




































In ternationa l
Scholars
Journa ls

 

African Journal of Agricultural Marketing ISSN 2375-1061 Vol. 6 (12), pp. 001-017, December, 2018. Available online 
at www.internationalscholarsjournals.org © International Scholars Journals 

 

Author(s)                                           Author(s) retain the copyright of this article. 
 
 

 

Full Length Research Paper 

 

Dynamics of the agricultural economy of Andhra 
Pradesh, India since the last five decades 

 
A. Amarender Reddy 

 
International Crops Research Institute for the Semi-Arid Tropics (ICRIS AT), Hyderabad, India. 

E-mail: a.amarenderreddy@cgiar.org. 
 

Accepted 22 July, 208 
 
Andhra Pradesh is one of the largest state in India, with agriculture as a major source of income for about 60% of its 
population. In the last 50 years, the annual growth rate of agriculture has been 2.88%, which is far below the target 
growth of 4% per annum. Further, Andhra Pradesh is divided into three district regions with growing demand for 
separate state from less developed regions. The paper examined regional disparities in agriculture in Andhra 
Pradesh since its formation in 1956. The study illustrates that there is a convergence among districts in agricultural 
growth, but least developed districts are left out of this convergence process. Both agricultural intensification and 
diversification strategies played important role in development of districts based on their resource endowment. 
Livestock based agricultural growth is evident in districts adjacent to large urban centres since the last two decades. 
Overall, TFP growth in agriculture and allied activities in Telangana is 13% per decade, 11% per decade in Coastal, 
while in Rayalaseema TFP growth has been stagnant from 1956 to 2009. Irrespective of region, the most backward 
districts in agriculture, that is Srikakulam, Visakhapatnam, Anantapur, Kadapa, Adilabad, Nalgonda, Mahbubnagar 
and Nizamabad showed stagnation in TFP growth during the last 50 years. With the existing resource endowment 
and technology, Telangana can increase its output by 28% from the existing level, while Rayalaseema region can 
enhance its output by 25%, Coastal region by only 14% as revealed from efficiency estimates. 

 

Key words: Agriculture, regional disparities, Andhra Pradesh, India. 

 
INTRODUCTION 

 
Andhra Pradesh is ranked the 4th largest in India in terms 
of area, its projected population of 8.4 crores as at 2010, 
makes it the 5th most populous State. The total 
geographical area of Andhra Pradesh is 275.04 lakh ha. 
out of which 39.8% is under the net area sown (109.58 
lakh ha) with cropping intensity of 1.26. Average annual 
rainfall in the state is 940 mm. About 72% of the 
population lives in rural areas. Even though about 62.2% 
of workers are dependent on agriculture (out of which 
22.5% are cultivators and the remaining 9.6% are 
agricultural labourers), its share in GSDP decreased from 
about 40% in 1980 to about 17% in 2009. The 
unweighted average poverty ratios and monthly per 
capita expenditure (MPCE) for the year 2004 to 20005 
calculated from NSSO 61st Round as reported 
(Chaudhuri and Gupta, 2009) indicates that the percent of 
poor is quite low (7.6%) in the Coastal region when 
compared to both Telangana (12.1%) and Rayalaseema 

 
 
 

 
(16.5%) regions. This paper presents regional disparities 
in agricultural development of Andhra Pradesh state 
since 1956, the year of Andhra Pradesh formation, 
keeping the current debate of separate state of 
Telangana as the main argument. It is widely recognised 
that the direct and indirect effects of the agricultural 
growth that accounts for most of the poverty decline in 
developing country like India. Datt and Ravallion (1996) 
show that poverty measures respond to rural/agricultural 
economic growth than to urban economic growth.  

Hence, agricultural growth is crucial to reduce poverty 
levels. However, some studies concern over the 
technological progress in less developed regions. For 
example, Fulginiti and Perrin (1997) studied 18 less 
developed countries and found that 14 of these countries 
showed a decline in agricultural productivity over the 
period 1961 to 1985. Such results indicate a divergence 
in agricultural productivity, in contrast to the trends in 

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manufacturing sector, which show signs of convergence 
(Barro and Sala-i-Martin, 1991). Keeping this in view, this 
paper examines the pattern of the agricultural sector 
growth across regions and districts in Andhra Pradesh. 
There are some studies on regional disparities in Andhra 
Pradesh, but only few (Reddy and Kumar, 2006; Reddy, 
2010) examined with detailed data, from a regional 
perspective. In this paper, we have also examined 
whether agricultural growth shows convergence or 
divergence over the last 50 years among the districts? 
What is the pattern of change among different sub-
sectors of agricultural outputs and inputs? Historically, 
high yielding technology and agricultural intensification is 
suitable for increased agricultural growth in favourable 
regions (like Coastal), whether, the same is also 
applicable for less developed regions (like Rayalaseema 
and Telangana) where rainfed agriculture dominates or a 
new strategy is required is still not clear.  

What are the missing links in high and low potential 
areas that are critical to their growth for different types of 
growth patterns? What is the role of livestock in 
agricultural transformation in different areas, and how is 
this affected by urbanization? What are the necessary 
conditions for diversification to high-value crops to take 
off under different agro-economic conditions? Andhra 
Pradesh is having three historical regions, namely 
Coastal, Rayalaseema and Telangana. The data has 
been analysed by using ratio methods and Gini 
concentration ratio, disparity index and TFP growth rates, 
which are unit free and popular methods to study regional 
disparities over a long period of time. The main argument 
is to follow changes in human capital, changes in 
structure of agricultural and allied sectors and input levels 
and TFP growth in agriculture and allied sectors across 
regions and districts. 

 

METHODOLOGY 
 
Andhra Pradesh is historically having three distinct regions namely 
Telangana (Mahbubnagar, Hyderabad (Rangareddy+Hyderabad), 
Medak, Nizamabad, Adilabad, Karimnagar, Warangal, Khammam, 
Nalgonda), Rayalaseema (Chittoor, Kadapa, Anantapur and  
Kurnool) and Coastal (Srikakulam, Visakhapatnam 
(Visakhapatnam+Vizianagaram), East Godavari, West Godavari, 
Krishna, Guntur (Guntur+Prakasam), Nellore). In addition, we have 
also done two more classifications based on per capita income and 
agricultural diversification level of the districts. And the classification 
of districts based on monthly per capita expenditure (MPCE) for the 
year 2003 to 2004 based on NSSO 55th round is as follows, low-
income region (Adilabad, Nizamabad, Kurnool, Anantapur, Chittoor, 
Nellore, Khammam with MPCE below Rs.530), medium-income  
region (Medak, Karimnagar, Visakhapatnam, Nalgonda, 
Mahbubnagar, Srikakulam and Guntur with MPCE up to Rs.644), 
high-income region (East Godavari, Krishna, Kadapa, West 
Godavari, Warangal, Hyderabad with MPCE above Rs.652). The 
last classification of districts based on diversification of agriculture 
was done based on the share of high value crops (HVCs) in total 
value of agricultural production at constant prices. In this 
classification, districts are classified as three distinct clusters as 
follows. High-diversification zone (districts with more than 40% 
share of HVCs in the total value of agricultural production; include 

 
  

 
 

 
Srikakulam, Kadapa, Mahabubnagar, Chittoor, Visakhapatnam and 
Hyderabad), Medium-diversification region (districts with 35 to 40% 
share of HVCs; include West Godavari, Nellore, Khammam, 
Krishna, Nalgonda and East Godavari) and Low-diversification zone 
(districts with less than 35% share of HVCs; include Nizamabad, 
Warangal, Adilabad, Guntur, Karimnagar, Anantapur, Kurnool and 
Medak.).  

