Disparities in Agricultural Productivity Growth in Andhra Pradesh

Volume 58
Number 1
April - June, 2010
ARTICLES
1. Inclusive Growth:
An Overview of Performance and
the Challenges Ahead . . . . . . . . C.H. H ANUMANTHA R AO
2. Nehruvian Legacy for
the Indian Economy . . . . . . . . . V.N. B ALASUBRAMANYAM
3. Goods and Services Tax in India:
An Empirical Analysis of
Revenue Implications . . . . . . . . M AHESH C. P UROHIT AND
V ISHNU K ANTA P UROHIT
4. Econometric Evaluation of
Forecasting Budgetary Transactions
with Intercept Correction . . . . . . . . . . . N ARAIN S INHA
5. Migrant Remittances: Size and
Channels of Money Transfer among
Oriya Workers in Surat City . . . . . G AGAN B IHARI S AHU AND
B ISWAROOP D AS
6. The Health Cost of Air Pollution
in Kolkata . . . . . . . . . . . . . . . C HIRODIP M AJUMDAR
COMMUNICATIONS FOR DEBATE & RESEARCH

1. Unanticipated Monetary Shocks and
Exchange Rate Variations in Sri Lanka . . . . B ISWAJIT M AITRA
2. Disparities in Agricultural Productivity
Growth in Andhra Pradesh . . . . . . . A. A MARENDER R EDDY
3. Regional Rural Banks:
The Turnaround Story . . . . . K. A LAMELU
AND
A. D EVAMOHAN
BOOK SCAN >> REVIEW

Interrogating the Idea of Justice . . . . . . . M.V. N ADKARNI
Electronic copy available at: http://ssrn.com/abstract=1557528
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The Indian Economic Journal Volume 58(1), April-June 2010
134
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COMMUNICATION FOR DEBATE & RESEARCH / 2
Disparities in Agricultural Productivity

Growth in Andhra Pradesh
A. Amarender Reddy
In the backdrop of the demand for bifurcation of Andhra Pradesh state based on growing
regional disparities, the paper examines the regional disparities in agricultural productivity
growth in Andhra Pradesh from 1956 to 2007 at district level by using Malmquist productivity
indices (MI). Overall, total factor productivity (TFP) growth in agriculture and allied activities
in Telangana is 1.3 per cent per annum, 1.1 per cent per annum in Coastal, while in
Rayalaseema TFP growth is stagnant. It indicates that, there is a convergence in TFP growth
among districts of developed Coastal and less developed Telangana regions, but districts in
Rayalaseema region are left out of this growth process, as this region is not able to catch up
with other two regions in agricultural productivity. Irrespective of region most backward
districts in agriculture, Srikakulam, Visakhapatnam, Anantapur, Kadapa, Adilabad, Nalgonda,
Mahbubnagar and Nizamabad showed stagnation in TFP growth during last 50 years. With the
existing resource endowment and technology, Telangana can increase its output by 28 per cent
from the existing level, while Rayalaseema region can enhance its output by 25 per cent,
Coastal region by only 14 per cent as revealed from efficiency estimates. Shadow input shares
indicate that, still gross irrigated area, fertiliser use and availability of labour are limiting
factors to increase production at district level. Inefficiency effects model (Battese and Coelli,
1995) reveals that, market infrastructure and credit availability are essential to increase
efficiency. There is significant influence of base year resource endowment both physical and
human for subsequent agricultural growth.
I. Introduction
Andhra Pradesh continues to be a predominantly agricultural state with 60 per cent of
total workforce in agriculture, even though its share in gross state domestic product
(GSDP) decreased to about 22 per cent in 2007. Hence, increasing productivity of
agricultural sector is important to increase incomes of majority of population. The
unweighted average poverty ratios and monthly per capita expenditure (MPCE) for the year
2004-05 calculated from NSSO 61 st Round as reported (Chaudhuri and Gupta, 2009)
indicates that the percent of poor is quite low (7.6%) in Coastal region when compared to
both Telangana (12.1%) and Rayalaseema (16.5%) regions. In the same lines, the MPCE
is quite high in Coastal (Rs.631) than Telangana (Rs.552) and Rayalaseema (Rs.524)
regions in rural areas. These differences in the poverty ratios after 50 years of planned
A. Amarender Reddy, Administrative Staff College of India, Hyderabad. E-mail: Reddyamarender.hyd@gmail.com
Electronic copy available at: http://ssrn.com/abstract=1557528
Disparities in Agricultural Productivity Growth in Andhra Pradesh
A. AMARENDER REDDY
135
development in united Andhra Pradesh is mostly due to differences in agricultural

productivity and explain to a larger extent the reasons for ongoing agitation for separate
Telangana state. A comprehensive review of regional differences in agricultural productivity
growth in India by Kumar et al. (2008) emphasised that the district-level studies are more
useful for policy prescription. Keeping the ongoing debate on regional disparities in Andhra
Pradesh intact, the study assess the changes in productivity and efficiency in agricultural
sector at district level with special emphasis on disparities at regional level with major
hypothesis that the productivity growth among districts and regions are not uniform.
Specific questions asked in this paper are: (i) what is the trend in total factor productivity
(TFP) growth among districts, what is the contribution of efficiency change and technical
change in TFP growth? Is there any convergence in TFP growth over the period among
districts and regions?; (ii) what is the trend in the shadow factor shares of inputs at district
and regional level, how they have changed between 1956 and 2007?; (iii) are there any
slacks in inputs at district and regional level, if yes, how much one can reduce input use
without effecting output? And to what extent output can be increased with the exiting
resources?; and (iv) which factors influence efficiency at district level?
II. Data and Methodology

The Data Envelopment Analysis (DEA) approach is used for measuring productivity
change and efficiency. We have taken the value of crop output (Rs. crore) and value of
livestock and fisheries products (Rs. crore) as two outputs and gross irrigated area (GIA)
in 1000 ha, rainfed area in 1000 ha, labour in thousands (agricultural workers plus
cultivators), livestock population (cattle equivalents; one cattle is equal to one buffalo or
eight sheep or eight goats), fertiliser use (NPK tonnes), mechanisation (tractor equivalent;
one tractor is equal to 40 iron ploughs or 80 wooden ploughs) as inputs. We have used
methodology followed in Fare et al. (1994) to estimate malmquist-type measure of
productivity and its decomposition into efficiency change and technical change. The method
assumes output orientation with constant returns to scale (CRS), as the input-oriented and
variable returns to scale (VRS) suffer from some methodological problems while analysing
regional data (Coelli and Rao, 2003).
We have used shadow price information, derived from the shape of the estimated
production surface to measure factor shares as followed by Coelli and Rao (2003) to know
the relative importance of inputs in influencing the productivity at district level, as price
information of inputs is not available for some inputs like irrigation and land. However, the
DEA results are susceptible to the effects of data noise, and unusual shadow shares, when
degrees of freedom are limited. The paper also estimate slacks in inputs and outputs by using
efficiency measurement systems software. In order to check reliability of efficiency estimates
of DEA method, we also estimated the efficiencies by using Battese and Coelli (1995) frontier
production function approach with same input and output data (aggregated two outputs
namely crop and livestock value to make one dependent variable) with the assumption of
136
The Indian Economic Journal
Volume 58(1), April-June 2010
Cobb-Douglas production function and results are presented. Both methods gave similar
results; hence we can conclude that the DEA results are robust. We have also assessed the
effect of base year values on subsequent growth rate of different inputs and outputs to assess
whether the variables are converging over the period or not? The study used the data at
constant prices of year 2004-05 collected from Andhra Pradesh Statistical Abstracts from 1956
to 2007, every 10, year interval data points are used for DEA approach (to save
computations), while data for every year is used for Battese and Coelli (1995) model.
Districts are grouped into Coastal region (Srikakulam, Visakhapatnam (Visakhapatnam +
Vijayanagaram), East Godavari, West Godavari, Krishna, Guntur (Guntur + Prakasam),
Nellore, Rayalaseema region (Chittoor, Kadapa, Anantapur and Kurnool) and Telangana
region (Mahbubnagar, Hyderabad (Hyderabad + Ranga Reddy), Medak, Nizamabad, Adilabad,
Karimnagar, Warangal, Khammam and Nalgonda) for regional level analysis.
III. Growth Rate of Outputs and Inputs During 1956-2007

