Andhra Pradesh An Approach to 12th Five Year Plan

Presentation by Centre for Economic and Social Studies

Hyderabad

ForGovernment of Andhra Pradesh

2nd June 2012

12th Plan Objectives• Faster growth: Targets a growth rate higher than

achieved in 11th Plan • More inclusiveness growth: Broad-based growth

involving all sectors and all sections of people. Facilitating and enhancing the ability of all sections of society to contribute to and thereby benefiting from growth

• Sustainability of growth – resource conservation and efficient use– Arresting environmental degradation

Structure and Growth of Economy

• Growth performance over its past is impressive, but not consistent, in the recent past

• Per capita income of the state is higher than all-India average during last decade.

• Declining share of agriculture (around 20%) in GSDP

• Corresponding increase for the services sector• Industrial sector share is stable at 20%• Structural change in terms of employment is tardy –

still 54% of workforce engaged in agriculture• Poverty reduction is one of the faster especially in

the rural sector.

Growth of EconomyGrowth in Real Gross Domestic Product of Andhra Pradesh and All India by Major Sectors

  Andhra Pradesh All India Period AGRI IND SER GSDP AGRI IND SER GDP2000-01 12.7 2.9 7.6 7.9 0.0 6.0 5.1 4.12001-02 -1.7 4.5 7.4 4.1 6.0 2.6 6.6 5.42002-03 -7.2 8.2 6.1 2.9 -6.6 7.2 6.7 3.92003-04 14.3 6.1 7.8 9.0 9.0 7.3 7.9 8.02004-05 4.2 12.3 7.9 8.0 0.2 9.8 8.3 7.12005-06 6.1 10.1 11.0 9.6 5.1 9.7 10.9 9.52006-07 2.0 17.6 12.5 11.2 4.2 12.2 10.1 9.62007-08 17.4 10.9 10.3 12.0 5.8 9.7 10.3 9.32008-09 (R) 0.8 7.1 9.5 6.9 0.1 4.4 10.0 6.72009-10 (P) 1.3 6.4 7.7 6.0 1.0 8.4 10.5 8.42010-11 (Q) 9.0 9.2 10.7 10.0 7.0 7.2 9.3 8.42011-12 (A) -1.5 7.3 9.8 6.8 2.5 3.9 9.4 6.910th Plan (2002-07) Average 3.9 10.9 9.1 8.1 2.4 9.2 8.8 7.611th Plan (2007-12) Average 5.4 8.2 9.6 8.3 3.3 6.7 9.9 7.9Decadal Average (2002-2012) 4.6 9.5 9.3 8.2 2.8 8.0 9.3 7.8Source: Central Statistical Office, Govt. India and Directorate of Economics Statistics, Govt. of AP.

Structure of Employment and Poverty

AP India AP India AP India AP India1983 1993-94 2004-05 2009-10

0%

20%

40%

60%

80%

100%

69.3 68.667.0880256427007

56.514127423822

58.5410810537425

51.5193884642107

54.8 53.2

30.7 31.432.9119743572984

43.4858725761773

41.4589189462561

48.4806115357887

45.2 46.8

Non-Agriculture Agriculture

 

Poverty Head Count Ratio % points change/Annum

1993-94 2004-05 2009-10 1993-2004 2004-20010

Andhra Pradesh 

Rural 48.1 32.3 20.7 -1.44 -2.33

Urban 35.2 23.4 14.9 -1.07 -1.70

All 44.6 29.9 19.0 -1.34 -2.17

All India

Rural 50.1 41.8 36.4 -0.75 -1.07

Urban 31.8 25.7 20.8 -0.56 -0.99

All 45.3 37.2 32.2 -0.74 -1.00

Structural change in Employment is very

slow

Faster decline of poverty in rural sector

Issues and Concerns

• Acceleration of Economic Growth - GSDP/per capita income• Poverty – income/non-income dimensions• Inequality – economic and social• Agrarian crisis/distress• Education – literacy, Schooling and higher education• Health and Nutrition• Disparities and Divides – social groups and regional• Migration – Distress led• Urbanisation - Urban Quality of Life• Harnessing demographic dividend – Skill Development• Economic Infrastructure – Physical and financial

– Connectivity – Roads and Transportation

• Shortage of power acting as a constraint

Growth alternatives for 12th Plan

Sectoral growth scenarios generating alternative GSDP growth rates of 9.0%, and 10.0% during 12th Five Year Plan.

