Financial Daily from THE HINDU group of publications
Friday, Apr 09, 2004

Cross Currency

Group Sites

Opinion - Economy

First and last in the South

Mohan Guruswamy

A comparison of the development pursued by the four southern States.

THE four southern States — Andhra Pradesh, Karnataka, Kerala and Tamil Nadu — after languishing behind the North and the West in economic growth in the 1980s surged ahead in the 1990s by posting a growth rate of 6 per cent, ahead of the national GDP growth of 5.6 per cent.

While this higher GDP growth has given the South an aura of progress and good governance, it masks much diversity in performance. The (Centre for Policy Alternatives) CPAs undertook a detailed study of the progress made in the four South Indian States and analysed data using several parameters to measure economic and social development. The results were quite surprising. Contrary to general perception, Andhra Pradesh (AP) fared poorly and came out the laggard in the South. Quite clearly Tamil Nadu has been the overall big performer, despite Kerala keeping its traditional lead in terms of human development.

Tamil Nadu has kept ahead of the national GDP growth rates for the Eight, Ninth and Tenth Plan periods. Andhra Pradesh's performance is also below the all India average.

Tamil Nadu's per capita GDP of Rs 14,592.90 is well ahead of AP's Rs 11,293.40, which is also behind the all India per capita of Rs 11,625.20. It would seem that this gap has only widened during the Ninth Plan period (1997-2002) when AP went well behind the other southern States with an economic growth of just 4.6 per cent, at a time when India's GDP grew at 5.50 per cent.

The decline in the incidence of poverty truly reveals the poverty of results in AP. In 1983, the incidence of poverty in AP was the lowest in the South at 28.9 per cent. However, in 2001, AP (15.8 per cent) lost its position to Kerala (12.7 per cent).

But what should cause even more concern is the rate of change. AP's incidence of poverty changed by 13.1 per cent, while that of Tamil Nadu dropped by 30.6 per cent from 51.7 per cent to 21.1 per cent. Kerala changed from 40.4 per cent to 12.7 per cent while Karnataka improved from 38.2 per cent to 20.0 per cent.

It is in terms of absolute numbers that the figures are more telling. The number of poor in Tamil Nadu shrank from 260.1 lakhs in 1983 to 130 lakhs in 2001, while in AP it dropped from 164.6 lakhs in 1983 to 119 lakhs in 2001. Thus, while 130 lakh people moved above the poverty line between 1983 to 2001 in Tamil Nadu the corresponding figure in AP was just 45.6 lakhs.

Even in terms of change in yield of foodgrains AP billed as the granary of the South has not done as well as the other States during the last decade. Tamil Nadu's yield of 2,461 kg/hectare was the highest with Kerala and AP following with 2,094 kg/hectare and 2,089 kg/hectare respectively. Karnataka with a yield of just 1,412 kg/hectare was the lowest, but the improvement of 55.2 per cent between 1990-2000 was the highest while the corresponding change for AP and Tamil Nadu was about 30 per cent each.

AP's record on the industrial front seems just as poor. Of the four southern States AP registers the lowest gross industrial output of just Rs 7,707. Not only is this lower than the All-India average (Rs 8,965) it is less than half the figure recorded by the southern leader, Tamil Nadu (Rs 15,523.0). Even in terms of value addition AP (Rs 1,128.0) trails the rest. Though AP is only marginally behind Kerala (Rs 1,162.0) it is well behind Karnataka (Rs 1,668) and Tamil Nadu (Rs 2,517). However, AP (12.1 per cent) has done well till 1998 in terms of annual growth in factory employment leading the South.

Second placed Tamil Nadu is way behind at 6.1 per cent. While Kerala registered a growth of 3.6 per cent Karnataka witnessed a negative growth of 2.0 per cent. The corresponding all India figure was just 2.3 per cent

But development is not just about economic growth. AP's performance in the critical areas generally accepted as the basic criteria to measure development has been patchy at best. The increase in literacy between 1991-2001 has been an impressive 38.5 per cent, well over the 23.5 per cent achieved during 1981-91. Still AP's literacy level is only 61.1 per cent, below the all India level of 65.4 per cent. But it would not be correct to judge AP's performance as better than the other three southern States for they started with higher levels and that influences the rate of growth.