Growth in Per Capita Income
Overall, the state recorded compound annual growth rate (CAGR) of 1.76 per cent in
per capita income (PCI) from agricultural and allied sectors, with growth rate in PCI from
livestock (including fisheries) is much higher (3.17%) than PCI from crop sector (1.29%).
Nellore recorded the highest growth rate (4.25%) in agriculture, followed by Warangal
(3.64%), Karimnagar (3.02%), Medak (2.76%) and Krishna (2.71%), while the lower
growth was recorded in Nizamabad (-0.8%), Anantapur (0.31%), Visakhapatnam (0.70%),
and Mahbubnagar (0.88%). This indicates that the districts with resource endowment
showed higher growth. In case of PCI from crop sector, the highest growth was recorded
in Warangal (3.33%), followed by Medak (3.28%) and Nellore (3.16%), while Anantapur
and Nizamabad recorded negative growth, some other districts like Mahbubnagar (0.41%),
Chittoor (0.77%), Hyderabad (0.45%) and West Godavari (0.90%) recorded less than 1 per
cent growth per annum. In the case of PCI from livestock sector many districts have
(Nellore, East Godavari, Chittoor and Srikakulam) recorded above 6 per cent growth per
annum, while Warangal, Krishna and West Godavari recorded about 5 per cent, Nalgonda,
Mahbubnagar, Visakhapatnam and Nizamabad districts recorded less than 2 per cent growth
per annum.
Growth in Inputs
CAGRs in credit, fertilisers, private investment in agriculture, literacy rate, farm
mechanisation, urbanisation, market infrastructure and irrigated area are positive and
significantly higher at state level with significant regional differences. Credit growth per
annum in nominal terms is about 10 per cent for Andhra Pradesh; the highest was recorded
in Hyderabad (16%), Kadapa (13%) and Nellore (13%), while less than 8 per cent were
recorded in Srikakulam, Anantapur and Nizamabad. CAGR per annum in fertiliser
A. AMARENDER REDDY
137
consumption is much higher (7.44%) compared to other indicators, more than 8 per cent
is recorded in Warangal, Karimnagar, Khammam, Adilabad, Hyderabad, Kadapa, Nalgonda,
Mahbubnagar and Nizamabad, while less than 7 per cent recorded in Medak, Krishna,
Srikakulam and Anantapur. Growth in per cent of private investment to total investment is
3.14 per cent in Andhra Pradesh, the higher growth (more than 5%) is recorded in
Mahbubnagar, Visakhapatnam, Nalgonda, East Godavari, Adilabad, West Godavari and Medak,
while less than 3 per cent was recorded in Srikakulam, Hyderabad, Krishna, Khammam and
Nellore and less than 2 per cent growth was recorded in Chittoor, Kadapa and Anantapur.
Growth rate in literacy rate is increased by 3.05 per cent in Andhra Pradesh, while more than
4 per cent growth was recorded in Karimnagar, Adilabad, Nalgonda, more than 3 per cent
recorded in Nellore, Warangal, Medak, Khammam, Srikakulam, Chittoor, Mahbubnagar,
Visakhapatnam and Nizamabad. Growth in mechanisation is 2.3 per cent in Andhra Pradesh,
with higher growth is recorded in Anantapur (3.46%), Krishna (3.52%), Khammam (3.69%),
Karimnagar (2.97%), Medak (2.39%), West Godavari (2.79%), Chittoor (2.67%) and Kadapa
(2.68%). Overall growth in urbanisation is about 1.5 per cent in Andhra Pradesh, of which
Visakhapatnam (3.12%), Karimnagar (2.4%), Hyderabad (2.35%) recorded highest growth,
while Nizamabad, Mahbubnagar, Srikakulam, Kurnool, West Godavari, East Godavari, Krishna
and Warangal recorded less than 1 per cent. Number of market yards increased by just 1.27
per cent per annum in Andhra Pradesh, with higher growth recorded in Kadapa (3.71%),
Hyderabad (3.4%), Kurnool (2.46%), East Godavari (7.76%), Khammam (2.61%), Krishna
(3.78%), Medak (4.07%) and Karimnagar (2.75%), while negative growth recorded in
Nellore, Warangal, Adilabad, Guntur and Nalgonda. Overall growth rate in GIA is much
higher at 1.11 per cent per annum, with higher growth rate in Khammam (3.47%),
Karimnagar (2.81%), Adilabad (2.5%), Warangal (2.49%), Kurnool (1.7%), Nizamabad
(1.48%), Nalgonda (1.49%), Mahbubnagar (1.27%), Visakhapatnam (1.26%), Guntur
(1.32%), West Godavari (1.21%) and Medak (1.48%), while the lower growth in GIA is
observed in Hyderabad (0.96%), Anantapur (0.40%), Krishna (0.37%), Nellore (0.05%),
Chittoor (-0.18%) and Srikakulam (-0.22%).
On the other hand, growth rate per annum in labour (cultivators plus agricultural
workers), livestock population in cattle equivalent and cropped area under rainfed are
significantly low. Growth in agricultural labour is 1.02 per cent per annum in Andhra
Pradesh, with the higher growth in Guntur (1.99%), Khammam (1.77%), Mahbubnagar
(1.66%) and Visakhapatnam (1.38%), while lower growth is recorded in Srikakulam (1.36%), Nellore (-0.12%), Chittoor (0.66%), Kadapa (0.52%), East Godavari (0.83%),
Medak (0.88%), and Nizamabad (0.96%). Overall, the growth rate in cropped area under
rainfed decreased by 0.56 per cent per annum; while the growth rate is significantly lower
in Nellore (-2.83%), Karimnagar (-2.31%), Nalgonda (-1.84%), Mahbubnagar (-1.10%) and
Nizamabad (-1.22%), while there is expansion of area under rainfed only in Visakhapatnam
(1.68%) probably due to expansion of area in Vijayanagaram. Growth rate in livestock
population is just 0.25 per cent per annum, with negative growth recorded in many districts
138
including Chittoor, Kadapa, Srikakulam, West Godavari, East Godavari, Krishna and Nellore,
only in Guntur, Khammam and Adilabad growth rate is near about 1 per cent per annum.
The annual compound growth rate in PCI from crops is the highest in Telangana (1.7%),
followed by Coastal (1.57%) and Rayalaseema (0.86%), and while growth in PCI from
livestock is the highest in Coastal (4.44%) followed by Rayalaseema (3.75%) and Telangana
(2.47%). Overall growth rate in PCI from agriculture and allied sectors is the highest in
Coastal (2.17%) followed by Telangana (1.93%) and Rayalaseema (1.29%). Growth in GIA
is the highest in Telangana (1.99%) followed by Coastal (0.72%) and Rayalaseema (0.58%).
Growth rate in fertiliser consumption is also the highest in Telangana (8.38%) followed by
Coastal (7.13%) and Rayalaseema (7.11%). Growth rates in urbanisation, literacy rate and
private investment in agriculture ( per cent of well-irrigated area to total GIA) are also the
highest in Telangana followed by Coastal and Rayalaseema. This indicates, in most of the
development indicators growth in Telangana is the highest, followed by Coastal and the
least in Rayalaseema. This reveals that, there is a convergence of growth in agricultural
sector between Coastal and Telanagana region, but drought prone Rayalaseema is lagging
behind in conformity with Reddy and Kumar (2006).
IV. Disparities in TFP Growth and Efficiency