X Plan XI Plan S-1 (9%) S-2 (10.0%)Past growth rates Growth Altrernative for 2012-17

0.02.04.06.08.0

10.012.014.0

3.9 5.

4

5.0 6.

0

10.9

8.2 9.

0 10.0

9.1 9.6 10

.5 11.5

8.1

8.3 9.

0 10.0

Growth alternatives for 12th Paln

Agriculture Industry Service GSDP

GSDP of AP at Constant (2010-11) Prices

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-175000.0

6000.0

7000.0

8000.0

9000.0

10000.0

11000.0

5676.4

6187.2

6744.1

7351.1

8012.6

8733.8

9519.8

5676.4

6244.0

6868.4

7555.2

8310.8

9141.8

10056.0at 9% at 10%

Strategies for Agriculture• Institutional support for purchase of input and output

procurement through SHG type organisations• Technological support

– soil testing – micro irrigation (drip and sprinkle systems)

• Soil fertility management • Micro nutrients• Municipal solid waste potential source of compost

• Infrastructure development to reduce post harvest losses– Storage and warehouse– Private sector participation

• Extension service• Price, input information management through SMS

Crop Diversification• Promotion of agro-processing industry and agri-business.• Improvements in the functioning of the institutions related to markets, credit and

agricultural research.• Enhancing investment in infrastructure, viz. cold storage facilities, roads, ports. • Crop diversification is predominant under tube wells irrigation - water use efficiency

need to be promoted further through micro-irrigation practices.• Productivity• Potential for higher fertilizer consumption in agriculturally backward mandals that

need to be identified and focused.• Distribution density of fertilizer sale point and functioning of for fertilizers market

need to be improved.• Adequate availability of fertilisers at the right time at normal price and to ensure

quality of pesticides needs an intervention• Inputs like fertilizers, irrigation and credit are complementary in nature. Irrigated

area increase leads to increase in demand for fertilizers• Extension services needs to be improved for better cultivation practices and

appropriate application of fertilisers and pesticides.

Agriculture - Crop Production and Horticulture

Land resources • Erosion of land resource is one

of the causes of agricultural crisis.

• Per capita availability of cultivable land and net sown area have declined over the years

• AP has large area of underutilised land as well as degraded land

• Decline in average size of holdings

• Increase in marginal and small size holdings

Changes in 1990-91 2004-05 Per capita availability of land (ha) .24 0.20 Net area sown (%) 41.0 36.7 Net irrigated area (% of NSA) 36 42 (2009-10) Underutilised land as % of cultivable area

35.0 28.0

Degraded land = 7 % of geographical area and 12 % of cultivable area

Distribution of land 2000-01 2005-06

Size of holdings % to total no. of

holdings

% to total area

operated

% to total no. of

holdings

% to total area

operated Marginal and small 82.7 46.4 83.5 48.4 Semi-medium and medium 16.6 46.2 16 32.2 Large 0.6 7.5 0.5 16.4 Average size of holdings (ha) 1.25 1.20

• Underutilized and fallow lands can be brought under cultivation by improving irrigation facilities , water shed development, land use planning, etc.

• Treatment of degraded land requires watershed development, micro nutrient management and organic farming, improving water use efficiency. Needs large investment.

Livestock Sector• AP is one of the largest in livestock –10% of the country’s

livestock.• Largest producer of Eggs and Meat, and second largest in Milk

production- 11.2 million tons of milk, 20 billion eggs, and 0.74 million tons of meat

• Livestock sub-sector contributes 5.6% of GSDP and 26% Agri-GSDP and grown at 8.6% during 11th Plan.