The district level data has been collected from Andhra Pradesh 
Statistical Abstracts from 1956 to 2007 and the total period is sub-
divided into 5 decades, 1956 to 1965, 1966 to 1975, 1976 to 1985, 
1986 to 1995, 1996 to 2005 respectively and the last two periods 
2006 and 2007 were taken as separate periods. Simple mean and 
ratios used for tabulation, further widely used Gini concentration 
(GI) index and disparity index (DI) have been applied for district 
level data. All the tables except GI and DI index indicates that the 
comparison of Telangana and Rayalaseema regions (in %) to 
Coastal region, that is, a value above 100 for Telangana region 
indicates that Telangana region‟s absolute value is more than 
Coastal‟s in that period, whereas less than 100 indicates that 
Telangana region‟s absolute value is less than Coastal‟s for that 
particular period. In the same way, medium-income and low-income 
regions compared with high-income regions; and medium-
diversified and low-diversified regions are compared with high-
diversified region. Hence, the data in the tables for Telangana and 
Rayalaseema regions, medium-income and low-income regions, 
medium- diversified and low-diversified regions are in % relative to 
the Coastal regions absolute figures in that particular period, while 
figures for Coastal, high-income and high-diversified regions are 
absolute figures.  

The data envelopment analysis (DEA) approach is used for 
measuring productivity change and efficiency. The DEA 
methodology was initiated by Charnes et al. (1978) which is largely 
based on the frontier concept pioneered by Farrell (1957). This 
method attempts to measure the efficiency of decision making units 
through linear programming techniques, which „envelop‟ observed 
input - output vectors as tightly as possible. The original model 
developed by Charnes et al. (1978) (CCR model) was applicable 
when technologies were characterized by constant returns to scale 
(CRS) and all farms operate at an optimal scale (Coelli et al., 1998). 
We have taken the value of crop output (Rs. Crores) and value of 
livestock and fisheries products (Rs. Crores) as two outputs and 
gross irrigated area (GIA) in 1000 ha, rainfed area in 1000 ha, 
labour in thousands (agricultural workers plus cultivators), livestock 
population (cattle equivalents; one cattle is equal to one buffalo or 8 
sheep or 8 goats), fertilizer use (NPK tons), mechanization (tractor 
equivalent; one tractor is equal to 40 iron ploughs or 80 wooden 
ploughs) as inputs. We have used methodology followed in Fare et 
al. (1994), to estimate a Malmquist-type measure of productivity 
and its decomposition into efficiency and technical changes. The 
method assumes output orientation with constant returns to scale 
(CRS), as the input oriented and variable returns to scale (VRS) 
suffer from some methodological problems while analyzing regional 
data (Coelli and Rao, 2003). In order to check reliability of efficiency 
estimates of the DEA method, we also estimated the efficiencies by 
using Battese and Coelli‟s (1995) frontier production function 
approach, with the same input and output data (aggregated two 
outputs, namely crop and livestock value to make one dependent 
variable) with the assumption of Cobb-Douglas production function 
and results are presented. 

 

RESULTS 
 
Trends in growth of agricultural output 
 
The results from Table 1 indicates that the value of 
agricultural production per annum increased from 
Rs.5672 to Rs.20883 crores in Coastal, from Rs.3078 to 



 
 
 

 
Table 1. Trends in value of agricultural production per annum at constant prices (2004-2005).  

 
     

Highly 
Medium  

Low diversified High-income Medium Poor 
 

  
Coastal Rayalaseema Telangana diversified  

 

Period Diversified (% of highly (Rs. Poor (% of high- (% of high 
 

 
(Rs. crores) (% of Coastal) (% of Coastal) (% of highly  

  

(Rs.Crores) diversified) Crores) income) -income)  

     
diversified)  

          
 

     Value of agricultural production    
 

 1956-65 5672 42 45 3078 120  123 3608 97 96 
 

 1966-75 7724 38 44 4065 123  123 4929 99 87 
 

 1976-85 10180 34 47 4783 128  156 6006 119 88 
 

 1986-95 15579 32 44 6846 147  152 9656 105 77 
 

 1996-2005 19573 34 56 9424 147  147 13771 93 76 
 

 2006-07 20883 32 66 8938 173  192 14894 100 79 
 

     Value of  livestock  production    
 

 1956-65 317 46 64 220 101  103 183 127 137 
 

 1966-75 611 38 82 458 100  94 466 107 83 
 

 1976-85 1142 34 89 915 100  80 1045 87 57 
 

 1986-95 1719 32 91 1379 102  76 1648 82 50 
 

 1996-2005 2291 31 93 1852 102  75 2274 80 46 
 

 2006-07 2642 31 93 2153 101  74 2643 80 45 
 

     Value of total agricultural production    
 

 1956-65 5987 42 46 3302 118  122 3794 98 98 
 

 1966-75 8340 38 47 4524 120  120 5372 100 87 
 

 1976-85 11351 34 51 5744 123  143 7035 114 84 
 

 1986-95 17318 32 48 8226 139  139 11301 102 73 
 

 1996-2005 21832 34 60 11278 141  135 16061 91 72 
 

 2006-07 23471 33 69 11083 159  169 17551 97 74 
 

 
Figures for Telagaa and Rayalaseema regions are the % of Coastal region absolute values; if this % is more than 100, the value for that region is higher than Coastal region vice versa. 

 

 

Rs.Rs.8938 crores in highly-diversified region and 

from Rs.3608 to Rs.14894 crores in high-income 
regions   between   1956-1966   to   2006-2007 
respectively.   Even   though   initial   value   of 

agricultural  production  in  Telangana  is  about 
45%, that of Coastal over the period increased to 
66%,  which  shows the  convergence in value  of 

agricultural   production  between  Telangana  and 

 
 

 

Coastal regions. While high-income and medium-
income regions started with the same base as 
low-income regions in 1956 to 1966, they have 
increased their share over the period to 127 and 
126% respectively. Rayalaseema showed decline 
in agricultural value over the period with lower 
base, compared to Coastal, as this region is not 
able to increase their agricultural production. 