Table 1 presents the district level TFP growth and its components for Telangana
districts. The highest TFP growth is recorded in Hyderabad, followed by Karimnagar,
Warangal, Khammam, Medak, Adilabad, Nalgonda, Mahbubnagar and Nizamabad. In case
of Hyderabad, the first three decades are with higher TFP growth (24 per cent during 19561966, 69 per cent during 1966-1976, 50 per cent during 1976-1986) and larger share of
TFP growth is contributed by efficiency change, while in last two decades productivity
growth is stagnant, may be due to shift of resources like land and labour to meet the
demands of urbanisation in Hyderabad. On the other hand in case of Karimnagar,
Mahbubnagar, Nalgonda, Warangal and Khammam TFP growth is higher in last three
decades, while in Adilabad, maximum TFP growth is recorded in last two decades. In most
of the districts, during 1986-1996 efficiency change contributed larger share, while during
1996-2007 technical change contributed larger share in TFP growth. Overall, there is
stagnation in TFP growth in Mahbubnagar and Nalgonda since last 50 years with decrease
in efficiency from 0.90 during 1956-1966 to 0.66 during 1996-2007 in Mahbubnagar and
from 0.77 to 0.70 in Nalgonda during the same period. In Medak, higher TFP growth is
recorded during 1966-1976 and 1986-2007, with overall TFP growth of 16 per cent per
decade coupled with significant increase in efficiency from 0.44 per cent to 0.75 per cent.
While in Warangal, TFP growth is 26 per cent per decade in last 50 years, with consistent
increase, except 1966-1976, for which TFP growth is decelerated, in line with many other
districts during 1976-1996, technical change is contributed a larger share, while during
1996-2007 the share of efficiency change (catching up) is higher in TFP growth. Only
district with deceleration in TFP growth in Telangana is Nizamabad with -3 per cent per
139
A. AMARENDER REDDY
Table 1
Estimates of Efficiency (%) and TFP Growth Rates (%) per Decade and its
Decomposition from 1956 to 2007 in Telangana Districts
District
Hyderabad
Karimnagar
Warangal
Khammam
Medak
Adilabad
Nalgonda
Mahbubnagar
Nizamabad
Indicator
1956
Efficiency (B&C)
1956-1966 1966-1976 1976-1986 1986-1996 1996-2007
1956-2007
28
27
31
46
56
61
TFP growth
24
69
50
43
26
Efficiency change
Technical change
0
0
10
12
80
-6
38
8
0
0
0
3
22
3
Efficiency (B&C)
50
48
46
40
45
58
64
TFP growth
12
-21
63
68
32
26
Efficiency change
19
-8
25
23
30
17
Technical change
-6
-14
31
36
Efficiency (B&C)
TFP growth
35
0
36
30
38
-38
45
72
57
46
72
57
49
26
25
Efficiency change
81
-20
38
48
Technical change
-28
-23
25
42
Efficiency (B&C)
61
64
59
58
78
87
69
TFP growth
14
-40
66
41
37
17
Efficiency change
Technical change
0
0
25
-9
-41
1
12
48
7
32
27
8
2
14
Efficiency (B&C)
56
44
40
47
59
64
75
TFP growth
10
21
31
15
16
Efficiency change
42
-10
26
13
Technical change
-15
16
Efficiency (B&C)
TFP growth
50
0
50
1
57
4
67
-5
73
20
89
22
67
8
1
Efficiency change
-2
-9
10
Technical change
-4
22
Efficiency (B&C)
77
76
61
64
68
70
68
TFP growth
12
-35
43
15
12
Efficiency change
Technical change
0
0
25
-10
-18
-21
-1
44
-4
20
-4
17
-1
7
Efficiency (B&C)
67
90
80
64
63
63
66
TFP growth
-3
-40
58
18
10
Efficiency change
-4
-25
11
13
-1
Technical change
-19
42
Efficiency (B&C)
TFP growth
93
0
92
0
83
0
82
-9
59
24
54
-24
72
-3
Efficiency change
-17
-18
-30
-14
Technical change
10
51
12
Note: Efficiency (B&C) indicates the efficiency estimates from Battese and Coelli (1995) model.
140
decade, with significant reduction in efficiency from 0.93 per cent to 0.54 per cent during
last 50 years, however even in this district, TFP growth is 24 per cent during 1986-1996,
mostly contributed by technical change (51%) while efficiency change declined by 18 per cent.
Table 2 presents the TFP growth and its components for Rayalaseema districts. In
Rayalaseema region, TFP growth is decelerated in Anantapur and Kadapa, while it is
slightly higher at 8 per cent and 3 per cent per decade in Chittoor and Kurnool respectively.
In Anantapur both efficiency and technical change decelerated, while in Kadapa, there is
a significant upward movement during 1986-1996. In Kurnool, there was a significant
increase in technical change that helped in slight increase in TFP growth even though
efficiency decelerated, on the other hand in case of Chittoor efficiency change is contributed
to TFP growth.
Table 2
Estimates of Efficiency (%) and TFP Growth Rate (%) per Decade and
its Decomposition from 1956 to 2007 in Rayalaseema Districts
District
Chittoor
Kurnool
Kadapa
Anantapur
Indicator
1956
Efficiency (B&C)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
TFP growth
Efficiency change
Technical change
78
0
0
0
95
0
0
0
47
0
0
0
96
0
0
0
1956-1966 1966-1976 1976-1986 1986-1996 1996-2007
87
45
90
-23
87
-33
-29
-6
45
-29
-1
-28
89
-1
9
-9
84
0
0
0
83
-17
-9
-9
44
-38
-23
-20
67
-8
-2
-7
81
0
0
0
80
23
3
20
48
5
-10
16
66
-16
-25
12
89
0
0
0
87
55
28
21
53
56
13
38
72
0
5
-4
85
0
0
0
88
9
-18
33
61
4
2
1
68
4
-1
5
1956-2007
85
8
14
-5
85
3
-7
11
50
-6
-5
-1
72
-5
-3
-1
Table 3 presents TFP growth in Coastal region. In Coastal, the highest TFP growth was
recorded in Nellore followed by Krishna, Guntur, East Godavari, West Godavari, Srikakulam
and Visakhapatnam. In Nellore, TFP growth was significantly higher with 40 per cent per
decade, of which 24 per cent is contributed by efficiency change and remaining 13 per cent
contributed by technological change. In Krishna, TFP growth is about 18 per cent per
decade of which 11 per cent is contributed by technical change and 6 per cent is
contributed by efficiency change. In Guntur, TFP growth is 13 per cent per decade, all of
141
A. AMARENDER REDDY
Table 3
TFP Estimates of Efficiency (%) and TFP Growth Rates (%) per Decade
and its Decomposition from 1956 to 2007 in Coastal Districts
District
Indicator
1956
Nellore
Efficiency (B&C)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
TFP growth
Efficiency change
Technical change
52
0
0
0
75
0
0
0
90
0
0
0
91
0
0
0
95
0
0
0
61
0
0
0
90
0
0
0
Krishna
Guntur
East Godavari
West Godavari
Srikakulam
Visakhapatnam
1956-1966 1966-1976 1976-1986 1986-1996 1996-2007
41
-10
11
-18
74
15
6
9
80
23
19
3
86
16
35
-14
92
0
0
0
60
-3
47
-34
86
0
0
0
41
15
27
-10
74
-6
-2
-5
89
3
-4
7
81
1
2
-1
86
0
0
0
60
-3
1
-4
84
0
0
0
62
139
68
43
79
27
22
4
94
27
14
12
80
0
0
0
81
0
0
0
66
-34
-39
8
85
0
0
0
86
58
10
44
92
40
2
37
88
2
-19
25
92
6
0
6
87
13
0
13
80
34
-6
43
93
0
0
0
89
39
12
24
92
17
3
14
88
13
-4
18
92
0
0
0
82
0
0
0
91
26
16
9
92
0
0
0
1956-2007
61
40
24
13
82
18
6
11
90
13
0
13
86
4
7
-2
85
2
0
2
71
1
0
1
88
0
0
0
which contributed by technical change. In East Godavari, there is almost stagnant TFP
growth, with deceleration in technological change. Srikakulam, Visakhapatnam and West
Godavari showed stagnation in TFP growth, even though in Srikakulam it improved during
last two decades. Among top 10 districts in terms of TFP growth six districts are from
Telangana, three from Coastal and one from Rayalaseema. Among the top four districts
namely Nellore, Hyderabad, Karimnagar and Warangal, the contribution of efficiency change
is higher than technological change, which indicates they are catching up with other frontier
districts. Among top 10 districts in efficiency six are from Coastal (Guntur, East Godavari,
West Godavari, Krishna, Visakhapatnam and Srikakulam), three are from Rayalaseema
142
(Anantapur, Chittoor and Kurnool) and only two are from Telangana (Nizamabad and
Khammam). While technological change contribution is higher in Krishna, Kurnool,
Khammam and Nizamabad.
Table 4 presents the region-wise trends in TFP growth. Overall TFP growth in Telangana
is about 13 per cent per decade, while the same are 11 per cent per decade in Coastal,
while TFP growth in Rayalaseema is stagnant. In Telangana and Coastal until 1976 there
is stagnation in TFP growth, then after there is a good growth, while in Rayalaseema except
1986-1996, there is stagnation in growth. In both Coastal and Telangana, most of the
growth came from technological change, which indicates technological progress ushered by
Green Revolution in major crops like paddy. In Coastal, efficiency is highest throughout the
period, while in Telangana efficiency is the lowest, it indicates that with the existing
resource endowment and technology Telangana can increase its output by more than 28 per
cent from the existing level, while Coastal region can enhance it by only 14 per cent and
Rayalaseema by 25 per cent in 2007.
Table 4
Region-wise Estimates of Efficiency (%) and TFP Growth Rate (%) per Decade
and its Decomposition from 1956 to 2007
Region
Telangana
Coastal
Rayalaseema
Total
Indicator
Efficiency (B&C)
Efficiency (DEA)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
Efficiency (DEA)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
Efficiency (DEA)
TFP growth
Efficiency change
Technical change
Efficiency (B&C)
Efficiency (DEA)
TFP growth
Efficiency change
Technical change
1956
54
-48
0
0
100
-22
-32
0
100
0
-24
-23
100
0
0
-35
62
0
0
0
1956-1966 1966-1976 1976-1986 1986-1996 1996-2007
53
-40
10
15
96
-27
-21
5
116
-9
-26
-15
91
10
-17
-37
71
4
14
-9
51
-42
-15
-3
88
-30
-19
1
103
-2
-33
-23
83
-9
-9
-40
69
-10
-2
-8
58
-37
34
8
124
-23
-15
14
105
9
-32
-29
102
-9
12
-34
72
20
3
16
64
-33
28
6
121
-11
-17
20
98
23
-27
-22
125
11
12
-26
74
24
4
20
70
-28
16
7
108
-10
-14
13
104
9
-25
-25
104
-4
9
-23
77
12
4
9
1956-2007
59
-38
13
6
107
-20
-20
11
105
5
-28
-23
100
-1
1
-32
71
10
4
5
Note: Efficiency (B&C) indicates the efficiency estimates from Battese and Coelli (1995) model and Efficiency (DEA) from Data Envelopment Analysis model.
A. AMARENDER REDDY
143
V. Changes in Factor Shares Differ Over Time and Space

