Institute of Management, Nirma University

MBA(FT) 2016-18
Macro Economics Management
Group Assignment Phase 1

SUMMARY: Research papers based on GSDP and

employment of Andhrapradesh

Submitted To: Prof. Nirmal Soni

Submitted by:
Group no:1
Bhavesh Khosla (161417)
Kaustuv Vatsyayan ( 161426)
Sainath G Reddy (161449)
Vinod Sreedhar S (161467)

Vinod Sreedhar S (161467)

Title: Structure and Growth of Industry
Authors: P Venkataramaiah and L.G Burange

During the process of economic progress of a nation, the percentage contribution of the
sectors varies in a pattern. In the initial phase of growth, the majority of contribution is from
the agriculture sector and it is gradually taken over by the industrial sector. The contribution
of service sector leads in contribution when the nation attains a fully developed status. There
is significant contribution of industrial sector in controlling the demand and supply of the
economy. It also plays a vital role in increasing the productivity of labour and widening the
production base of the nation.
The paper discusses the role of industry has played in context to the state of Andhra
Pradesh(AP) through analysis of pre and post liberalisation period. The factors like
employment rate, value of output, wage rate are studied in contrast with the national
statistics. The authors have projected the current values to the targets set as per the vision
2020 set by the state government in 1995.
The share of industries in AP can broadly be classified into mining and quarrying,
manufacturing, electricity, gas, water supply and construction. The following table gives the
contribution of industry to state gross domestic product (SDP) from 1960s till the
liberalisation era
Year
1960-61
1970-71
1980-81
1990-91
1995-96

% share of industry in SDP

12
14.8
17.6
19.4
18.5

90s. The performance of the industrial sector at the national level is far superior to that of
Andhra Pradesh. Its share at the national level was higher than at the state level. From 19.5
per cent in 1960-61, its share rose to 28 per cent in 1990-91. The capability of industrial
sector to produce employment was low. This can be seen from the fact that the industrial
contribution in SDP increased significantly from 1970 to 1990, the share of total workers
from this sector remained stagnant at 11 percent during this period.

In order to achieve the targets, set by vision 2020, the investment of Rs 11,65,000 over a
period of 25 years. The capital output ratio works out to 6.85 and the sector is expected to
absorb eight million workers by 2020 from a low base of 3.5 million workers in 1995. The
elasticity of employment with respect to value added in industry comes to 0.25. The three
parameters, viz, capital output ratio, employment elasticity and share in GSDP envisaged in
the vision are eminently reasonable. But the required annual growth rates of income as well
as employment are unbelievably high when compared with the past performance. It calls for
the need of external investment and hence the state needs to project itself as investment
friendly.
Employment in the registered manufacturing sector in Andhra Pradesh grew at a rate of 4.8
per cent per annum in the post liberalisation period as compared to a growth rate of 2.31 per
cent in the pre liberalisation period. It is the agro-based industries which contributed to this
rise. While the employment growth rate in the non-agro industries was more or less same
(around 4.7 per cent) in both the periods, the growth rate in employment in agro- based
industries shot up to 4.85 per cent in the post liberalisation period from 1.38 per cent in the
1980s. This also includes the shift from unorganised industries to registered so the real
growth rate is lesser than this.
After initial spurge of industrial growth post liberalisation, the industrial growth has satiated.
. Manufacturing segment of the economy is now being called 'old economy' as if it has no
future as against the IT sector which is called the new economy. Since the IT sector is export
oriented, it is not sustainable in long term if no domestic demand is generated for the same.
So the growth of industrial sector is an important driving force for the economy and hence it
has to be nurtured by providing necessary infrastructural facilities.

Bibliography
P VENKATARAMAIAH, L. G. (2003). Structure and Growth of Industry. Economic
and Political Weekly, 1212-1218.