regional disparities

Electronic copy available at: http://ssrn.com/abstract=2205159

In perspective

Regional disparities inAndhra Pradesh, India

A Amarender ReddyInternational Crops Research Institute for the Semi-Arid Tropics (ICRISAT), India

MCS BantilanInternational Crops Research Institute for the Semi-Arid Tropics (ICRISAT), India

Abstract

India is a federal union of 28 states. The states are further subdivided into districts. Andhra

Pradesh is one of the largest states in India. This article examines how regional disparities in

Andhra Pradesh have developed since its formation in 1956. A large urban centre (Hyderabad)

which acts as a hub for economic activities, has attracted factors of production, and has stimulated

income and employment opportunities in the surrounding local economy, but its impact on the

peripheral districts is limited. There is a need for policy intervention in these peripheral districts

in order to reduce regional disparities.

Keywords

Andhra Pradesh, India, regional development, regional disparities, regions

Introduction

Regional inequalities are a developmentchallenge in most developing countries,especially those with large geographicareas under their jurisdiction. FollowingIndia’s market liberalization in the early1990s, skilled labour and capital inAndhra Pradesh have been drawn fromthe peripheral regions to the core regions,mostly attracted by the high-technology ser-vice sector. Meanwhile, unskilled workers,women, and the elderly remained in thelow productivity and less capital intensiveagricultural sector.

This article examines regional disparitiesin Andhra Pradesh and highlights the roleplayed by its largest urban conglomeration(Hyderabad). It tries to answer the follow-ing questions:

(1) Have the regions and districts shownconvergence or divergence over thelast five decades?

Corresponding author:

A Amarender Reddy, ICRISAT, Patancheru 502324,

Andhra Pradesh, India.

Email: [email protected]

Local Economy

28(1) 123–135

! The Author(s) 2012

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DOI: 10.1177/0269094212463791

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Electronic copy available at: http://ssrn.com/abstract=2205159

(2) What is the pattern of change amongdifferent sub-sectors of industry, agri-culture, and services sectors?

(3) What policy options would be effectivein addressing regional disparities?

District level data on different develop-ment indicators are collected for the 23 dis-tricts of Andhra Pradesh state comprisingthree regions1 from the Andhra PradeshStatistical Abstracts 1956–1958 and 2005–2007. All the prices are converted into1999–2000 constant prices by using thewholesale price index series to calculatethe changes in per capita income over theperiod. The analysis has been done by com-paring averages for triennium ending (TE)1958 and 2007 for various developmentindicators. Most of the comparisons aremade on per capita terms and ratios whichare unit free and comparable over theperiod and districts. Inter-district inequal-ities are quantified by a Gini concentrationratio (GCR).

Overview of Andhra Pradeshand its regions

Specific national, regional, and local condi-tions with specific cultural, historical, insti-tutional, and political legacies all shape theparticular experiences of sub-national terri-tories and their economic and social devel-opment (Pike and Tomaney, 2004). AndhraPradesh state is one of the largest statesin India with a population of 84.6m in23 districts. The state was formed in1956 by the merging of three regions,namely, Telangana, Coastal Andhra, andRayalaseema. Telangana region occupiesthe largest geographical area of the state(42%), followed by Coastal Andhra (34%)and Rayalaseema (25%). Population dens-ity is highest in Coastal Andhra (367/km2),followed by Telangana (288/km2) andRayalaseema (213/km2).

In Figure 1, districts are grouped intopoor, medium rich and rich, based on aver-age monthly per capita expenditure, with1.25 USD/capita/day as poor, 1.26 to 2.00USD/capita/day as medium-rich and above2.00 USD/capita/day as rich. In 2004–2005,more than 10% of the rural population inTelangana lived in poverty in five out of 10districts. In Rayalaseema three out of fourdistricts fell into this category, but in coastalAndhra only two out of nine districts fellinto this category. Telangana region hasa larger share of scheduled castes andtribes (the most backward sections of soci-ety as recognized in the constitution ofIndia), whose socio-economic conditionsare far inferior to the upper caste popula-tion. Arguably, Telangana’s developmentwas held back by the long overhang of feu-dalism (the Nizam of Hyderabad), whichmeant that both coastal Andhra andRayalaseema regions were more sociallyadvanced in comparison, at the time ofindependence. However, even thoughhuman development indicators (see below)are at a higher level in both the CoastalAndhra and Rayalaseema regions, theformer, the granary of south India, isprosperous due to its highly productiveagricultural sector, while the latter is adrought-prone region with low land prod-uctivity, low population density, and lowconsumer demand (Reddy, 2010).