Factor shares are virtual inputs and outputs, where the actual quantity is multiplied by
shadow price. Shadow price represents the scarcity value imposed by DEA on each input,
in the case of output; shadow share represents relative importance of each output in
maximising aggregate output value. These shadow shares also reflect either general factor
endowments or scarcity value (marginal productivity multiplied by input quantity) of inputs
at district level. Table 5 presents our estimated shadow shares obtained from the DEA. The
last two series in Table 5 represent the shadow shares for crops and livestock (both sum
to unity) over the study period. The change in shares appear to be quite reasonable as crops
accounted for 65 per cent of the total output in 1956 and its share reduced to 59 per cent
in 2007. The first six series in the table represent the shadow input shares. Shadow share
of irrigated land is much higher, even though it decreased from 59 per cent to 43 per cent,
which indicates that the scarcity of irrigated land in Andhra Pradesh and its importance in
increasing production. The shares of fertilisers increased from 11 per cent to 27 per cent,
which indicates the increasing use of fertiliser in Andhra Pradesh over the period. The share
of cropped area under rainfed, aggregated over all the districts, seems to be quite stable
around 13 to 14 per cent. The labour share shows a steady increase from 1 per cent in
1956 to 9 per cent in 2007 and the share of livestock increased from 1 per cent to 5 per
cent, which indicates that slowly scarcity value of labour and livestock increased over the
study period in the labour and livestock abundant agrarian economy. While the share of
tractor (equivalent of farm equipment) decreased from 15 per cent to 3 per cent, however,
we have to note that this variable included tractor equivalent of tractors, wooden and iron
plough, hence it also reflect outdated farm machinery.
Table 6 shows the district-specific average output and input shadow shares for 1986-2007
underlying the TFP indices reported here. These shares are averaged over the last three
decades of the study period 1986 to 2007. These figures indicate that, in the total output of
agriculture and allied sector, share of crop output is 53 per cent, while share of livestock
(including fisheries) products is 46 per cent. The shadow share of GIA is highest with 45
per cent, followed by labour (26%), rainfed land (13%), livestock population (10%) and farm
implements and fertiliser (3 per cent each), which shows the importance of irrigation, labour,
rainfed area and livestock population in agrarian economy in Andhra Pradesh. Share of
irrigated land is much higher in the districts with scarce irrigation facilities (with higher
marginal productivity) in Adilabad (0.94), Anantapur (0.89), Chittoor (0.66), Kurnool (0.69),
Mahbubnagar (0.57), Hyderabad (0.57) and Kadapa (0.56). The shadow shares of labour are
quite high in districts with labour intensive agriculture with paddy as main crop without
much mechanisation like Nellore, (0.70), Nalgonda (0.62), Khammam (0.64), Srikakulam
(0.71), Warangal (0.57), Medak (0.46), Kadapa (0.38), Nizamabad (0.30) and Mahbubnagar
(0.38). In districts where land is a limiting factor due to urbanisation, its shadow share is
quite high. For example, in the Hyderabad, Krishna and Guntur the land share is 0.37, 0.44
144
Table 5
Factor Shares (Ratios) Estimated from DEA in 2007
District
Labour
Livestock
Population
Rainfed
Area
GIA
Fertiliser
Mechanisation
Crop
Value
Livestock
Value
Hyderabad
0
(0)
0
(0.19)
0
(0)
0
(0)
0.17
(0)
0
(0)
0.22
(0)
0.14
(0)
0
(0)
0
(0)
0
(0)
0.05
(0)
0
(0)
0.48
(0)
0.3
(0)
0
(0)
0
(0)
0
(0)
0.44
(0)
0
(0)
0.09
(0.01)
0
(0)
0
(0)
0
(0)
0
(0)
0
(0)
0
(0)
0
(0)
0
(0)
0
(0)
0
(0)
0.31
(0)
0.05
(0)
0.12
(0)
0
(0)
0.03
(0)
0.21
(0.12)
0.29
(0.1)
0
(0)
0
(0)
0
(0)
0.05
(.01)
0
(.09)
0.45
(0)
0.43
(.05)
0.33
(0)
0
(0)
0
(0)
0
(0)
0
(0)
0.4
(.37)
0.12
(0.01)
0
(0)
0
(0)
0
(0)
0
(0)
0
(0)
0
(0)
0
(0)
1
(1)
0
(0.67)
0
(0.5)
0.14
(.13)
0.86
(.91)
0
(.81)
0.57
(0.95)
0.67
(0.91)
0.42
(1)
0.88
(0.85)
0.2
(.92)
0.52
(.9)
0.6
(0)
0.64
(0.99)
0.69
(1)
0
(0)
0.03
(0.89)
0.52
(0)
0.67
(0)
0.79
(.88)
0
(0)
0
(0)
0.56
(.33)
0
(0.4)
0.43
(.59)
0
(0)
0.55
(0)
0
(0)
0
(0.09)
0.38
(0)
0
(0.15)
0.58
(.08)
0.25
(0.1)
0
(.63)
0.24
(0)
0
(0)
0.9
(1)
0.84
(0)
0
(0.07)
0
(0)
0
(0)
0.71
(0)
0
(0)
0
(0)
0.86
(.09)
0.27
(.11)
0.14
(0)
0
(0)
0
(0)
0
(0)
0.04
(0)
0.12
(0)
0
(0)
0.08
(0)
0
(0)
0
(0)
0
(0)
0
(0)
0
(0.11)
0
(0.93)
0
(1)
0
(0)
0.01
(0.9)
0
(0)
0
(0)
0.14
(0)
0.03
(.15)
0
(.51)
1
(0.54)
1
(.77)
1
(0.58)
0
(.25)
1
(0.56)
0.22
(.48)
0.35
(.6)
1
(.94)
0.42
(1)
0.69
(.8)
1
(0.41)
1
(1)
0
(0.61)
0.37
(0.63)
0.61
(.57)
1
(1)
0.36
(.84)
0.56
(1)
0.14
(0)
0.59
(.65)
1
(.49)
0
(.46)
0
(.23)
0
(0.42)
1
(.75)
0
(0.44)
0.78
(.52)
0.65
(.4)
0
(0.06)
0.58
(0)
0.31
(.2)
0
(0.59)
0
(0)
1
(.39)
0.63
(0.37)
0.39
(.43)
0
(0)
0.64
(.16)
0.44
(0)
0.86
(1)
0.41
(.35)
Karimnagar
Warangal
Khammam
Medak
Adilabad
Nalgonda
Mahbubnagar
Nizamabad
Chittoor
Kurnool
Kadapa
Anantapur
Nellore
Krishna
Guntur
East Godavari
West Godavari
Srikakulam
Visakhapatnam
State
Note: Figures in Parenthesis are for year 1956.
145
A. AMARENDER REDDY
and 0.49 per cent respectively. In districts where land is a limiting factor due to urbanisation,
its shadow share is quite high. For example, in the Hyderabad share of land is 0.37. The
shadow share of land is also higher in West Godavari (0.67) and East Godavari (0.26),
Karimnagar (0.52), Chittoor (0.26) and Nizamabad (0.26) indicating higher land productivity
in these districts. Shares of other factors, including livestock and fertiliser are also plausible
and appear to support the general scarcities of these resources in different districts. However,
in some districts the shadow share estimates are unusually high or low due to the