 
 

 

Overall, the figures indicate that there is a 
significant convergence of agricultural develop-  
ment among the medium developed region, but left 
the least developed regions (that is, low-income 
region and Rayalaseema region) in the  
development process. The value of livestock 
production increased from Rs.317 to Rs.2642 
crores in Coastal, from Rs.220 to Rs. 2153 crores 



 
 
 

 

in the highly-diversified region and from Rs.183 to 
Rs.2643 crores in high-income region. Value of livestock 
products significantly increased in Telangana compared 
to Coastal, while it decreased in low-diversified and low-
income regions compared to their counterparts. Overall, 
growth of livestock products is higher in and around major 
urban centres and high-income regions, which shows that 
the production of livestock is more dependent on demand 
factors than the supply factors. The total value of 
agriculture and allied sectors increased in Telangana 
from 46 to 69%, compared to Coastal from 1956-1965 to 
2006-2007, while in Rayalaseema it decreased from 42 to 
33%. This again shows that Rayalaseema region‟s 
growth is poorer than both Telangana and Coastal. The 
cropwise area under resource incentive crops are 
presented in Table 2. Area under rice increased from 
1,968 to 2,189 kha, area under sugarcane increased from 
61 to 142 kha, area under mango increased from 61 to 
168 kha, area under cotton increased from 32 to 252 kha, 
under chillies increased from 65 to 104 kha, under tomato 
increased from 7.3 to 10 kha, while area under tobacco 
decreased from 153 to 108 kha in the Coastal region. In 
comparism to Coastal, in Telangana, area under resource 
incentive crops like rice (increased from 44 to 60%), 
mango (from 4 to 60%) and cotton (227 to 294%), tomato 
(23 to 300%) was increased, while area under sugarcane, 
chillies and tobacco decreased. In Rayalaseema, area 
under all the aforementioned crops decreased except 
tomato in relation to Coastal. High-income cluster of 
districts showed similar trend as that of the Coastal 
region. It indicates that in Rayalaseema, area under 
resource incentive crops is less at the beginning and also 
declined subsequently, but in Coastal, area under these 
crops was significantly higher at the beginning and also 
increased subsequently, while in Telangana mixed results 
exist. This also confirms the theory that the initial high-
level of resource endowment region (Coastal), increases 
chances of future growth for the regions than low-
resource endowed region (Rayalaseema), which 
enhanced regional disparities in Andhra Pradesh to some 
extent. 
 

The crop‟s group wise information is presented in Table  
3 (cereals, pulses, oilseeds, spices, fruits, vegetables 
and land-put to non-agriculture), which shows except 
cereals, and oilseeds area under all crops increased in 
Coastal in absolute terms (Reddy et al., 2011). Area 
under cereals (from 115 to 93% of Coastal) and pulses 
(from 455 to 87%) decreased in Telangana (Reddy, 
2004), while area under fruits (from 37 to 47%), oilseeds 
(from 175 to 222%), spices (from 48 to 141%) vegetables 
(from 28 to 118%) and land-put-to-non-agricultural use 
(from 73 to 108%) increased compared to Coastal region. 
Disparities in area under fruits are much higher compared 
to cereals, for example area under fruits in Telangana is 
half that of Coastal. Regional disparities peaked during 
1976 to 1985 period; with area under fruits in Telangana 

 
  

 
 

 

is 1/6
th

 that of the Coastal region; however, since the last 

two decades these disparities decreased. Area under 
oilseeds is much higher in Rayalaseema and its 
concentration is increased over the period. While area 
under pulses was increased, since the 1990s in Coastal, 
mainly due to expansion of area under black-gram in rice 
fallows. Area under spices decreased in Rayalaseema, 
while in Telangana it increased compared to the Coastal 
region, as there is a large expansion of area under 
chillies in Telangana region. Even though area under 
vegetables is higher in initial years both in Coastal and 
Rayalaseema, its share decreased over years. Overall, 
even though disparities among regions in fruits and 
vegetables are stark in the base year, disparities 
decreased then after, as there is expansion of area under 
these crops in backward districts surrounding Hyderabad. 
However, proportion of land put to non-agricultural use 
increased in Telangana due to high level of urbanization 
around Hyderabad. It is a very disturbing fact that the 
already high level of fallow lands (un-utilised agricultural 
land) in Telangana (283% of Coastal fallow area) is 
increased to 329% of coastal fallow land. Mainly due to 
low investment in agricultural development in Telangana, 
in terms of large scale dams and canal irrigation systems 
and neglect of traditional tank irrigation.  

The Gini ratio and disparity index of total agricultural 
production, cereal and pulses production are presented in 
Table 4. Both disparity index and Gini ratio have 
increased for both cereals and pulses, while in the case 
of value of agricultural production both disparity index and 
Gini ratio were decreased. Which shows that, districts 
have become more specialized in the case of cereals and 
pulses production, but in terms of value of production 
districts are converging, as loss from reduction of area 
under one crop is compensated by income from 
expansion in area under other crops, and also the 
districts, which are not concentrated in growing cereals 
and pulses are increasing value of production from other 
crops. The trends in the yields of major crops are 
illustrated in Table 5 which illustrates trend in yields of 
major crops that is, rice, groundnut and cotton. Yield of 
rice increased from 778 to 2980 kg/ha, yield of groundnut 
increased from 581 to 1292 kg/ha, and yield of cotton 
increased from 339 to 2057 kg/ha in Telangana. Yield of 
rice, groundnut and cotton declined in both Coastal and 
Rayalaseema regions compared to Telangana, while in 
high and medium-income regions it showed increase in 
yield compared to low-income regions, except in the case 
of cotton in the medium-income region. In high and 
medium diversified regions, paddy yield is declined while 
cotton and groundnut yield increased compared to the 
low-diversified region. 
 

 

Farm inputs and irrigation 

 

The proximate causes of agricultural growth as measured 



 
 
 

 
Table 2. Trends in area of resource intensive crops.  