Hyderabad is a cosmopolitan urbancentre, formed about 500 years ago, andlocated in the Telangana region. It consti-tutes 9.15% of the state population; thesecond largest city is Vishakhapatnam(only 2.04%), followed by Vijayawada(1.76%), both of which are located inCoastal Andhra. In addition to these threecities, about 45 urban centres exist, but withlittle agglomeration effects. Hence,Hyderabad attracts capital and labour notonly from within the state, but also fromother states and countries, especially onaccount of its concentration in IT industry

124 Local Economy 28(1)

and both public and private service sectors.Hyderabad city also has better public ser-vices like primary health centres, roads, andeducated and highly skilled labour. Hencethe gulf between Hyderabad and thepoorer peripheral districts has widened.

Sectoral composition of incomeand employment

The development of the state’s economy isindicated by the decrease in share of theagricultural sector in Gross State Domestic

Product (GSDP) from about 56% in 1970to about 27% in 2009. However, the shareof population dependent on the agriculturalsector is stagnant at about 60%, contrary tothe experience of developed countries.In triennium ending (TE) 2008, the servicesector contributed to about 45% of GSDPin Andhra Pradesh, while its share is 82% inHyderabad (Figure 3). Agriculture contrib-uted to about 24% of GDP in Telangana,29% in Coastal Andhra and 27% inRayalaseema. The growth rate of GSDPwas 5.3% per annum between 1970 and

Figure 1. Map of Andhra Pradesh India depicting district level poverty based on average monthly per

capita expenditure (USD/capita/day).

Reddy and Bantilan 125

2010, mainly driven by the service sector inHyderabad.

Faster growth in the non-agriculturalsector compared with the agriculturalsector for an extended period and the con-centration of the service sector in core citieshas resulted in increased regional disparitiesin income between core (urban centres) andperiphery (rural). Urbanization is higher inTelangana (31% of the population lives inurban areas in Telangana includingHyderabad), followed by Coastal Andhra(25%) and Rayalaseema (23%) (Table 1).Districts surrounding the large urbancentre of Hyderabad in Telangana regionare experiencing exponential growth in percapita income from the non-agriculturalsector due to a fast-growing urban popula-tion, in part stimulated by a ‘home marketeffect’ (Reddy, 2011). However, the highgrowth of Hyderabad (the core region) isnot sufficient to increase per capita incomesof the remote peripheral districts, namelyAdilabad, Nizamabad and Karimnagarwithin Telangana. Per capita income inCoastal Andhra is higher than Telangana(excluding Hyderabad), but the Telanganaregion has shown faster growth since 1999due to the spread effects of Hyderabad

(Figure 2). Rayalaseema region is farbehind both the coastal Andhra andTelangana regions. Per capita income isless in Rayalaseema where there is no‘home market effect’ due to less populationdensity, lower productivity agriculture andless purchasing power, and no large urbancentre to support economic activity.

Per capita income both from the agricul-ture and non-agriculture sectors is highestin coastal Andhra, which indicates thatagricultural income has complementednon-agricultural income in coastal Andhrathrough backward and forward integrationand accumulation of consumption poweramong the population (Figure 3). OnlyCoastal Andhra has benefited from prod-uctivity enhancing technology in the ‘greenrevolution’ period (paddy) and the commer-cialization (such as fruits and vegetables,milk, and meat products) of agriculturedue to its initial better resource endowmentand subsequent public and private invest-ment in the agricultural sector.