dimensionality problem in DEA or the district factor endowment may be significantly differ
from sample average, because of district-specific factors, such as land scarcity, labour
abundance, etc. For many districts, the errors in estimation of shadow prices may be a
combination of these two factors, to varying degrees.
Table 6
Average Factor Shares (Ratios) for Last Three Decades (1986-2007) Estimated from DEA
District
Labour
Livestock
Rainfed
Area
GIA
Fertiliser
Mechanisation
Crop
Value
Livestock
Value
Hyderabad
Nellore
West Godavari
Nalgonda
Mahbubnagar
Krishna
Medak
Khammam
Guntur
East Godavari
Srikakulam
Visakhapatnam
Karimnagar
Warangal
Chittoor
Nizamabad
Adilabad
Anantapur
Kadapa
Kurnool
State
0.05
0.70
0.00
0.62
0.38
0.16
0.46
0.64
0.00
0.00
0.71
0.00
0.06
0.57
0.05
0.30
0.00
0.01
0.38
0.12
0.261
0.00
0.00
0.33
0.00
0.00
0.44
0.00
0.00
0.49
0.64
0.00
0.00
0.00
0.00
0.01
0.00
0.00
0.09
0.00
0.07
0.104
0.37
0.00
0.67
0.00
0.00
0.00
0.00
0.00
0.00
0.26
0.00
0.12
0.52
0.16
0.26
0.26
0.01
0.00
0.00
0.00
0.132
0.57
0.30
0.00
0.32
0.57
0.40
0.42
0.36
0.51
0.10
0.29
0.51
0.23
0.26
0.66
0.44
0.94
0.89
0.56
0.74
0.453
0.00
0.00
0.00
0.06
0.05
0.00
0.12
0.00
0.00
0.00
0.00
0.09
0.19
0.00
0.02
0.00
0.00
0.01
0.00
0.00
0.028
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.28
0.00
0.00
0.00
0.00
0.05
0.00
0.06
0.07
0.023
0.00
0.00
0.00
0.19
0.20
0.32
0.37
0.47
0.53
0.58
0.60
0.62
0.65
0.76
0.77
0.85
0.87
0.92
0.94
0.98
0.531
1.00
1.00
1.00
0.81
0.80
0.68
0.63
0.53
0.47
0.42
0.40
0.38
0.35
0.24
0.23
0.15
0.13
0.08
0.06
0.02
0.469
Table 7 presents actual input use and outputs for the year 1956, within parenthesis we
presented slack in variables (in%) in that year. The table also presents for inefficient districts,
the benchmarks considered while measuring slacks and for efficient districts, number of times
acted as benchmark while estimating slacks for inefficient districts. In the year 1956,
Nizamabad, Kurnool, West Godavari and Visakhapatnam are efficient districts, with
Nizamabad acted 14 times as benchmark for other districts, while Visakhapatnam 12 times,
Kurnool 11 times and West Godavari 4 times. Overall slack in crop output is zero, while
146
livestock output is 12.5 per cent. This indicates that with the existing resources, livestock
output could have been increased by 12.5 per cent in the base year 1956 in Andhra Pradesh.
In case of inputs, highest slack is observed in rainfed area (35%), followed by fertiliser
(24.9%), livestock population (22.8%), labour (14.7%), mechanisation (14.2%) and least in
case of GIA (6.1%). This indicates that, without affecting the output, one could have reduced
the use of rainfed area by 35 per cent, fertiliser by 25 per cent, livestock population by 23
per cent, labour use by 15 per cent, farm machinery by 14 per cent and GIA by 6 per cent
in the base year. In case of rainfed area slacks are highest in Kadapa (74%) followed by
Nalgonda (64%), Anantapur (63%), Guntur (59%), Nellore (56%) and Adilabad (52%). In
case of fertiliser slacks are highest in Guntur (58%), Anantapur (58%) and Chittoor (62%),
which indicates overuse of fertilisers in Guntur, Anantapur and Chittoor in as early as 1956.
Slack in livestock population is higher in Kadapa (60%), Adilabad (57%), Khammam (44%),
Nalgonda (38%), Chittoor (38%) and Nellore (35%).
Table 8 presents slack variables in the model for the year 2007. In the year 2007,
Hyderabad, Adilabad, Chittoor, West Godavari, East Godavari and Visakhapatnam are
efficient districts, with East Godavari acted 12 times as benchmark for other districts, West
Godavari and Adilabad acted 8 times each, while Hyderabad 6 times, Visakhapatnam 5
times and Chittoor 3 times. Overall, slack in crop output is 1.4 per cent, while livestock
output is 10.2 per cent. This indicates that with the existing resources livestock output
could have been increased by 10.2 per cent and crop output could have been increased by
1.4 per cent in the year 2007. In case of inputs, highest slack is observed in livestock
population (23%), followed by farm machinery (23%), rainfed area (21%), labour (7.2%),
fertiliser (5.3%) and least in case of GIA (1.7%). Which indicates that without affecting
the output, one could have reduced the use of livestock population by 23 per cent, farm
machinery by 23 per cent, rainfed area by 21 per cent, labour by 7.2 per cent, fertiliser by
5.3 per cent and GIA by 1.7 per cent. In case of livestock population slacks are highest in
Karimnagar (61%), Warangal (60%), Nellore (58%), Srikakulam (55%), Nizamabad (50%)
and Nalgonda (51%). In case of farm machinery slack is highest in Khammam (57%),
Karimnagar (50%), Anantapur (48%), Nellore (48%), Kadapa (43%), Nalgonda (40%) and
Warangal (36%). In case of rainfed area the highest slack is in Anantapur (55%) followed
by Krishna (41%), Kurnool (40%), Nellore (35%) and Srikakulam (33%). The highest slack
in labour is reported in Guntur (24%) followed by Khammam (19%), Karimnagar (16.5%)
and Anantapur (14%). The highest slack in fertiliser use is recorded in Kurnool (24%)
followed by Nizamabad (16%), Guntur (11.5%) and Srikakulam (11.3%).
Table 9 presents region-wise factor shares and slack variables. Factor shares are much
higher for GIA and fertiliser in both Telangana and Rayalaseema, while in Coastal in
addition to irrigation and fertilisers, mechanisation and cropped area under rainfed are also
having higher factor shares in 1956. While in 2007, factor shares of irrigated area reduced
except Coastal, shares for fertiliser and cropped area under rainfed increased, while in
Rayalaseema factor shares for fertiliser and livestock increased at the cost of irrigated area.
147
A. AMARENDER REDDY
Table 7
Value of Inputs and Output (Slack in Variables as % of Actual in Parenthesis) in 1956
S.
No.
District