 

Crop Period 
Coastal Rayalaseema Telangana 

 

(1000 ha) (% of Coastal) (% of Coastal)  

  
 

 1956-65 1967.1 20 44 
 

 1966-75 2009.0 19 44 
 

Rice 
1976-85 2198.9 16 51 

 

1986-95 2338.4 12 50 
 

 
 

 1996-2005 2224.1 12 56 
 

 2006-07 2188.5 10 60 
 

 1956-65 61.3 32 41 
 

 1966-75 84.6 28 34 
 

Sugarcane 
1976-85 87.7 30 43 

 

1986-95 108.4 27 50  

 
 

 1996-2005 131.3 26 37 
 

 2006-07 142.4 17 32 
 

 1956-65 61.1 36 4 
 

 1966-75 70.7 38 10 
 

Mango 
1976-85 86.5 32 14 

 

1986-95 124.6 28 29 
 

 
 

 1996-2005 167.0 38 41 
 

 2006-07 167.8 45 60 
 

 1956-65 153.8 11 21 
 

 1966-75 148.3 13 20 
 

Tobacco 
1976-85 142.0 12 19 

 

1986-95 112.6 16 21  

 
 

 1996-2005 115.6 13 12 
 

 2006-07 108.4 10 8 
 

 1956-65 31.6 666 227 
 

 1966-75 42.4 439 244 
 

Cotton 
1976-85 159.1 82 84 

 

1986-95 256.5 34 127  

 
 

 1996-2005 254.1 49 244 
 

 2006-07 252.1 15 294 
 

 1956-65 64.8 30 95 
 

 1966-75 82.7 22 82 
 

Chilli 
1976-85 65.9 27 111 

 

1986-95 85.7 19 118  

 
 

 1996-2005 96.0 23 111 
 

 2006-07 104.0 20 91 
 

 1956-65 7.3 32 23 
 

 1966-75 9.6 84 75 
 

Tomato 
1976-85 5.3 189 114 

 

1986-95 9.5 169 120 
 

 
 

 1996-2005 10.2 338 213 
 

 2006-07 8.0 418 303 
 



  
 
 

 
Table 3. Trends in area (in 1000 ha) for major crop groups.  

 

Crop group Period 
Coastal Rayalaseema Telangana 

 

(1000 ha) (% of Coastal) (% of Coastal)  

  
 

 1956-65 2939 59 115 
 

 1966-75 2823 53 112 
 

Cereals 
1976-85 2866 46 112 

 

1986-95 2724 29 94 
 

 
 

 1996-2005 2436 22 94 
 

 2006-07 2422 18 93 
 

 1956-65 57 24 37 
 

 1966-75 99 27 23 
 

Fruits 
1976-85 170 27 16 

 

1986-95 238 27 26 
 

 
 

 1996-2005 411 34 34 
 

 2006-07 447 45 47 
 

 1956-65 370 142 175 
 

 1966-75 397 200 189 
 

Oilseeds 
1976-85 374 242 169 

 

1986-95 532 298 156  

 
 

 1996-2005 407 412 196 
 

 2006-07 368 476 222 
 

 1956-65 161 82 455 
 

 1966-75 332 64 256 
 

Pulses 
1976-85 379 57 238 

 

1986-95 694 28 120 
 

 
 

 1996-2005 827 36 99 
 

 2006-07 847 50 87 
 

 1956-65 452 73 48 
 

 1966-75 494 61 52 
 

Spices 
1976-85 575 48 53 

 

1986-95 655 34 83  

 
 

 1996-2005 669 38 127 
 

 2006-07 670 17 141 
 

 1956-65 25 50 28 
 

 1966-75 31 61 41 
 

Vegetables 
1976-85 32 67 46 

 

1986-95 49 73 53  

 
 

 1996-2005 56 129 86 
 

 2006-07 53 158 118 
 

 1956-65 755 58 73 
 

 1966-75 912 57 70 
 

Land put to non- 1976-85 955 58 70 
 

agricultural use 1986-95 1045 57 68 
 

 1996-2005 1102 56 76 
 

 2006-07 1011 55 108 
 

Fallow land 
1956-65 678 110 283 

 

2006-07 745 121 329 
 

 
 



 
 
 

 
Table 4. Trends in GINI index and disparity index (DI) of district agricultural production value (at 
constant prices), cereal and pulses production.  

 
 

Period 
Agricultural production value Cereal production Pulses production 

 

 

DI GINI DI GINI DI GINI 
 

  
 

 1956-1965 0.301 0.038 0.177 0.014 0.286 0.049 
 

 1966-1975 0.280 0.041 0.161 0.028 0.286 0.121 
 

 1976-1985 0.267 0.075 0.199 0.051 0.295 0.005 
 

 1986-1995 0.278 0.080 0.240 0.040 0.337 0.174 
 

 1996-2005 0.238 0.027 0.241 0.089 0.328 0.204 
 

 2006-2007 0.202 0.037 0.238 0.103 0.379 0.169 
 

 
 

 
Table 5. Trends in yield of important crops.  

 
Crop Period Coastal (kg/ha) Rayalaseema (kg/ha) Telangana (kg/ha) 

 

 1956-1965 1003.7 1291.6 778.1 
 

 1966-1975 1392.4 1551.5 1326.1 
 

Rice 
1976-1985 1913.7 1822.6 1822.6 

 

1986-1995 2419.1 2352.6 2219.4 
 

 
 

 1996-2005 2873.2 2588.5 2588.5 
 

 2006-2007 3218.7 3039.9 2980.3 
 

 1956-1965 959.3 970.9 581.4 
 

 1966-1975 971.7 849.4 643.5 
 

Groundnut 
1976-1985 983.5 831.6 799.6 

 

1986-1995 1130.1 849.7 849.7  

 
 

 1996-2005 1156.6 726.5 955.9 
 

 2006-2007 1383.2 762.7 1292.7 
 

 1956-1965 922.1 168.1 339.0 
 

 1966-1975 1436.1 170.2 309.5 
 

Cotton 
1976-1985 2419.6 563.5 517.0 

 

1986-1995 2097.8 1250.4 1033.4 
 

 
 

 1996-2005 2195.3 1144.0 1546.0 
 

 2006-2007 3045.0 1234.4 2057.4 
 

 
 

 

by the growth in land productivity in the context of states 
like Andhra Pradesh can be found mainly in the increased 
use of inputs into the agricultural production process - 
irrigation facilities, labour, the use of fertilizers, and 
tractors (Reddy 2010). But investment in irrigation is 
technically and economically feasible only in favourable 
areas and in unfavourable areas it is costly (as building 
lift irrigation in Telangana). Many Coastal districts 
benefited from green revolution, while some of the 
districts in Telangana and Rayalaseema have 
experienced agricultural growth mainly of oilseeds and 
pulses following technical innovations and favourable 
price support regimes in the 1980s. Some districts are 
benefiting from growth of higher value agricultural 
products as urbanisation and growth of incomes in the 
1990s onwards. Table 6 depicts the cropped area, 

 
 

 

irrigated area and cropping intensity along with irrigation 
intensity. Net cropped area (NCA) is marginally increased 
over 50 years from 3072 kha in 1956-1965 to 3944 kha in 
2006 to 2007 in the Coastal region, while it decreased 
significantly in Telangana (from 128 to 106% of Coastal) 
and Rayalaseema (from 79 to 71% of Coastal) compared 
to the Coastal region. Gross cropped area (GCA) 
increased from 3397 to 5302 kha in the Coastal region 
during 50 years, it also decreased significantly in 
Telangana and Rayalaseema region compared to 
Coastal region. The net irrigated area (NIA) increased 
from 1793 to 2204 kha in Coastal, the increase is much 
higher in Telangana (from 41 to 76% that of Coastal) but 
stagnate in Rayalaseema. Gross irrigated area (GIA) 
increased from 3072 to 3944 kha in the Coastal region, 
but it decreased relative to the Costal region from 128 to 



  
 
 

 
Table 6. Trends in NCA, GCA, NIA, GIA, cropping intensity and irrigation intensity.  