Human development indicators

Regional trends in population density, ruralliteracy, and work participation rates are

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Andhra

Telangana

exc Hyd

Hyderabad Coastal Rayalaseema AP

Ru

pee

s1993-94

2000-01

2007-08

Figure 2. Per capita DDP at 1999–2000 constant prices.


presented in Table 1. In terms of humandevelopment indicators (rural literacyrate), Coastal Andhra and Rayalaseemahave been ahead of Telangana since 1956,although the gaps between the CoastalAndhra and Telangana regions havereduced over the years. The faster increasein the share of population in Telanganareflects migration from other regions toHyderabad. Population density is higher indeveloped Coastal Andhra compared toTelangana and Rayalaseema, in spite ofout-migration from Coastal Andhra toHyderabad, mostly financed by the agricul-tural surplus generated from the ‘green

revolution’. The higher population densityof Coastal Andhra also helped increase con-sumption demand, which, in turn, sup-ported non-agricultural activities. Incomparison, the low population densityand low-productive agriculture ofRayalaseema could not generate enoughlocal demand to sustain non-agriculturalemployment and incomes. Binswangeret al. (1987), while studying developedcountries over the period 1900–1984, con-cluded that in the short term, labour sur-pluses generated by improvements inagricultural productivity may not findemployment in the modern sectors, but in

4

38

27

39

1

29

24

27

31

18

30

20

18

23

30

26

65

43

43

42

82

47

46

46

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Hyderabad

Coastal Andhra

Telangana exc Hyd

Rayalaseema

Hyderabad

Coastal Andhra

Telangana exc Hyd

Rayalaseema

1993

-96

2005

-08

Agril Industry Services

Figure 3. Sectoral share of GSDP.

Table 1. Trends in population statistics 1961–2007.

Indicators Year Coastal Andhra Telangana Rayalaseema

Total population (million) 1961 16 12 6

2007 34 33 14

Population density/km2 1961 170 102 94

2007 367 288 213

% of urban population 1971 19 21 16

2001 25 31 23

Rural literacy rate (%) 1961 24 14 21

2001 58 49 58

Rural work participation rate (%) 1961 51 54 53

2001 45 45 48

Infant mortality rate (per 1000) 2007 42 42 45


the long term, the migration of labour tomore productive non-agricultural sectorsor large urban centres appears inevitable.This is reflected in the higher work partici-pation rate (48%) in Rayalaseema (whichmay be disguised unemployment) comparedto both coastal Andhra and Telangana.

The exorbitant growth of thecore urban centre

There is clear evidence that Hyderabad isthe region’s largest consumption centre. Its‘home market effect’ makes it the maingrowth engine for Andhra Pradesh. This isevident from the share of sales tax collectionof Hyderabad, which is 75% of total saletax collection of Andhra Pradesh state(Table 2).

Andhra Pradesh state attracted 124bnrupees of FDI between 1991 and 2010, ofwhich 51% was invested in Telangana, butwith a very high concentration inHyderabad city. Telangana region, exclud-ing Hyderabad has received only 13%

compared with 43.2% investments incoastal Andhra. Rayalaseema has receivedjust 5.8% of FDI investments. Notably,Telangana (excluding Hyderabad) receivedrelatively lower amounts of FDI, chiefly dueto the concentration of investments inHyderabad city.

Another good indicator of economicprosperity, intensity of business activityand social development, is the number oftwo-wheeler vehicles per 1000 population.Vehicle intensity is greatest in Hyderabad.However, Telangana (excludingHyderabad) and coastal Andhra have uni-form intensity, whereas in Rayalaseemathere is low intensity of motor vehicles.

The share of non-agricultural workers ishigher in coastal Andhra (42%), but less inboth Telangana and Rayalaseema – 38%each in 2007–2008 (see Table 2) – while inHyderabad 100% of workers depend on thenon-agricultural sector. Rayalaseema has amuch larger share of farmers than agricul-tural labourers,2 which is due to the lowproductive land and relatively poorerhouseholds that also own such land for

Table 2. Consumption and production trends in non-agricultural sectors.

Hyderabad

Coastal

Andhra

Telangana

excluding

Hyderabad Rayalaseema

Share of sales tax collection Cross regions

TE 2009 (% of the state)

75 15 7 3

FDI in AP from 1991 to 2010 (%of AP) 38 43 13 6

Two wheeler vehicles per 1000 population

in 2009

252 72 71 54

Share of non-agricultural workers in total

workforce (%)

100 42 38 38

Workers with above matriculation (%) 48 9 9 7

% of above matriculation who are engaged

in agriculture

0 13 17 24

Expenditure per student in Govt. degree

colleges (average of 2006 to 2010 in

rupees)

11558 7614 9192

Source: Srikrishna Committee Report (2011).


subsistence survival. The opposite is true forCoastal Andhra (Reddy, 2011).