Bench
mark
districts/*
Labour
(1000)
Livestock
(1000)
Rainfed
GIA
Fertiliser
Area
(1000 ha) (1000 t)
(1000 ha)
Mechanisation
(tractors)
Crop
Value
(Rs.
crore)
Livestock
Value
(Rs.
crore)
Hyderabad
20, 11, 9
335
(16.9)
441
(24.7)
306
(0.0)
49
(0.0)
3
(15.1)
1133
(10.7)
75
(0.0)
53
(0.0)
Karimnagar
20, 11, 9
543
(0.0)
751
(22.2)
407
(27.5)
132
(0.0)
5
(37.5)
2267
(10.3)
178
(0.0)
96
(0.0)
Warangal
20, 11, 9
526
(10.7)
716
(26.0)
360
(0.0)
123
(0.0)
3
(19.1)
2469
(26.1)
170
(0.0)
38
(0.0)
Khammam
20, 11, 9
323
(25.9)
485
(44.3)
297
(37.0)
54
(0.0)
2
(0.0)
1247
(28.1)
187
(0.0)
88
(0.0)
Medak
20, 11
544
(18.2)
577
(19.2)
375
(49.0)
98
(0.0)
4
(26.5)
2020
(20.3)
141
(0.0)
177
(0.0)
Adilabad
20, 11, 9
359
(51.2)
511
(57.3)
487
(51.7)
29
(0.0)
2
(0.0)
1619
(60.5)
134
(0.0)
69
(0.0)
Nalgonda
20, 11, 9
570
(10.8)
862
(37.6)
666
(64.0)
121
(0.0)
3
(0.0)
3065
(38.6)
248
(0.0)
174
(0.0)
Mahbubnagar
20, 11, 9
497
(1.4)
799
(28.6)
918
(49.0)
103
(0.0)
3
(0.0)
2554
(28.5)
326
(0.0)
145
(0.0)
Nizamabad
(14)
395
420
176
127
1593
819
110
10 Chittoor
11, 9
727
(23.3)
952
(37.6)
263
(0.0)
177
(0.0)
5
(61.9)
2765
(18.9)
603
(0.0)
50
(118.2)
11 Kurnool
(11)
572
801
1179
63
2084
474
104
12 Kadapa
20, 9
472
(54.7)
569
(60.3)
346
(73.5)
119
(43.8)
1
(0.0)
1322
(35.5)
303
(0.0)
53
(0.0)
13 Anantapur
11, 9
608
(24.9)
730
(29.0)
991
(63.3)
126
(0.0)
6
(58.1)
1800
(0.0)
754
(0.0)
60
(85.8)
14 Nellore
20, 9, 18
639
(1.1)
1058
(35.4)
426
(56.0)
312
(17.0)
6
(0.0)
2292
(0.0)
249
(0.0)
71
(0.0)
15 Krishna
20, 18
573
(17.8)
712
(26.0)
131
(17.7)
337
(26.6)
11
(40.1)
1615
(0.0)
547
(0.0)
124
(0.0)
16 Guntur
20, 11, 9
896
(9.0)
852
(0.0)
789
(58.9)
213
(0.0)
10
(57.8)
3173
(2.9)
740
(0.0)
375
(0.0)
17 East Godavari
9, 18
711
(2.2)
757
(0.0)
251
(0.0)
289
(0.4)
6
(12.8)
2640
(0.0)
994
(0.0)
64
(179.9)
600
679
134
338
2045
1075
190
1013
(37.7)
819
(17.4)
260
(0.0)
226
(0.0)
6
(42.2)
2879
(13.6)
865
(0.0)
46
(242.0)
18 West Godavari
19 Srikakulam
20 Visakhapatnam
State
(4)
9, 18
(12)
740
751
206
170
2673
445
618
11643
(14.7)
14242
(22.8)
8968
(35.0)
3206
(6.1)
96
(24.9)
43255
(14.2)
9325
(0.0)
2705
(12.5)
Note: *for efficient districts number of times acted as benchmark are reported in parenthesis.
148
Table 8
Value of Inputs and Output (Slack in Variables as % of Actual in Parenthesis) in 2007
S.
No.
District
Benchmark
districts/*
Labour
(1000)
Livestock
Rainfed
GIA
Fertiliser
Population
Area
(1000 ha) (1000 t)
(1000) (1000 ha)
Mechanisation
(tractors)
Crop
Value
(Rs.
crore)
Livestock
Value
(Rs.
crore)
Hyderabad
(6)
589
530
196
76
100
3124
513
974
Karimnagar
17, 18
985
(16.5)
980
(61.3)
154
(0.0)
513
(18.3)
137
(0.0)
9124
(49.8)
2066
(0.0)
723
(109.3)
Warangal
17, 18
951
(13.4)
962
(60.2)
197
(0.0)
394
(0.0)
123
(1.9)
6613
(35.6)
2298
(0.0)
578
(140.0)
Khammam
6, 17
815
(18.8)
922
(46.3)
265
(0.0)
244
(0.0)
86
(2.4)
7126
(57.0)
2102
(0.0)
675
(20.7)
Medak
1, 20,
10, 18
853
(0.0)
763
(21.0)
321
(26.4)
200
(0.0)
60
(0.0)
5675
(0.0)
1285
(15.4)
967
(0.0)
Adilabad
(8)
613
868
445
89
64
2354
2071
339
Nalgonda
20, 10,
17, 18
968
(0.0)
1102
(51.3)
265
(15.8)
388
(0.0)
122
(0.0)
9417
(40.4)
1456
(0.0)
866
(0.0)
Mahbubnagar
1, 20, 6,
10, 17
1146
(0.0)
1249
(29.8)
542
(28.4)
257
(0.0)
88
(0.0)
6145
(0.0)
1413
(0.0)
794
(0.0)
Nizamabad
17, 18
646
(9.5)
548
(50.6)
129
(0.0)
286
(0.0)
107
(16.3)
3745
(17.2)
1099
(0.0)
397
(98.6)
10 Chittoor
(3)
1018
741
261
187
63
10640
1897
1111
11 Kurnool
1, 6, 17
1069
(14.4)
895
(0.0)
767
(40.2)
253
(0.0)
148
(23.8)
5349
(24.3)
2218
(0.0)
751
(0.0)
12 Kadapa
20, 6, 17
615
(0.0)
571
(0.0)
306
(6.1)
166
(6.9)
57
(0.0)
4479
(43.0)
1068
(0.0)
324
(29.0)
13 Anantapur
20, 6, 17
1063
(14.3)
945
(0.0)
1024
(54.9)
164
(0.0)
66
(0.0)
6809
(48.4)
1675
(0.0)
526
(8.3)
14 Nellore
1, 18
601
(0.0)
772
(58.1)
115
(35.4)
296
(0.0)
132
(7.0)
7170
(47.8)
983
(38.9)
1201
(0.0)
15 Krishna
1, 6, 17, 18
1002
(0.0)
592
(0.0)
298
(41.0)
440
(0.0)
209
(8.4)
7415
(19.8)
2572
(0.0)
2276
(0.0)
16 Guntur
1, 6, 17
2549
(23.6)
1408
(0.0)
778
(9.5)
662
(0.0)
301
(11.5)
10872
(13.6)
5056
(0.0)
2373
(0.0)
17 East Godavari
(12)
1087
508
287
503
148
5405
4465
2003
18 West Godavari
(8)
1082
489
79
628
230
6990
3581
3182
19 Srikakulam
6, 17, 18
500
(0.0)
786
(54.8)
257
(33.2)
203
(0.0)
81
(11.3)
3446
(27.6)
1236
(0.0)
573
(0.0)
20 Visakhapatnam
(5)
State
1511
1118
503
310
70
5837
2405
1497
19663
(7.2)
16749
(23.0)
7189
(20.8)
6259
9(1.7)
2392
(5.3)
127735
(22.9)
41461
(1.4)
22130
(10.2)
Note: *for efficient districts number of times acted as benchmark are reported in parenthesis.
149
A. AMARENDER REDDY
Output shares of crops are much higher in 1956 with 0.80 per cent in Rayalaseema, 0.66
per cent in Coastal and 0.58 per cent in Telangana, while the share is reduced in Coastal
to 0.43 per cent in 2007, while in Rayalaseema a slight decreased to 0.78 has been
reported, while in Telangana slight increase to 0.62 has been reported.
Table 9
Region-wise Factor Shares (Ratios) and Slack in Variables as % of Actual Input
and Outputs Estimated from DEA in 1956 and 2007
Region/year
Labour
Livestock
Population
Rainfed
Area
GIA
Fertiliser
Mechanisation
Crop
Value
Livestock
Value
Factor share
1956
Telangana
Coastal
Rayalaseema
2007
Telangana
Coastal
Rayalaseema
1956
Telangana
Coastal
Rayalaseema
2007
Telangana
Coastal
Rayalaseema
0.021
0.000
0.000
0.000
0.031
0.000
0.057
0.310
0.003
0.806
0.230
0.720
0.117
0.023
0.250
0.000
0.404
0.028
0.581
0.664
0.803
0.419
0.336
0.198
0.059
0.174
0.013
0.000
0.076
0.120
0.179
0.143
0.030
Slack as % of
0.524
0.363
0.340
actual
0.196
0.224
0.495
0.042
0.021
0.000
0.619
0.434
0.778
0.381
0.566
0.223
13.4
11.4
24.3
29.4
12.5
29.9
38.4
33.1
31.7
0.0
7.6
10.7
15.4
25.0
38.9
25.9
2.8
12.4
0.0
0.0
0.0
0.0
15.3
41.6
6.7
7.2
8.2
37.6
15.5
0.0
11.2
13.9
37.7
3.8
0.0
1.4
2.5
6.1
10.5
28.9
15.5
23.9
1.4
1.9
0.0
33.7
0.0
5.1
VI. Factors Influencing Technology and Efficiency