Kerala, for instance, had a literacy level of 81.6 per cent in 1981 and that went up to 90.9 per cent in 2001. Literacy in Tamil Nadu grew from 54.4 per cent in 1981 to 73.5 per cent in 2001. Karnataka has been the real poor performer here with change from 46.2 per cent in 1981 to 67.0 per cent in 2001. Thus, we see that AP, which was a good 10.5 per cent behind Karnataka in 1981, has closed the gap down to 5.9 per cent in 2001. Here is the other big southern irony, for Karnataka is often held up as the other big performer in the South. In terms of population growth too Karnataka has fared poorly by registering the highest decennial growth of 17.3 per cent. AP grew at 13.9 per cent while Tamil Nadu (11.2 per cent) and Kerala (9.4 per cent) were well ahead. All the southern States were well below the All India population growth of 21.3 per cent during 1991-2001.

But when it comes to Infant Mortality Rates (IMR) AP's performance is miserable. While the All India IMR dropped from 104/1000 to 66/1000 between 1981-2001, AP's IMR dropped from 86/1000 to 66/1000. Kerala, by contrast, achieved an IMR of just 11/1000 taking it close to developed country levels. Karnataka (58/1000) and Tamil Nadu (49/1000) too have fared much better than AP.

Life expectancy at birth is another determinant of development. Here also AP falls behind the other southern States. The performance of Tamil Nadu on this count has been the best with additions of 3.8 per cent and 4.3 per cent for males and females, respectively, while the corresponding increases for AP have been 1.2 per cent and 1.1 per cent, respectively. AP that had a better life expectancy for men than the all India average (60.8 to 60.1) fell behind the national average for 1996-2001 of 62.4 years by achieving 61.5 years. In the case of women the all India average increased from 61.4 years to 63.4 years from 1991-2001 while that of AP increased slightly from 63 years to 63.7 for the same period. The national rise in the life expectancy for women at 3.3per cent was three times the AP increase of 1.1 per cent.

While AP's performance on various socio-economic indicators has been less than exemplary, AP has benefited disproportionately in terms of central assistance. Of the four States AP received the highest (Rs 1,292.8) cumulative per capita grants from the Centre for the period 2000-01 to 2002-03. While Karnataka (Rs 1,127.2) was a close second, Kerala (Rs 793.6) and Tamil Nadu (Rs 777.9) were way behind.

Even in terms of cumulative per capita net loans from the Centre for the period 2000-01 to 2002-03, AP (Rs 911.5) benefited more than the other southern States.

While Karnataka (Rs 755.7) still received somewhat comparable amounts from the Centre, the per capita amounts received by Kerala (Rs 332.8) and Tamil Nadu (Rs 264.8) were abysmally low when compared with AP. While the Centre has little to do with devolution of central taxes as the Finance Commission determines it, AP has done well on this count as well. While Kerala (Rs 1,760.4) received the highest share of per capita central taxes during 2000-01 to 2002-03 AP (Rs 1,664.3) came a close second.

Due to the high assistance provided by the Central Government, AP and Karnataka were able to expend larger sums of money on development. While Karnataka (Rs 8,195.9) spent the most per capita between 2000-01 and 2002-03 on development, AP was next with Rs 7,982.9. While Tamil Nadu (Rs 7,561.4) and Kerala (Rs 7,377.6) were behind AP, they too were well ahead of the all India average of Rs 6,748.5.

Despite this AP's spending on some of the key development indicators is not very impressive. AP's spending on education for 2000-01 was the lowest (Rs 493.9) among the four States.

The All-India average (Rs 586.8) for the corresponding period was also much higher. Kerala was the highest spender (Rs 827.8) in the South. AP's (Rs 140.1) spending on Medical and Public Health was only better than Karnataka (Rs 64.2) and was below the all India figure (Rs 157.2). On the other hand, Tamil Nadu (Rs 160.8) and Kerala (Rs 187.8) spent much higher sums of money

Though the Centre has been more than generous in doling out funds to AP, it is quite evident that the State is in fiscal distress. After Kerala (20.8 per cent) AP (18.5 per cent) had the second highest average interest payments as a proportion of revenue receipts for the period 1996-97 to 2000-01.

Karnataka (14.9 per cent) and Tamil Nadu (14.7 per cent) registered much lower ratios over the corresponding period. If AP continues to expend ever-higher amounts on interest payments its ability to spend on development would be severely curtailed and its overall performance is only likely to slip further.

Finally, in order to see AP's overall performance relative to the other southern States a simple ranking table was constructed based on the various socio-economic indicators considered in the study. Based on the average of the rankings for the various parameters Tamil Nadu comes first in the South. Andhra Pradesh has clearly been the southern laggard.

(The author is with the Centre for Policy Alternatives, New Delhi. For a copy of the full report write to Centre for Policy Alternatives at

More Stories on : Economy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Tenuous action

First and last in the South
Correct the federal fiscal imbalance
India's health needs a dose of funds, reforms
L'affaire Malik
Big transition travails for small units
Water level
ASK Raymond James clarifies

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line