 

Item Period 
Coastal Rayalaseema Telangana 

 

(1000 ha) (% of Coastal) (% of Coastal)  

  
 

 1956-65 3072 79 128 
 

 1966-75 3676 79 128 
 

Net cropped area 1976-85 3659 75 123 
 

(NCA) 1986-95 3758 74 111 
 

 1996-2005 3869 73 111 
 

 2006-07 3944 71 106 
 

 1956-65 3397 79 118 
 

 1966-75 4606 69 112 
 

Gross cropped area 1976-85 4651 63 108 
 

(GCA) 1986-95 5090 59 93 
 

 1996-2005 5099 57 93 
 

 2006-07 5302 58 93 
 

 1956-65 1793 25 41 
 

 1966-75 1902 27 43 
 

Net irrigated area 1976-85 1996 26 50 
 

(NIA) 1986-95 2089 26 60 
 

 1996-2005 2171 28 66 
 

 2006-07 2204 28 76 
 

 1956-65 3072 79 128 
 

 1966-75 3676 79 128 
 

Gross irrigated area 1976-85 3659 75 123 
 

(GIA) 1986-95 3758 74 111 
 

 1996-2005 3869 73 111 
 

 2006-07 3944 71 106 
 

   %  
 

 1956-65 111 110 101 
 

 1966-75 125 108 110 
 

Cropping intensity (%) 1976-85 127 107 111 
 

 1986-95 135 107 114 
 

 1996-2005 132 102 111 
 

 2006-07 134 110 117 
 

 1956-65 113 129 119 
 

 1966-75 121 129 131 
 

Irrigation intensity (%) 
1976-85 125 130 135 

 

1986-95 131 129 135 
 

 
 

 1996-2005 130 120 132 
 

 2006-07 136 122 141 
 

 

 

106% during the last 50 years. Cropping intensity from 
111 to 134% in Coastal, slightly increased from 101 to 
117% in Telangana, but stagnant in Rayalaseema. In 
same lines, irrigation intensity increased both in 
Telangana and Coastal regions and while in 
Rayalaseema it decreased. Overall there is a conver-
gence in irrigated area and cropping intensity between 

 

 

Telangana and Coastal, but Rayalaseema region was left 
out.  

The trends in source wise irrigated area is presented in 
Table 7, which shows that the area under canals 
increased from 1087 to 1256 kha, area under tube wells 
increased from 18 to 454 kha, area under other wells 
increased from 44 to 84 kha, area under total wells 



 
 
 

 
Table 7. Trends in sources of irrigation.  

 

Source Period 
Coastal Rayalaseema Telangana 

 

(1000 ha) (% of Coastal) (% of Coastal)  

  
 

 1956-65 1087 10 14 
 

 1966-75 1147 12 17 
 

Canals 
1976-85 1285 12 21 

 

1986-95 1310 12 23 
 

 
 

 1996-2005 1320 12 24 
 

 2006-07 1256 11 21 
 

 1956-65 487 34 93 
 

 1966-75 491 31 78 
 

Tanks 
1976-85 466 23 81 

 

1986-95 450 20 70  

 
 

 1996-2005 395 17 65 
 

 2006-07 361 17 55 
 

 1956-65 18 24 32 
 

 1966-75 47 9 13 
 

Tube wells 
1976-85 120 5 7 

 

1986-95 203 32 48 
 

 
 

 1996-2005 326 52 101 
 

 2006-07 454 69 156 
 

 1956-65 44 134 263 
 

 1966-75 69 169 345 
 

Other wells 
1976-85 90 185 370 

 

1986-95 129 188 417  

 
 

 1996-2005 112 176 476 
 

 2006-07 84 124 588 
 

 1956-65 62 101 194 
 

 1966-75 116 104 210 
 

Total wells 
1976-85 211 82 163 

 

1986-95 332 92 191  

 
 

 1996-2005 438 83 197 
 

 2006-07 539 77 224 
 

 

 

increased from 62 to 539 kha, while area under tanks 
decreased from 487 to 361 kha. The area under canals 
was very low in both Telangana and Rayalaseema, 
compared to the Costal region and not catching up (area 
under canals increased in Telangana from 14 to 21% that 
of the Coastal region, from 10 to 11% in Rayalaseema), 
area under tube wells increased in both Telangana and 
Rayalaseema regions, area under other wells increased 
in Telangana, but reduced in Rayalaseema compared to 
the Coastal region. Overall, area under total wells 
increased in Telangana, but decreased in Rayalaseema 
compared to the Coastal region. This disaggregated 
analysis also shows that, there is a convergence in area 
under canal and wells between Coastal and Telangana 
regions, but in Rayalaseema region, area under canals 

 

 

and wells reduced from lower base. However, in the case 
of area under tanks, there is a striking reduction in area in 
all three regions; however speed of reduction is fast in 
Telangana and Rayalaseema regions. Table 8 presents 
Gini ratio and disparity index for NCA, NIA, GCA and GIA 
during 1956 to 2007. Gini ratio is slightly increased for 
NCA, while disparity index is almost stagnant during the 
period. Both DI and GR decreased in case of NIA, while 
in the case of GIA, DI decreased, but GR increased.  

Overall disparity in irrigated area decreased, but 
geographical concentration slightly increased in gross 
cropped area during the study period. While in the case 
of NCA, GCA and GIA there is a mixed trend. The trends 
in inputs used in the agricultural sector are stated in 
Table 9, wherein, number of diesel pump sets increased 



 
 
 

 
Table 8. Trends in Gini index and disparity index of NCA, NIA, GCA and GIA.  