In addition to the DEA, to estimate robustness of efficiency estimates, we have used
frontier production function Battese and Coelli (1995) model. It also shed light on which
inputs have major contribution in district frontier production function (best practice
technology) and also to know the factors which influence the efficiency of districts as
explained in methodology section.
Table 10 presents the results of Battese and Coelli (1995) frontier production function
model results. Both dependent and independent variables are in logged form; hence it
assumes cobb-douglas production function and the coefficients represent elasticities of
respective independent variables. The dependent variable is logged value of agricultural
production, while independent variables are rainfed area (1000 ha), gross irrigated area
150
(1000 ha), labour (cultivators plus agricultural labourer in thousands), livestock (cattle
equivalents in thousands), fertiliser consumption (tonnes) and mechanisation (tractor
equivalent). Only GIA and labour variables are having positive elasticities, while all other
variables are having negative elasticities (which are in line with the findings of significant
slacks, except GIA and labour). Time variable is having significant positive coefficient,
indicating there is a positive technological progress. Among explanatory variables in
inefficiency effects, number of market yards, agricultural credit, and Rayalaseema regional
dummy are positively associated with efficiency (negatively associated with inefficiency); all
other variables are having negative association with efficiency. As in line with efficiency
estimates, Telangana region is having positive and significant association with inefficiency
(hence negative association with efficiency).
Table 10
Battese and Coelli (1995) Model Results for Period 1956-2007
Dependent variable: value of agricultural production (Rs. crore)
Constant
Log (agricultural labour (1000))
Log (livestock population (cattle equivalent 1000 nos.))
Log (rainfed area (1000 ha))
Log (gross irrigated area (1000 ha))
Log (fertiliser (tonnes))
Log (mechanisation (tractor equivalent))
Time (year)
Returns to scale
Inefficiency effects
Constant
Log (market yards (number of market yards)
Log (credit (Rs. crore)
Urbanisation (%)
Literacy (%)
Private investment to total investment (%)
Log (annual rainfall (mm)
Telangana region dummy
Rayalaseema region dummy
Sigma-Squared
Gamma
Log likelihood function =
LR test of the one-sided error =
Number of cross-sections = 20
Number of time periods = 52
Total number of observations = 1040
Note: * Indicates significant at 5% level of significance
Coefficient
t-ratio
Mean
4.115*
1.442*
-0.949*
-0.164*
0.143*
-0.062*
-0.016
0.023*
0.417
16.0
32.6
-19.3
-7.4
4.0
-3.3
-0.5
18.2
1551.6
782.6
787.6
409.8
229.4
47.6
3967.6
26.5
0.964
-0.052*
-0.222*
0.002*
0.004
0.011*
0.050
0.124*
-0.274*
0.088
0.838
1.7
-2.0
-11.8
3.4
1.7
8.9
0.6
2.0
-3.6
13.5
23.1
46.2
408.4
65.7
1750.8
24.1
33.1
30.9
922.8
0.5
0.2
151
A. AMARENDER REDDY
VII. Base Year Effect on Subsequent Agricultural Growth