About 47.9% of workers are educatedabove matriculation in Hyderabad, whilethis ranges between 7% and 9% in allthree regions. Even though the share ofhighly educated (above matriculation)engaged in agriculture is low, there is signifi-cant regional variation ranging from 13% incoastal Andhra to 24% in Rayalaseema,with the lowest reported in Hyderabad(Srikrishna Committee Report, 2011). Thisindicates the lower employment opportu-nities in non-agricultural occupations forthe highly educated in Rayalaseemaregion. It is interesting to note that theexpenditure per student is higher in coastal

Andhra followed by Rayalaseema andTelangana, which possibly indicates the per-ceived higher returns to education andtherefore greater investment in human cap-ital in the developed region, thereby reinfor-cing regional disparities.

Figure 4 presents the district-wise dec-adal population growth in AndhraPradesh from 2001 to 2011(RGI, 2011).In general, the male population in urbanareas increased much faster than therural population. The districts nearHyderabad city (which actually fall underHyderabad Metropolitan DevelopmentalAuthority), that is Rangareddy, Medak,Mahboobnagar, and Nalgonda, showedhigher increase in decadal growth rate of

–8 –6 –4 –2 0 2 4 6 8 10

0 10 20 30 40 50 60 70 80 90 100

Ranga ReddyMedak

KadapaMahaboobnagar

WarangalSrikakulam

ChittoorNalgonda

KarimnagarNellore

PrakasamKurnoolKrishna

NizamabadVisakhapatnam

GunturKhammam

AnanthapurVizianagaram

AdilabadEast GodavariWest Godavari

Hyderabad

Rural Male (%)

Urban Male (%)

Urban Male Rural Male

Figure 4. District-wise decadal growth rate of population 2001–2011.


the male urban population. It is also inter-esting that some of the most prosperous dis-tricts, east Godavari and west Godavaridistricts, showed much less increase in theurban-male population along with remotedistricts like Adilabad, Vijayanagaram,and Anantapur.

Most of the high-growth industries gen-erate employment particularly in largeurban centres and mostly among males –the majority of the rural workers migratedto urban centres to acquire the necessaryskills. Construction, followed by textiles,IT and IT enabled services (ITES), healthcare, tourism, drugs and pharmaceuticals,banking and insurance, engineering, minesand minerals, food processing, chemicalsand fertilizers, and biotech are among thefastest growing industries which absorblarge numbers of employees mostly inurban and semi-urban areas (Table 3). Thelargest growth is expected from IT andITES, biotech, healthcare, textiles, engineer-ing, and pharmaceuticals.

Land use pattern, geographicaladvantage, and agriculturalgrowth

Palmer-Jones and Sen (2003) have stressedthe importance of initial conditions in deter-mining the rate of agricultural growth inrural India. In Telangana, only 40% of thetotal geographical area is used for agricul-ture and a large portion (23% of total geo-graphical area) is fallow land (cultivable,but not cultivated in the reporting year).This large area of fallow land inTelangana is a sign of the neglect of theagricultural sector and a lack of investmentsin land development measures over the lastfive decades (Figure 5). The larger irrigatedarea in Coastal Andhra can be attributed tohigher public investments in irrigation,which is facilitated by its lower gradientand higher rainfall.

The change in land productivity from1958 to 2007 at constant prices of 1999–2000 is given in Table 4. The total value of

Table 3. Human resource requirements span out in Andhra Pradesh for high growth industries.