 
 

Period 
NCA NIA GCA GIA 

 

 

DI GINI DI GINI DI GINI DI GINI 
 

  
 

 1956-65 0.168 0.001 0.258 0.034 0.176 0.009 0.252 0.043 
 

 1966-75 0.156 0.014 0.238 0.008 0.149 0.013 0.235 0.038 
 

 1976-85 0.149 0.021 0.224 0.028 0.133 0.014 0.219 0.064 
 

 1986-95 0.142 0.041 0.202 0.034 0.129 0.034 0.209 0.079 
 

 1996-2005 0.147 0.058 0.187 0.028 0.144 0.049 0.205 0.074 
 

 2006-07 0.165 0.068 0.187 0.029 0.157 0.053 0.214 0.079 
 

           

 
 

 

from 18,600 to 67,200, number of electric pump sets 
increased from 12,400 to 191700, number of tractors 
increased from 1200 to 36300, iron ploughs increased 
from 4,700 to 162,800, while wooden ploughs decreased 
from 1,433,000 to 545,500 and agricultural credit 
increased from Rs.576 to Rs.35666 crores during the 
same period in the Coastal region (Reddy, 2005, 2006 ). 
In Telangana, the number of diesel pump sets as % of 
Coastal region decreased from 294 to 154%, in 
Rayalaseema, it also showed a declining trend from 138 
to 57% of the Coastal region. While proportion of electric 
pumps increased both in Telangana and Rayalaseema 
regions compared to Coastal region. Proportion of 
tractors in Telangana stagnates at lower level compared 
to Coastal region. Share of iron ploughs increased in 
Telangana, while it decreased in Rayalaseema compared 
to the Coastal region. Proportion of wooden ploughs 
increased in both Telangana and Rayalaseema regions. 
Trends in credit delivery shows that, there is an increase 
in share of credit uptake Telangana, but declined in 
Rayalaseema region. In farm mechanization and inputs 
there is a convergence between Telangana and the 
Coastal regions, but Rayalaseema region is left out of the 
growth of important inputs like tractors and credit. 
 

 

Trends in livestock and its products 

 

Table 10 depicts the trends in livestock population and its 
products which are more resource incentive. The egg 
production increased from 1000 to 93000 lakhs, 
production of meat increased from 8 to 76 kilotons, 
production of milk increased from 241 to 4434 kilotons, 
production of fish increased from 237 to 4510 kilotons, 
production of poultry (in numbers) increased from 51 to 
2302 lakh between 1956 to 2007 in the Coastal region. In 
egg, meat and poultry production both Telangana and 
Rayalaseema regions showed declining trend compared 
to the Coastal region. In milk, fish production,  
Telangana‟s relative position decreased, while 
Rayalaseema relative position slightly increased over the 
last 50 years. Unlike fish, concentration in the poultry 
industry is less among regions. 

 

 

TFP growth and efficiency over time 
 
Table 11 presents the district level TFP growth and its 
components for Telangana districts. The highest TFP 
growth is recorded in Hyderabad, followed by 
Karimnagar, Warangal, Khammam, Medak, Adilabad, 
Nalgonda, Mahbubnagar and Nizamabad. In case of 
Hyderabad, the first 3 decades are with higher TFP 
growth (24% during 1956 to 1966, 69% during 1966 to 
1976, 50% during 1976 to 1986) and larger share of TFP 
growth is contributed by efficiency change, while in the 
last 2 decades productivity growth is stagnant, maybe 
due to a shift of resources like land and labour to meet 
the demands of urbanization in Hyderabad. On the other 
hand, in case of Karimnagar, Mahbubnagar, Nalgonda 
and Khammam TFP growth is higher in last 3 decades, 
while in Adilabad, maximum TFP growth is recorded in 
last 2 decades. In most of the districts, during 1986 to 
1996, efficiency change contributed a larger share, while 
during 1996 to 2007 technical change contributed a larger 
share in TFP growth. Overall, there is stagnation in TFP 
growth in Mahbubnagar and Nalgonda since the last 50 
years with decrease in efficiency from 0.90 during 1956-
1966 to 0.66 during 1996 to 2007 in Mahbubnagar and 
from 0.76 to 0.70 in Nalgonda during the same period. In 
Medak, higher TFP growth was recorded during 1966 to 
1976 and 1986 to 2007, with overall TFP growth of 16% 
per decade coupled with significant increase in efficiency 
from 0.44 to 0.75. While in Warangal, TFP growth is 26% 
per decade in the last 50 years with consistent increase, 
except in 1966 to 1976, for which TFP growth is 
decelerated, in line with many other districts during 1976 
to 1996, technical change has contributed a larger share, 
while during 1996 to 2007, the share of efficiency change 
(catching up) was higher in TFP growth. The only district 
with deceleration in TFP growth in Telangana is 
Nizamabad with -3% per decade, with significant 
reduction in efficiency from 0.93 to 0.54 during the last 50 
years; however, even in this district, TFP growth is 24% 
during 1986 to 1996, mostly contributed by technical 
change (51%) while efficiency change declined by 18%. 
 

Table 12 presents the TFP growth and its components 
for Rayalaseema districts. In Rayalaseema region, TFP 



 
 
 

 
Table 9. Trends in resource endowment (Inputs) relating to agriculture.  

 

Inputs Period 
Coastal Rayalaseema Telangana 

 

(absolute value) (% of Coastal) (% of Coastal)  

  
 

 1956-65 18679 138 294 
 

 1966-75 29929 100 233 
 

Diesel Pump sets(number) 
1976-85 40386 80 196 

 

1986-95 51311 67 172 
 

 
 

 1996-2005 61559 60 159 
 

 2006-07 67254 57 154 
 

 1956-65 12424 114 119 
 

 1966-75 46019 147 313 
 

Electric pump sets (number) 1976-85 87127 148 370 
 

 1986-95 126891 152 400 
 

 1996-2005 165775 154 417 
 

 2006-07 191742 154 417 
 

 1956-65 1210 21 83 
 

 1966-75 6540 30 46 
 

Tractors (number) 
1976-85 14200 37 70 

 

1986-95 23220 39 78 
 

 
 

 1996-2005 30750 39 81 
 

 2006-07 36300 40 83 
 

 1956-65 4708 580 143 
 

 1966-75 28840 250 97 
 

Iron plough (Numbers) 
1976-85 66424 200 143 

 

1986-95 104539 186 159  

 
 

 1996-2005 141106 181 169 
 

 2006-07 162833 179 172 
 

 1956-65 1433498 41 105 
 

 1966-75 1294266 43 115 
 

Wooden plough (numbers) 1976-85 1077221 49 133 
 

 1986-95 871347 57 159 
 

 1996-2005 664807 70 200 
 

 2006-07 545500 81 238 
 

 1966-75 576 31 88 
 

Loans (Rs.Crores) 1976-85 1149 28 96 
 

 1986-95 10217 27 98 
 

 1996-2005 22978 28 99 
 

 2006-07 35666 28 99 
 

 

 

growth is decelerated in Anantapur and Kadapa, while it 
is slightly higher at 8 and 3% per decade in Chittoor and 
Kurnool respectively. In Anantapur, both efficiency and 
technical change decelerated, while in Kadapa, there was 
a significant upward movement during 1986 to 1996. In 
Kurnool, there was a significant increase in technical 
change that helped in slight increase in TFP growth, even 
though efficiency decelerated, on the other hand in case 

 

 

of Chittoor efficiency change contributed to TFP growth. 
Table 13 presents TFP growth in the Coastal region. In 
Coastal, the highest TFP growth was recorded in Nellore 
followed by Krishna, Guntur, East Godavari, West 
Godavari, Srikakulam and Visakhapatnam. In Nellore, 
TFP growth was significantly higher with 40% per 
decade, of which 24% is contributed by efficiency change 
and the remaining 13% contributed by technological 



 
 
 

 
Table 10. Trends in livestock (resource incentive) and its products.  