Table 11 presents the results of growth in per capita income (PCI) from agriculture and
allied activities as dependent variable and value of various other variables in base year
(1956) as explanatory variables. Labour and per capita income from agriculture in initial
year is having negative and significant influence on growth in per capita income, while
urbanisation in initial year is having negative but insignificant association. The fertiliser
consumption, irrigated land, and literacy rate in the base year are having positive influence
on growth in PCI from agriculture and allied activities at district level. Hence one can
conclude that, resource endowment (both physical and human) in initial years is having
positive influence on subsequent growth in per capita income.
Table 11
Effect of Base Year Resource Endowment on Subsequent Growth
of PCI from Agriculture During 1956-2007
Dependent variable: per cent growth (1956-2007)
in per capita income from agriculture
Constant
9.236 (0.9)
Base year PCI from agriculture
-1.386* (-4.0)
Base year agricultural labour (1000)
-1.654* (-2.1)
Base year GIA (1000 ha)

Base year fertiliser (1000 tonnes) use
Base year Literacy (%)
Base year Urbanisation (%)
Annual rainfall (mm)
R2
0.455 (1.3)
0.868* (2.7)
0.189 (0.6)
-0.608 (-1.4)
1.84 (1.7)
0.74
Note: Figures in parenthesis are t-values; all values of base year variables are in logged form except, variables measured in per cent.
* Indicates significant at 5% level of significance
VIII. Conclusion
The paper examines productivity growth since formation of united Andhra Pradesh in
1956 at district level by using Malmquist productivity indices. Overall, TFP growth in
agriculture and allied activities in Telangana is about 1.3 per cent per annum, the same are
1.1 per cent per annum in Coastal, while TFP growth in Rayalaseema is stagnant. It
indicates that, there is a convergence in TFP growth among districts of developed Coastal
and less developed Telangana regions, but districts in Rayalaseema region are left out of
this growth process, as Rayalaseema region is not able to catch up with other two regions
in agricultural productivity. Another important finding is that irrespective of region most
backward districts in agriculture, that is Srikakulam, Visakhapatnam, Anantapur, Kadapa,
Adilabad, Nalgonda, Mahbubnagar and Nizamabad showed stagnation in TFP growth during
152
last 50 years. With the existing resource endowment and technology, Telangana can increase
its output by more than 28 per cent from the existing level, while Rayalaseema region can
enhance its output by 25 per cent, Coastal region by only 14 per cent as revealed from
efficiency estimates. Shadow input shares indicate that, still gross irrigated area, fertiliser
use and availability of labour are three important inputs, which limits the district
production frontier. Inefficiency effects model (Battese and Coelli, 1995) reveals that,
market infrastructure and credit availability are two important variables in increasing
efficiency. Study results also emphasis importance of resource endowment (physical and
human) in base year for subsequent growth.
References
Battese, G.E. and T.J. Coelli (1995). A Model for Technical Inefficiency Effects in a Stochastic Frontier Production
Function for Panel Data, Empirical Economics 20: 325-32.
Chaudhuri, S. and N. Gupta (2009). Levels of Living and Poverty Patterns: A District-Wise Analysis for India, Economic
and Political Weekly XLIV(9): 94-110.
Coelli, T.J. and D.S.P. Rao (2003). Total Factor Productivity Growth in Agriculture: A Malmquist Index Analysis of 93
Countries, 1980-2000, Working Paper Series No. 02/2003. Centre for Efficiency and Productivity Analysis.
Fare, R., S. Grosskopf, M. Norris and Z. Zhang (1994). Productivity Growth, Technical Progress and Efficiency Changes
in Industrialized Countries, American Economic Review 84: 66-83.
Kumar P., M. Surabhi and M. Hossain (2008). Agricultural Growth Accounting and Total Factor Productivity in South
Asia: A Review and Policy Implications, Agricultural Economics Research Review 21: 145-72.
Reddy, A.A. and P. Kumar (2006). Occupational Structure of Workers in Rural Andhra Pradesh, Journal of Indian School
of Political Economy: 180-95 January-July.
Appendix
Table A1
Region-wise Value of Explanatory Variables for Technical Inefficiency
in the Model (B&C 1995) in 1956 and 2007
Region
Year
Markets
(nos.)
Credit
(Rs. crore)
Urbanisation
(%)
Literacy
(%)
Private
Investment(%)
Rain
(mm)
Telangana
2007
619
48447
25.2
46.0
71.7
1084.6
1956
369
505
14.3
6.3
9.4
804.5
2007
728
48701
34.5
53.9
22.6
1293.0
Coastal
Rayalaseema
1956
420
1042
16.4
10.7
2.3
814.5
2007
379
13408
24.9
51.1
68.6
716.6
1956
125
277
14.2
9.8
28.9
682.0

Disparities in Agricultural Productivity Growth in Andhra Pradesh

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Volume 58

April - June, 2010

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