• Strengthening of State Milk Mission• Issues

– Cross-breeding varieties – for improving productivity– Fodder and Feed– Availability of Veterinary services– Marketing of livestock products – supply chain– Cold Storages

Strategies for Allied Sectors• Fisheries (Inland) – 12.6 lakh tons

– Improvements Area and productivity – Investment to maintain Health and Sanitary standards– Improvement in both international and domestic market chains \– Seed farms, infrastructure for larger reservoir etc– Investments to improve retail market chains Marine Fisheries – welfare programmes

• Fisheries (Marine) – 2.6 lakh tons– Reduce pressure on inshore and diversification to offshore– Diversification to deep sea (offshore) fishing -sea farming, mariculture– More welfare oriented programmes given the dependency of 15 lakh

people.– Investments for clean water, better ice supply, cold storage, toilets,

landing, marketing and drying facilities, post harvest technology, and value addition activities, relief during fishing ban period, insurance.

Strategy for IndustryManufacturing sector – MSME• Enhance the productivity of MSMEs through clusters. This removes regional

imbalances in industrial development• Create more institutions for clusters with PPP model

Creation of Clusters• Pharma Cluster – Hyderabad (already approved)• Auto component cluster – Vijayawada (already approved)• Marine Food Processing cluster – Bheemavaram• Powerloom cluster – Siricilla• Leather cluster - Hyderabad• Precision and Engineering tools cluster – Rangareddy

Agro-based potential• Dairy value chain – employment generation for micro and small entrepreneurs• Poultry/Meat value chain - employment generation for micro and small

entrepreneurs• Horticulture huge potential.• Promoting Rural Business hubs – agriculture and non-agriculture products

Power Sector Strategy• Demand for electricity is increasing - uninterrupted supply of

electricity especially in rural areas is a challenge.• Meeting increasing demand for power is a major challenge – A

moderate estimate indicate 3 times increase in per capita consumption by the end of 12th plan from that of 2009-10.

• Needs large scale investment in power – PPP approach would be useful.

• Utilisation of alternate renewable energy system is low – Tidal, Wind and Solar: need to be promoted

• State being the Gas-hub of India - natural gas resources of the state can be utilised for power sector.

• Promoting captive power plants for industries. • Further strengthening of DISCOMs• Modernisation of transmission infrastructure – reduces T&D loss.

Strategy for InfrastructureRoad Connectivity • Expansion of road network in rural area – facilitating rural industry• Extension of width for roads connecting industrial towns.• Better Transportation System – inter-district and intra-district.

Rail Connectivity • Railway line between Bhadrachalam and Sattupalli linking coal reserves.• Railway line – Karimnagar and Nizamabad – granite industry of North

Telangana• Railway line between Jaggaihpet and Mellacheruvu - connecting cement

industry.

Ports and Industrial Development• Developing Minor Ports• Developing potentials of Port/export based industries.• Ancillary industrial growth can take place around Krishnapatnam and

Machilipatnam ports by providing better infrastructural facilities.

IT and Tourism SectorI T Sector• IT and IT enabled services are the fast growing sector.• Concentrated in Metropolitan cities especially in Hyderabad.• Need to be diversified into Tier II and III cities – IT Parks in these

cities• Promoting ICT in Governance and Service Delivery.

Tourism• Tourism has been one of the emerging and priority sectors.• Identifying and development of Tourist places with appropriate

infrastructure along with safety and security. • Development of Hospitality industry and Transport Connectivity• Tourist packages• Of late, “Medical Tourism” has been picking up, especially in

Hyderabad – it has to further nurtured.

Education - Literacy• State cannot achieve 100% literacy rate even by 2050, unless Adult literacy

programme targets illiterates above 35 year olds - currently 15-35 age group illiterates are targeted.

• More than formal literacy in terms of reading and writing, functional literacy is important among adults.

• Primers of literacy has to be developed such a way to achieve functional literacy - it must include numeracy, financial literacy, computer literacy.

• Enable all to utilise Information and Communication Technology (ICT) in their daily life.

