AP Report 2019-final

An Assessment of Loss in Economic Capacity Due to Bifurcation
Basically, the methodology consists of
assessing the investment requirements to
accelerate its growth so that the gap between
Per Capita GSDP of Andhra Pradesh and
Telangana is bridged in ten years. The extent
to which assessed investments exceed the
internally generated savings in the State would
reflect the loss to Andhra Pradesh due to the
bifurcation.
The assessment is made using the following
assumptions.
1. The net Capital Output Ratio (COR) is
3.5.
Firm estimates of COR are not available
at state level. But the estimates of EPW
foundation (2012) are close to this. Also
this is consistent with the current saving
rate (30%) and the recent growth
experience of the State.
2. Total Factor Productivity (TFP) growth of
1% per annum. State wise estimates are
not available.
3. Saving rate is 30%. This is consistent
with the input-output matrix prepared for
Residual Andhra Pradesh (2011-12).
4. Any public investments, especially in
crucial infrastructure would have a
crowding-in effect and would bring equal
investments from private sector
Macro Aggregates
In 2017-18, the Per Capita Income (PCI) of
Andhra Pradesh at current prices was
Rs. 1.57 lakhs, Rs. 36,000 lower than that of
Telangana . The average growth rate of
PCGSDP for Andhra Pradesh (AP) and
Telangana State (TS) observed during 2014-
18 were 10.3% per annum and 8.6% per
annum respectively (Table B). Although, the
growth rate of Andhra Pradesh is higher than
that of Telangana , it would take about 14 years
for Andhra Pradesh to achieve parity with
Telangana . If Andhra Pradesh’s PCGSDP
were to reach that of Telangana in ten years it
has to accelerate its growth rate to 10.86%
Table B
Macro Indicators of Andhra Pradesh and Telangana State
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