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Impressive Industrial growth in Bangaru Telangana
Highlights
The dreams of people of Telangana to live in a state of their own and to develop it in accordance with their hopes and aspirations came to a reality on the historic day of 2nd June 2014, with the formation of the 29thState of the Indian Republic.
The dreams of people of Telangana to live in a state of their own and to develop it in accordance with their hopes and aspirations came to a reality on the historic day of 2nd June 2014, with the formation of the 29thState of the Indian Republic.
This tryst with destiny is just the beginning and a lot of fundamental rethinking and effort is needed to carve out an enduring future for all. The Vision of the State has to reflect the native wisdom of the people to harness the local resources optimally and in the fastest manner possible. States play a major role in boosting India’s growth. This increase in the level of growth can be attributed to a number of factors like exports, investments, development of skilled labour force, inflation, institutional quality etc.
Considering the recent emphasis by the Central Government on state level promotion of exports, it becomes important for each state to develop a strategy in its major product groups. The reason for emphasis on involvement of states for promotion of exports is the desire for all-inclusive growth in exports in the country.
The Government of Telangana is of the firm view that industrialization holds the key for higher and sustainable growth leading to growth of exports.
The Government of Telangana has recently unveiled an investor friendly industrial policy, which is receiving applauds from the Industrial community and being treated as the best policy in the Country.
Each state in the country possesses a production and trade advantage in a particular product. For example, Uttar Pradesh has an advantage in Handicrafts, Leather articles, Brassware etc; Rajasthan exports Gems &Jewellery; Karnataka manufactures products of minerals, electronic items and chemicals.
Thus, there arises a need to assess state specific products for which the state should take steps for enhancing exports. The newly formed state of Telangana has a big task of making its mark in the field of exports. It is a state enriched with huge potential of Industries & Natural Resources which can be a catalyst in promoting exports from it.
The state has large amounts of land available as well as clusters which cater to the production of auto components and spare part s as well as textiles. Telangana region has rich natural resources.
Telangana region is having large amount of forest area and 20 per cent of the country's coal deposits in the country. Telangana is also rich in limestone deposits that cater to cement factories. Telangana has other mineral resources like Granite, bauxite and mica. Telangana has a significant amount of Software exports in India.
While majority of the Industry is concentrated over Hyderabad, the other cities are also becoming significant IT destinations in the state. Hyderabad's IT exports exceeded $7 billion in 2014.There have been extensive investments in digital infrastructure.
Under this economic scenario, the State of Telangana would now have to examine its economic strategies and policies to become vibrant state in the globally competitive scenario.
The framework for the new Telangana Government is to enable its export strategies. International economic theories and global experience point to various strategies such as focusing on resource endowed with, focusing on lime light industry, etc., and clearly point out the importance of foreign trade welfare maximization can be achieved through.
In the modern economic order all economies all interlocked and effect of one economy is felt over others as well. This calls for a strategy that also insulates the economy from such negative effects. Export Strategy cannot be viewed in isolation but is embodied in various strategies and policies of the government such as Industrial Policy, Monetary Policy, infrastructure development, Human Resources Development and various other policies.
Any exports strategy has to effectively reduce import dependency while encouraging healthy domestic manufacturing. It is not export enhancement as such that results in positive foreign exchange flows but surplus of exports over imports. It is therefore, that we understand Exports Strategy synonymously with foreign trade policy. Often it is the experience of the regulators that in the second and third stages of development of an export oriented economy, while exports seemingly decline, foreign inflows increase. This is due to investments of domestic entrepreneurs in foreign business establishments which initially results in financial outflows and is followed by subsequent reverse flows of foreign currency in the form of profit repatriation.
Similarly, services which comprise the largest portion of the economic activity, such as tourism and hospitality industry, healthcare services, trade, etc., have also an important role in creating an outward looking vibrant global economy. These efforts have to be dovetailed with availability of investment. Therefore, any policy has to view not only merchandise exports but enhancement of Foreign Direct Investment, investment in foreign countries. While, Union Government endeavours in the effort of monetary policy, foreign trade policy, industrial policy, labour policies, etc. states have an equal responsibility as it directly affects the welfare of their population.
While a sound public export strategy has to be founded on these experiences, a detailed study on these lines has been attempted in this document.