 

Livestock products Period 
Coastal Rayalaseema Telangana 

 

(absolute value) (% of Coastal) (% of Coastal)  

  
 

 1956-65 1 84 323 
 

 1966-75 1 47 172 
 

Egg (1000 lakhs) 
1976-85 14 14 71 

 

1986-95 44 11 64 
 

 
 

 1996-2005 75 11 63 
 

 2006-07 93 10 62 
 

 1956-65 8 80 196 
 

 1966-75 10 81 172 
 

Meat (1000 tons) 
1976-85 22 69 125 

 

1986-95 42 56 130 
 

 
 

 1996-2005 63 51 133 
 

 2006-07 76 49 135 
 

 1956-65 229 28 87 
 

 1966-75 241 28 88 
 

Milk (1000 tons) 
1976-85 866 25 63 

 

1986-95 2234 29 59  

 
 

 1996-2005 3621 30 57 
 

 2006-07 4434 31 57 
 

 1956-65 237 30 91 
 

 1966-75 251 30 91 
 

Fish (1000 tons) 
1976-85 887 26 65 

 

1986-95 2276 29 60 
 

 
 

 1996-2005 3684 31 59 
 

 2006-07 4510 32 58 
 

 1956-65 51 48 64 
 

 1966-75 100 39 82 
 

Poultry (lakh ) 
1976-85 186 34 90 

 

1986-95 276 32 93  

 
 

 1996-2005 363 32 95 
 

 2006-07 2302 33 48 
 

 
 

 

change. In Krishna, TFP growth is about 18% per decade 
of which 11% is contributed by technical change and 7% 
is contributed by efficiency change. In Guntur, TFP 
growth is 13% per decade, all of which is contributed by 
technical change. In East Godavari, there is almost a 
stagnant TFP growth, with deceleration in technological 
change. Srikakulam, Visakhapatnam and West Godavari 
showed stagnation in TFP growth, even though in 
Srikakulam it improved during the last 2 decades. Among 
the top 10 districts in terms of TFP growth 6 districts are 
from Telangana, 3 from Coastal and 1 from 
Rayalaseema. Among the top 4 districts namely Nellore, 
Hyderabad, Karimnagar and Warangal, the contribution 
of efficiency change is higher than technological change, 

 
 
 

which indicates they are catching up with other frontier 
districts. Among the top 10 districts in efficiency, 6 are 
from Coastal (East Godavari, West Godavari, Krishna, 
Guntur, Visakhapatnam and Srikakulam) 3 are from 
Rayalaseema (Anantapur, Chittoor and Kurnool) and only 
2 are from Telangana (Nizamabad and Khammam). 
While technological change contribution is higher in 
Krishna, Kurnool, Khammam, and Nizamabad.  

Table 14 presents the region wise trends in TFP 
growth. Overall TFP growth in Telangana is about 13% 
per decade, while the same is 11% per decade in 
Coastal, while TFP growth in Rayalaseema is stagnant. 
In Telangana and Coastal, until 1976 there was 
stagnation in TFP growth, then after there was a good 



         
 

 Table 11. Mean efficiency and TFP growth per decade and its decomposition from 1956 to 2007 in Telangana districts. . 
 

          
 

 District Variable 1956 1956-66 1966-76 1976-86   1986-96 1996-2007 Mean  
 

  Mean efficiency (B&C) 0.28 0.27 0.31 0.46 0.56 0.61 0.43  
 

 
Hyderabad 

TFP growth 1 1.24 1.69 1.50 1.00 1.03 1.26  
 

 
Efficiency change 1 1.10 1.80 1.38 1.00 1.00 1.22 

 
 

   
 

  Technical change 1 1.12 0.94 1.08 1.00 1.03 1.03  
 

  Mean efficiency (B&C) 0.48 0.46 0.40 0.45 0.58 0.64 0.50  
 

 
Karimnagar 

TFP growth 1 1.12 0.79 1.63 1.68 1.32 1.26  
 

 
Efficiency change 1 1.19 0.92 1.25 1.23 1.30 1.17 

 
 

   
 

  Technical change 1 0.94 0.86 1.31 1.36 1.01 1.08  
 

  Mean efficiency (B&C) 0.35 0.36 0.38 0.45 0.57 0.72 0.49  
 

 
Warangal 

TFP growth 1 1.30 0.62 1.72 1.46 1.57 1.26  
 

 
Efficiency change 1 1.81 0.80 1.38 1.03 1.48 1.25 

 
 

   
 

  Technical change 1 0.72 0.77 1.25 1.42 1.06 1.01  
 

  Mean efficiency (B&C) 0.61 0.64 0.59 0.58 0.78 0.87 0.69  
 

 
Khammam 

TFP growth 1 1.14 0.60 1.66 1.41 1.37 1.17  
 

 
Efficiency change 1 1.25 0.59 1.12 1.07 1.27 1.02 

 
 

   
 

  Technical change 1 0.91 1.01 1.48 1.32 1.08 1.14  
 

  Mean efficiency (B&C) 0.44 0.40 0.47 0.59 0.64 0.75 0.56  
 

 
Medak 

TFP growth 1 1.10 1.21 1.05 1.31 1.15 1.16  
 

 
Efficiency change 1 1.03 1.42 0.90 1.26 1.09 1.13 

 
 

   
 

  Technical change 1 1.07 0.85 1.16 1.04 1.06 1.03  
 

  Mean efficiency (B&C) 0.50 0.50 0.57 0.67 0.73 0.89 0.67  
 

 
Adilabad 

TFP growth 1 1.01 1.04 0.95 1.20 1.22 1.08  
 

 
Efficiency change 1 0.98 1.09 0.91 1.10 1.00 1.01 

 
 

   
 

  Technical change 1 1.03 0.96 1.05 1.08 1.22 1.07  
 

  Mean efficiency (B&C) 0.77 0.76 0.61 0.64 0.68 0.70 0.68  
 

 
Nalgonda 

TFP growth 1 1.12 0.65 1.43 1.15 1.12 1.06  
 

 
Efficiency change 1 1.25 0.82 0.99 0.96 0.96 0.99 

 
 

   
 

  Technical change 1 0.90 0.79 1.44 1.20 1.17 1.07  
 

  Mean Efficiency (B&C) 0.90 0.80 0.64 0.63 0.63 0.66 0.67  
 

 
Mahbubnagar 

TFP growth 1 0.97 0.60 1.58 1.18 1.10 1.04  
 

 
Efficiency change 1 0.96 0.75 1.11 1.13 1.04 0.99 

 
 

   
 

  Technical change 1 1.01 0.81 1.42 1.04 1.06 1.05  
 

  Mean efficiency (B&C) 0.93 0.92 0.83 0.82 0.59 0.54 0.72  
 

 
Nizamabad 

TFP growth 1 1.00 1.00 0.91 1.24 0.76 0.97  
 

 
Efficiency change 1 1.00 1.00 0.83 0.82 0.70 0.86 

 
 

   
 

  Technical change 1 1.00 1.00 1.10 1.51 1.08 1.12  
 

 
Mean efficiency (B&C) estimates are based on Battese and Coelli (1995) model. 