Key industries

Employment

in 2011 (in 000)

Projected

employment

by 2015 (in 000)

Incremental

growth (%) in

Human Resources

requirement till 2015

Construction 2200 4210 48

Textiles 745 1826 59

IT and ITES 152 893 83

Healthcare 290 850 66

Tourism 851 1366 38

Drugs and Pharmaceuticals 230 478 52

Banking and insurance 135 268 50

Engineering 99 215 54

Mines and minerals 114 225 49

Food processing 198 280 29

Chemicals and fertilizers 87 131 34

Biotech 5 24 79

Paper 21 33 36

Source: Planning Commission (2011).


agriculture (crop plus livestock/ha)increased from Rs16,265 to Rs49,668 inCoastal Andhra, from Rs8647 to Rs23,087in Rayalaseema, and from Rs5846 to 32,328in Telangana. Coastal Andhra supports a

large number of agricultural labourers per1000 hectares of net cropped area (517),which is almost double that ofRayalaseema region (267). This again indi-cates the higher employment generation

Table 4. Trends in agricultural production (1958–2007).

Indicator Year Coastal Andhra Telangana Rayalaseema

Value of agricultural production (Rs/ha) TE 1958 16265 5846 8647

TE 2007 49668 32328 23087

Number of agricultural labourers/1000 ha TE 1958 234 134 134

TE 2007 517 292 267

Number of cultivators/1000 ha TE 1958 250 184 175

TE 2007 234 259 200

Mechanization (number of tractors/1000 ha) TE 1958 0.39 0.26 0.10

TE 2007 9.20 7.21 5.19

Per capita DDP (Rs) TE 2007 26356 23715 18671

Per capita DDP (Rs) of largest city in the region TE 2007 33980 35776 19179

Net cropped area (NCA) (1000 ha) TE 1958 3072 3932 2427

TE 2007 3944 4181 2800

Net irrigated area (NIA) (%) TE 1958 58 19 18

TE 2007 56 40 22

Electricity consumption (kwh/capita) TE 1973 59 31 48

TE 2007 478 779 572

Fertilizer consumption (kg/ha) TE 1958 17 7 7

TE 2007 294 211 119

Rice (kg/ha) TE 1958 1004 778 1292

TE 2007 3219 2980 3040

Groundnut (kg/ha) TE 1958 959 581 971

TE 2007 1383 1293 763

Cotton (kg/ha) TE 1958 922 339 168

TE 2007 3045 2057 1234

18

24

25

21

24

22

15

10

15

11

7

13

10

6

7

13

7

9

7

14

12

8

23

15

46

40

39

45

36

40

C

T

R

C

T

R

0% 20% 40% 60% 80% 100%

1968

2008

Forest

Barren plus waste

non-Agricultural

Pasture

Fallow

Agriculture

Figure 5. Land use pattern (% of total geographical area).


capacity of the farm sector in the agricultur-ally advanced region despite significantmechanization, compared with the lowproductivity regions. The per capita districtdomestic product (DDP) is also muchhigher in coastal Andhra than Telanganaand Rayalaseema. It is interesting to notethat the gap in DDP between each regionand its largest city is much higher inTelangana, but almost negligible inRayalaseema, where there is no big city toattract skilled labour and capital. The prod-uctivity of three major crops (paddy,groundnut, and cotton) is higher in coastalAndhra, while Rayalaseema and Telanganaregions showed mixed trends (Reddy andBantilan, 2012).

A set of GCRs, calculated from districtlevel data on agricultural production fortwo crop groups (paddy and legume), andgross irrigated area (GIA) are presented inTable 5. The Gini ratio increased for bothpaddy and legume crops, while for totalcrop production (in value terms) itdecreased. However, the Gini ratioincreased for GIA showing that the benefitsfrom land improvement/irrigation areincreasingly concentrated in a few districts.This shows that districts were increasinglyspecialized in growing crops based on theircomparative advantage, although to someextent it helped in the convergence of dis-tricts in their agricultural production.However, GCRs decreased in sectoral dis-trict domestic production for all three sec-tors (namely agriculture, industry, andservices).

Regional policies and public andprivate sector investment

Regional-wide disaggregation of revenueand expenditures is given in Table 6. Theshare of the largest urban centre(Hyderabad) in state revenue is nearly 50%,followed by Telangana and coastal Andhraand Rayalaseema. It shows that the urbancentre and its surrounding districts are con-tributing a larger chunk of state revenues,while the agricultural-based regions’ share isnegligible. However, when it comes to stateexpenditure, distribution is more egalitarian.This signifies the state and public policy rolein funding under developed regions.

