Reproduced from CMIE ( Centre for Monitoring Indian Economy):
Andhra Pradesh at the time of its bifurcation lost the two most industrialised districts to the Telangana state – Hyderabad and Rangareddi. This made acceleration in investment activity an imperative for economic growth in the state.
- In the last two years, Andhra Pradesh has seen a spur in its investment activity. The state has posted a strong growth in new investments announced and project completions for the second successive year in 2015-16.
- Investment completion more than doubled from the previous year to Rs. 196.5 billion in 2014-15. In 2015-16, investment projects worth Rs. 440.4 billion were completed. This is the highest investment completion seen in the last five years.
- It is also the second highest investment completion in the entire investment cycle captured since 1995-96.
- New investment announcements also saw a considerable increase during 2014-16. New investment proposals rose significantly to Rs. 713.2 billion in 2014-15. In the subsequent year, a total of 166 new projects worth Rs. 918.5 billion were announced.
- The share of the state in India’s new investments announced rose to over nine per cent from an average of 2-6 per cent seen in the last five years. The investors meet held in the state during January 2016 played a significant role in contributing to this rise in new investments.
This rise comes over a period of sluggish investment activity during 2012-2014. The divided state of Andhra Pradesh had seen a peak in investment activity during 2008-09 to 2011-12. Investment completion and announcement of new projects tanked in the subsequent two years. Investment announcements during this period fell by nearly 80 per cent to 229.4 billion in 2012-13. It grew only marginally by 25.7 per cent in 2013-14. Similarly, investment completion dipped by 55 per cent to 65.9 billion in 2012-13.
This slowdown in investment activity coincides with the period where protests for a separate Telangana state had intensified and was subsequently announced as the 36th ( states+ UTs) state of India. The investment climate in both Andhra Pradesh and Telangana had taken a toll as a result of this.
After the bifurcation, Andhra Pradesh has seen announcement of various policy incentives such as single desk clearance mechanism, reimbursement on value added tax (VAT)/ central sales tax (CST), capital subsidies and energy subsidies, among others, to support the growth of investment flows in the state. It has also succeeded in implementing policy reforms to become the second most business-friendly state in India, according to the World Banks Ease of doing business report released in 2015.