2008

2011

2014

2017

2020

2023

2026

2029

2032

2035

2038

2041

2044

2047

2050

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0

105.0 Variant III Variant II Variant IScenarios of literacy in AP

Variant I – Without any policy initiative.Variant II – Policy initiative: Adult literacy programme targeting 15-35 years oldsVariant III – Policy initiative of adult literacy programme Targeting 15-59 years olds

Education - Schooling• AP’s performance in school education is relatively better• Short fall (5%) in universalisation of elementary education – due to non-

enrolment and dropouts.• Focus on hardcore residual group of children - rural, urban slums, and

SC/ST, poor, female headed and migrant households. • It needs a policy to develop enabling mechanism – household

characteristics specific interventions and incentives.• New focus on universalisation of Secondary Education - RMSA.• Incentives such as – textbooks, uniforms, scholarship, bicycles etc. for

improving enrolment.• Infrastructure: Buildings, Classrooms, Black boards, water & sanitation,

playground etc.,• Teacher-Pupil Ratio – gap at secondary level; focus on subject specific

teachers• Laboratories and libraries at secondary and higher secondary/intermediate

education and for vocational courses

Harnessing Demographic DividendSkill Development

• Changing distribution of population by age group – increasing share of working age (15-59) group and corresponding decline in the share of dependents.

• Most of working age population is illiterate and without any technical skills - less productive

• Most (45%) of the Workforce in the state is engaged in elementary occupations without specialized skills - AP stands on the top next to Chhattisgarh in terms of workforce engaged in elementary occupations.

• Growth gets constrained without adequate skilled and productive labour force - especially the expansions of MSMEs sector

• Need for adult literacy and skill development programmes • Targeting 15 to 35 years age population who are

illiterates/semi-literates/unskilled/semi-skilled.• Identifying and mapping of skills in demand in the job market/industry. • Residential and day scholar courses - very short-term courses to long term• Skill development of professional graduate – to improve their employability

Health – Maternal and Child Health• Life cycle approach - Pregnancy, birth, and infancy to adolescence.• Issues - Anti-natal Care, Place of delivery, Infant mortality, Under nutrition.• Universalisation of Access – Anti-natal care, institutional delivery, immunization

– Increasing rate of anti-natal care- 96%, but only 67% of mothers had their first ANC within first trimester.

– Increasing institutional delivery – 72% (66% in rural) but still large number of children left out

– Complete immunization among 12-23 months olds is 67%.• Reduction of IMR and MMR and Malnutrition

– Declining Infant mortality at 46 in 2010 – but AP is having one of the highest IMR in India.

– Maternal mortality - 154 (2006-09) -fifth lowest state. – Nutritional status – anemia, under nutrition (around 2/5th of the children).– Increasing anemic incidence (%) of women in the state.

• Strengthening of ICDS program targeting 3 to 5 years age children – coverage and functioning.

• Strengthening of public sector primary health care centres especially in rural areas – physical infrastructure, equipment, medicine, and staffing.

• Need to develop and strengthen secondary and tertiary health care facilities.

• Distributive model of urban growth – focus on small and medium towns (CTs).• Urban Infrastructure – Roads and Transportation , Traffic Congestion.• Bus-Rapid Transportation System , MMTS and Metro Rail.

• Civic Amenities – Housing, Electricity, Water and Sanitation• Urban Environment – Pollution, Solid Waster Management• Slum Area Development - Around 25% of urban population lives in slums• Slum Area Development programmes – housing and other civic amenities.

JNNURM•At present, ten projects are being covered by JNNURM funds - road network, storm water drains, bus rapid transit system, water supply, solid waste management, sewage treatment, river and lake improvement, slum improvement and rehabilitation.•JNNURM is to addresses infrastructure and service delivery needs – but monitoring mechanisms should be strengthened and decentralized.•City of Hyderabad - very few of the infrastructure projects planned have been delivered fully in the three years of the mission.

Urban Challenges

23

Governance - Decentralization• Strong need to improve Implementation, Accountability, and Service

Delivery - Greater devolution and empowerment needed. The delegation of 3 ‘F’s (Functions, Functionaries and Finances) still inadequate. Activity mapping based on the principle of ‘subsidiarity’ and ‘economies of scale’

is done only in the case of nine departments. In recent years CSS (Central Sponsored Scheme) have to come to dominate

planned expenditures even in what are traditionally state services such as education, health and water and sanitation.

