day (MMCMD) shortly. The quantum is expected to increase by another 40 MMCMD by June 2009. We are also concentrating on attracting the automobile industry as it will act as a mother industry in accelerating the growth of ancillaries, Somayajulu said. After the States unsuccessful association with car majors such as Volkswagen and General Motors, which moved to other States, the government has decided to promote local entrepreneurs such as MLR motors in the small car sector.

The IT sector has been progressing well, registering an annual growth rate of over 50 per cent. This is likely to be sustained over the next few years. The State registered exports to the tune of Rs.18,582 crore last year, and efforts are on to take it beyond Rs.25,000 crore in the current year.

Chief Minister Y.S.

We are trying our best to ensure that the State moves to at least the third place in exports, from the current fourth position, said C.S. Rao, IT adviser to the government. The State is fast turning out to be a research and development hub and can now boast of several applications for patents. More than the thrust on industry and IT, what has come in handy for the State is the significant progress achieved on the agricultural front. Though the State had been registering a growth above the national average in this sector, the contribution was mainly from the animal husbandry and livestock sector, which registered a growth of over 10 per cent.

There are misconceptions that the number of people dependent on the animal husbandry sector is far less when compared with those dependent on agriculture, Somayajulu said. Successive governments failed to address the problems in the crop sector, resulting in negative growth from the Eighth Plan period onwards, he said.

The crop sector, which showed a negative growth (-0.28 per cent) during the Ninth Plan period, improved slightly in the past three years to take the growth rate to 0.28 per cent in the Tenth Plan. The thrust given by the government to irrigation projects and, of course, the bounty of rainfall received during the past couple of years are expected to boost the contribution from the sector and achieve the targeted 4 per cent growth.

A few new ayacut projects have been commissioned while some others are in the pipeline, boosting the morale of the 62.3 per cent people dependent on the sector.

We are confident of contributing at least 30 per cent to the National Food Security Mission announced by the Centre and envisaging an additional 20-million-tonne foodgrain production, a senior agriculture department official said.

Plans are afoot to increase the production of rice to 10 million tonnes (from 9 million tonnes), wheat to eight million tonnes and pulses to two million tonnes by the end of the Plan period in 2012.

The State government is confident of achieving a significant increase in the production of paddy since more than 30 lakh acres of land is likely to come under assured irrigation once some major projects fructify.

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