Table 7 summarizes the regional disper-sion of investments in health and electricity.It shows that total per capita connectedload for Telangana region was the highest,owing to demand for electricity inTelangana region being higher comparedwith other regions which the electricitydepartment is meeting. In Telanganaregion, agricultural power consumption inKWH (MUs) per capita is higher comparedwith Rayalaseema and coastal Andhraregions. The electricity supply for the agri-cultural sector is provided at highly subsi-dized rates in the state. The higher powerconsumption in Telangana is attributed todominance of tube-well irrigation whichrequires electricity to pump water fromdeeper soils (through private investment),unlike canal irrigation (which flows throughgravitation and does not require electricity)

Table 5. Trends in Gini concentration ratio of districts.

Item TE 1958 TE 2007 Sector 1999–2000 2007–2008

Crop production 0.301 0.202 Agriculture 0.103 0.076

Paddy area 0.177 0.238 Industry 0.037 0.017

Legumes area 0.286 0.379 Services 0.031 0.024

Gross irrigated area (GIA) 0.043 0.079 GDDP 0.036 0.035

Note: GCR near to 1 indicates higher inequality, near to zero indicates equality.


in coastal Andhra. Again, public spendingin health and electricity indicates that publicinvestment is more egalitarian, and in manycases helped to reduce regional disparities.

Tractors, electric pump sets and irrigatedarea are three important inputs in the agrar-ian economy. There was a shift of manydistricts in their relative position between1956 and 2007 from low-to-high in electricpumps and fertilizer in the Telanganaregion compared with Coastal Andhra,but although this increased the irrigatedarea and productivity, it also raised thecost of production. In the use of farmmachinery and other inputs the Telanganadistricts have also caught up, butRayalaseema districts have lagged behind.

Rayalaseema has the highest density ofbank accounts with 127 accounts per 1000rural population, followed by the coastalareas at 110 and Telangana at 85 mainlydue to a pro-active initiative of publicsector banks to open bank accounts inbackward areas, but credit flows throughformal credit institutions are higher in theCoastal Andhra region (SrikrishnaCommittee Report, 2011), which exacer-bates the already existing regional dispari-ties in capital investments.

Overall, land productivity, per capitaincome, and irrigated area as a percentageof GCA have been higher in coastalAndhra, followed by Telangana andRayalaseema. Coastal Andhra is

Table 6. Regional share in revenue from important taxes and non-taxes, and expenditure on important

services (%).

Year

Revenue from 4 sources Expenditure on 8 services

Hyderabad C T R AP Hyderabad C T R AP

2004 34 20 41 5 100(139.0) 3 33 44 20 100(65.4)

2005 47 20 28 5 100(170.6) 2 29 48 21 100(84.1)

2006 47 18 30 5 100(199.4) 1 30 49 20 100(126.2)

2007 46 18 31 5 100(197.3) 1 27 48 24 100(109.0)

Sources: Andhra Jyothi Online, Hyderabad March 23, 2007; Vaartha, April 15, 2008 and Socio-Economic Survey of AP

2007–2008.

Notes 1: The four income sources of revenue are: sales tax, state excise, stamps and registration, and transport.

2: The 8 important expenditure services are: agriculture, rural development, irrigation, education, medical &health, water

supply & sanitation, housing, & welfare (including minorities).

3: Figures in brackets are Rs bn.

Table 7. Region-wise public sector investment in health and electricity consumption.

Region

No. of primary

health centres (PHCs)

per million rural

population

Total connected load

(watt/capita)

Agricultural power

consumption in kwh/capita

1999 2009 1972 2009 1972 2009

Coastal Andhra 27.5 25.1 58.5 436.9 11.1 82.3

Telangana 29.4 25.3 48.7 463.0 9.7 256.5

Rayalaseema 33 26.9 69.1 344.6 22.6 237.7


prosperous agriculturally due to its naturaladvantage and also due to favorable gov-ernment policies during the last five decades(Reddy, 2010). Overall, the gap betweenCoastal Andhra and Telangana is still highin many developmental indicators andneeds to be reduced, while Rayalaseemahas lagged behind in the developmentprocess.