A detailed study of present export achievements, export infrastructure, existing policies, sector performance, opportunities and developmental priorities has also been duly carried in the beginning of this document. Further, strategies that are based on a sound blue print usually have high success rate. There are various models such as cluster development, establishing industrial corridors, de-bottle-necking, reduction of cost of transactions, etc. These have also been examined in this document. It must be remembered that while exports ultimately depend on the performance of each and every individual enterprise, the role of the state has repeatedly proven to be path setter and critical in the larger play of things.
A favourable environment for flourishing industrial growth would ultimately depend on:
• Availability of Land ,Water
• Continuous, quality Power at competitive prices
• Skilled &Semi-Skilled human resources
• Regulatory facilitation
• Availability of raw-materials
• Easy environmental clearances
• Sound Infrastructure
• Banking services at competitive interest rates
• An environment that supports growth of potential sectors.
These are the issues this strategy tries to address This strategy paper begins by spelling out indicative Vision and Mission for promoting the states’ exports; it also elaborately discusses the direction for policy thrust and specific steps for incentivizing exports. After due discussions with stake holders, study of all related and relevant strategies & polices having bearing on exports, several initiatives have been suggested along with their budgetary requirements. Similarly, a cross departmental co-ordination effort has also been made to dovetail this strategy with other government strategies and policies. Focus has been given to the projects envisaged in industrial policy framework of Telangana State as thrust and core sectors.
Growth of Industrial Sector
The growth of industrial sector in Telangana has been impressive. During the year 2014-15(Advanced Es¬timate), the growth of industries surged to 4.1 percent from 0.13 percent of 2013-14 at constant (2004-05) prices due to the incentives being offered under the new Government’s Industrial Policy Framework, 2014.
During the decade 2004-05 to 2014-15 the State registered an average growth rate 7.8 % at constant prices (2004-05). However, the growth path of the State exhibited greater fluctuations than that of all India. Man¬ufacturing sector growth across districts indicates that seven districts other than Medak, Rangareddy and Hyderabad require specific strategies and policy interventions. The growth in sub-sectors indicates a fall in the unregistered manufacturing sector represented by the micro and small enterprises, electricity, gas & water supply, and construction. The share of industry sub sector in the Gross State Domestic Product (GSDP) is presented below.
Sectoral composition of Telangana State
1. Service Sector 59%. (Green Color)
2. Industrial Sector 27.1%( Red Color)
3. Agricultural Sector 13.9% (Blue color)
Telangana is home to large industries in IT/ITES, pharma, engineering goods and defence, most of them are located in the capital city of Hyderabad. The State also has good road network connecting Hyderabad to other cities in Telangana, and other states such as Andhra Pradesh, Maharashtra and Karnataka.
Its geographical location and matured infrastructure, its climate and cosmopolitanism rendered faster growth, particularly during the last two decades. The pre-reform period witnessed huge public sector investments from the Government of India that acted as sheet anchor for industrial growth. Defence and Industries like MIDHANI, BHEL,HMT, HAL, IDPL, HCL, ECIL, BDL, Ordnance Factory; over 50 central government training and educational establishments that included NGRI, IICT, CCMB, Central University, NALSAR, NPA, NIRD etc., and global institutions like ISB, ICRISAT have also enabled it to grow as knowledge hub and a strategic capital city of consequence for the nation as a whole.
Such investments have put low financial burden on the State. The Annual Survey of Industries provides Industrial statistical information to assess and evaluate the changes in the growth, composition and structure of organized manufacturing sector comprising activities related to manufacturing processes, repair services, gas and water supply and cold storage. It is conducted once in a year to collect the data from the Organized Manufacturing units registered under the section 2 m(i) & 2m(ii) of the Factories Act 1948 and also regular collection of industrial production on monthly basis for calculation of IIP.
Highlights of ASI 2011-12 Results
• The number of factories increased to 9005 in 2011-12 from 8980 during 2010-11.
• These 9005 factories generated employment to 7.00 lakh persons during 2011-12.
• The Telangana State is one among the major Industrial States in the country and ranked 8th place interms of GVA(Gross Value Added) i.e. Rs. 36,475.65crores
• The Industrial growth from 2010-11 to 2011-12 in terms of Gross Value Added is 17.53% and NetValue Added is 16.76% The concentration of the Industrial sector is more in Medak, Ranga Reddy and Hyderabad together accounting for more than half of the income from this sector. These districts contribute about 75% of the output from organized manufacturing sector and about 44% of the construction output.
G.Rajendra Kumar
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