In practise, internal revenue mobilisation at the Panchayat level is weak; PRIs largely depend on transfers from the state and central governments, and hence limited discretion.

District Planning Committees – AP was the late starter with regard to constitution of DPC and are active where BRGF (Backward Areas Grant Fund) funds are flowing.

There is no separate window for the Panchayat in the State Budget. A Silver lining in the other wise dismal picture is that recently Government issued

rules for the PESA (Panchayat Raj Extension to Scheduled Areas) implementation. Weak alignment between funds, functions and functionaries has not generated

conditions for accountable governance of local bodies in AP.

Welfare Programs – CSS and State• Need to focus on synergy between various schemes • More frequent monitoringCentrally Sponsored Scheme• ICDS/Mid-day-Meal• SSA/RMSA• MGNREGS• Indira Awas Yojana• JNNURM

State Programmes• PDS• Rajiv Arogyasri Scheme (RAS)• Scholarships/Fee Reimbursement• Indira Kranthi Patham (IKP)• INDIRAMMA

Total Investment and State Plan

2012-13 2013-14 2014-15 2015-16 2016-170

100000

200000

300000

400000

500000

600000

700000

2744

65

3201

53

3735

98

4361

38

5093

44

3075

25

3620

04

4263

05

5022

22

5918

84

9.0 10.0

Inve

stm

ent

Rs.

Cro

res

Total Investment

State Plan (18% of total investment)

2012-13 2013-14 2014-15 2015-16 2016-170

20000

40000

60000

80000

100000

120000

4940

4

5762

8

6724

8

7850

5

9168

2

5535

4

6516

1

7673

5

9040

0

1065

399.0 10.0

Inve

stm

ent

Rs.

Cro

res

2007

-8

2008

-09

2009

-10

2010

-11

(RE

)

2011

-12

(BE

)

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

11-th Plan 12-th plan

0

20000

40000

60000

80000

100000

120000Past trends Projected (9%) Projected (10%)

Trend in State Plan Size

Estimates made using current ICORs under the assumption of constant

efficiency of investment.

Financing the Plan

Composition of aggregate Plan Resources• In the 11th plan, state own resources have sharply declined 47%• Borrowings increased from 24% to 40% of the total resources. • Central assistance constituted around 13% of the aggregate

resources.• Outstanding debt/GSDP ratio is below FRBM norm • Yet Borrowings is a Bleak Source of Plan Finance – large

future repayment obligations of market loans due to earlier debt swap scheme; repayment obligations will be more than double 2017-18

• The state has to focus on augmentation of revenues buoyancies, tolerable level of fiscal deficit and controlling non-plan expenditure.

Beyond the ApproachEffective Implementation of the Plan

• To achieve the targets set out in the Plan, constant monitoring is imperative

• Such monitoring should be based on innovative approaches– Result Based Management– Biannual Monitoring– Independent Sample Surveys– Forecasting

Beyond the ApproachResults-Framework-Document

• Basic questions– What is the objective of the program/department?– What actions are planned?– What is progress in each year?

• RFD will be consistent with GoI guidelines• Drawing detail action plan with monitorable

indicators of progress• Key Programs of the Plan will be identified based

on – Investments– Social Welfare

• Independent review of the progress of flagship programs- annual/biannual (to be decided)

• Programes to be reviewed will be identified on annual basis – varies year-to-year

• This will be based on quick field survey and secondary data – Physical indicators– Financial indicators– Process indicators if needed

• The main objective this would be to receive feed back and identify bottle necks

Beyond the ApproachAnnual/Biannual Review

Beyond the Approach Independent Sample Surveys and Forecasting

Independent Sample Surveys• Evaluation and Impact Assessment of selected

programmes/schemes• Surveys - Cross section and/or Panel based• Surveys can be region/area or community/social group specific –

focussing on relevant issues.Monitoring • To monitor a few important macro economic indicators and

forecast• Monitoring

– Sectoral growth– Price movements– Investment requirements

Forecasting of GSDP Growth – Overall and Sectoral.

Thank You