Rayalaseema region, which ranked nextto the Coastal region in the beginning of theperiod, has slipped to third position, beingovertaken by the Telangana region whichnow ranks next to the Coastal region. Thereasons for shift in ranking of these tworegions are the poor resource endowmentsof Rayalaseema and considerable under-uti-lization of resources in the relatively betterendowed Telangana under the earlier feudalset up, followed by a release of productiveforces consequent on the abolition of theprincely state, its merger with the rest ofthe country after independence, and thedevelopment of the large urban centre ofHyderabad.

Conclusion and discussion:Policies for balanceddevelopment

Regional growth patterns in AndhraPradesh do not conform to assumptionsregarding adjustments in wages or returnsto capital which would eventually lead toregional economic convergence, at least inthe time period studied here. In contrast, aprocess of cumulative causation is apparent,in which agglomeration has stimulatedinnovation and productivity growth, furtheraccelerating the attraction of factors to theleading, or core, region. Early versions ofcumulative growth (or growth pole theory)can be found in the writings of Myrdal(1957), with later elaborations by Kaldor(1970), Hirschman (1958) and Krugman(1991,1998), all of which suggest a deepen-ing, in the absence of intervention, in core-

periphery disparities, especially in thecontext of greater market liberalization.

The question remains what type of inter-vention would help reduce regional imbal-ances in Andhra Pradesh. As Scott (2000:116) argues ‘successful development pro-grams must inevitably be judicious combin-ations of general principles and localizedcompromises, reflecting the actual geog-raphy and history of each individualregion’. Among the specific polices thatwould be beneficial to balanced regionalgrowth in Andhra Pradesh are the develop-ment of better communications between thecore-urban centre and remote rural periph-eries in order to encourage agriculturalproductivity and lower transaction costsfor enterprises in the periphery, and innova-tive financial instruments for financingpublic-private partnership infrastructureprojects in under-developed regions. Somepolicy options for the development of back-ward areas are not controversial, for exam-ple investment in education and skilleddevelopment including quality educationand health facilities, better transparencyand governance and the expansion of finan-cial services. However, the success of the‘green revolution’ technology hastened byirrigation facilities in Coastal Andhracannot be replicated in regions that are notgeographically similarly advantaged. Thepoorer districts of Rayalaseema andTelangana require quite different policyinterventions, for example encouraging lesswater-intensive rain-fed crops, livestock,and non-agricultural employment. Socialsupport programmes for women and the eld-erly need to be encouraged. Developmentpolicies must focus on the peripheral regionswith more autonomy to local planning anddecision-making bodies. Local electedbodies are better positioned to identify andexploit local opportunities and to planeffective strategies, but lagging regions likeRayalaseema could benefit from empoweredregional development councils.


Future research should concentrate onthese questions: first, how is the relativeimportance of agriculture as the engine ofrural development versus the non-farmactivities changing in each region? Second,what should be the strategy of small farmersin the face of relative decline in incomesfrom the agricultural sector? And, finally,what will be the governance and implemen-tation challenges of public programmes?

Acknowledgements

This article is drawn from ‘Study of Spatial and

Temporal Dynamics of Labour Market

Behaviour by Using Household Panel Data of

ICRISAT’ funded by CGIAR. Thanks are also

due to Professor D Narasimha Reddy for his

suggestions on how to improve the article.

Notes

1. The Telangana districts are: Mahbubnagar,

Hyderabad (RangareddyþHyderabad),Medak, Nizamabad, Adilabad, Karimnagar,Waranagal, Khammam and Nalgonda; the

four districts of Rayalaseema are: Chittoor,Kadapa, Anantapur, and Kurnool; the ninedistricts of Coastal Andhra are: Srikakulam,Visakhapatnam (Visakhapatnamþ

Vizianagaram), East Godavari, WestGodavari, Krishna, Guntur (GunturþPrakasam), and Nellore.

2. An agricultural labourer is defined as aperson between 15 and 59 years old whosemajor share of income is from wages earned

by working on others’ farms, while a cultiva-tor is defined as a person whose major shareof yearly income comes from farming their

own land.

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regional disparities

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