 

 

growth, while in Rayalaseema except in 1986 to 1996, 
there was stagnation in growth. In both Coastal and 
Telangana, most of the growth came from technological 
change, which indicates technological progress ushered 

 
 

 

by green revolution in major crops like paddy. In Coastal, 
efficiency is highest throughout the period, while in 
Telangana efficiency is the lowest, it indicates that with 
the existing resource endowment and technology, 



 
 
 

 
Table 12. Mean efficiency and TFP growth per decade and its decomposition from 1956 to 2007 in Rayalaseema districts.  

 
District Data 1956 1956-66 1966-76 1976-86    1986-96 1996-2007 Mean 

 

 Mean Efficiency (B&C) 0.78 0.87 0.84 0.81 0.89 0.85 0.85 
 

Chittoor 
TFP growth 1 1.45 1.00 1.00 1.00 1.00 1.08 

 

Efficiency change 1 1.90 1.00 1.00 1.00 1.00 1.14 
 

 
 

 Technical change 1 0.77 1.00 1.00 1.00 1.00 0.95 
 

 Mean efficiency (B&C) 0.95 0.87 0.83 0.80 0.87 0.88 0.85 
 

Kurnool 
TFP growth 1 0.67 0.83 1.23 1.55 1.09 1.03 

 

Efficiency change 1 0.71 0.91 1.03 1.28 0.82 0.93 
 

 
 

 Technical change 1 0.94 0.91 1.20 1.21 1.33 1.11 
 

 Mean efficiency (B&C) 0.47 0.45 0.44 0.48 0.53 0.61 0.50 
 

Kadapa 
TFP growth 1 0.71 0.62 1.05 1.56 1.04 0.94 

 

Efficiency change 1 0.99 0.77 0.90 1.13 1.02 0.95 
 

 
 

 Technical change 1 0.72 0.80 1.16 1.38 1.01 0.99 
 

 Mean efficiency (B&C) 0.96 0.89 0.67 0.66 0.72 0.68 0.72 
 

Anantapur 
TFP growth 1 0.99 0.92 0.84 1.00 1.04 0.95 

 

Efficiency change 1 1.09 0.98 0.75 1.05 0.99 0.97 
 

 
 

 Technical change 1 0.91 0.93 1.12 0.96 1.05 0.99 
 

 
 

 

Telangana can increase its output by more than 28% 
from the existing level, while Coastal region could 
enhance it by only 14% and Rayalaseema by 25% in 
2007. 
 

 

CONCLUSIONS AND POLICY OPTIONS 

 

The agricultural development in the less developed 
districts is a big challenge as they are resource poor 
regions and crops are grown under more risky agro-
ecological conditions, over the time they become 
specialized in dry land crops, which are technologically 
less productive and high risk crops, farmers are deprived  
of physical and financial capital, higher costs in 
developing, delivering and accessing services (for input 
or output markets, or research, extension from both 
public and private sectors), greater competition in their 
output markets make their agriculture unsustainable. 
Many of these difficulties are endogenous, such as agro-
ecological, locational, demographic and socio-economic 
which affects agricultural transformation is a direct result 
of these differences. It is unfortunate that an already 
difficult task has been made harder by broader processes 
of change (for example some aspects of globalization and 
withdrawal of state from support services). Governments 
must try to reduce transaction costs and increase 
profitability to farmers and traders where high transaction 
costs and low profits are constraining development of 
these unfavourable regions. With more variability, risk 
and uncertainty and with lower densities of 

 
 
 
economic activity (like Anantapur and Mahbubnagar), the 
need for state support is even greater than it was in the 
high-income regions.  

So far in this paper, we have argued that agricultural 
growth, particularly cereal based intensification, offers the 
best potential in the Coastal region. On the other hand. 
Telangana and Rayalaseema regions are not suitable for 
such cereal based revolution. This leaves policy makers 
with a major challenge as external action to reduce 
transaction costs and raise the profitability of agricultural 
diversification led growth. What then are the best policy 
options for agricultural growth in these areas in the long 
run, keeping their competitiveness? Some policy options 
are not controversial: the benefits of education, improved 
governance and communications infrastructure are widely 
recognised and benefit farm sectors in under developed 
regions. Some researchers also question effectiveness of 
research and extension services without complementary 
markets and infrastructure, and there is a continuing 
process of experimentation about the best means and 
practices to finance and deliver these services to 
commercial and subsistence farmers. High transaction 
costs may be even more constraining on agricultural 
diversification towards commercial crops, there is a 
greater need for price support and stabilisation to make 
the technologies financially attractive to farmers (Reddy, 
2009a, b). Due to lack of policies which address regional 
disparities,the gap widened between the potential and the 
actual productive capacities of agriculture. 
 

The paper also examined productivity growth, since the 



 
 
 

 
Table 13. Mean efficiency and TFP growth per decade and its decomposition from 1956 to 2007 in Coastal districts.  

 
District Data 1956 1956-66 1966-76 1976-86 1986-96 1996-2007 Mean 

 

 Mean efficiency (B&C) 0.52 0.41 0.41 0.62 0.86 0.89 0.61 
 

Nellore 
TFP growth 1 0.90 1.15 2.39 1.58 1.39 1.40 

 

Efficiency change 1 1.11 1.27 1.68 1.10 1.12 1.24  

 
 

 Technical change 1 0.82 0.90 1.43 1.44 1.24 1.13 
 

 Mean efficiency (B&C) 0.75 0.74 0.74 0.79 0.92 0.92 0.82 
 

Krishna 
TFP growth 1 1.15 0.94 1.27 1.40 1.17 1.18 

 

Efficiency change 1 1.06 0.98 1.22 1.02 1.03 1.06 
 

 
 

 Technical change 1 1.09 0.95 1.04 1.37 1.14 1.11 
 

 Mean efficiency (B&C) 0.90 0.80 0.89 0.94 0.88 0.88 0.90 
 

Guntur 
TFP growth 1 1.23 1.03 1.27 1.02 1.13 1.13 

 

Efficiency change 1 1.19 0.96 1.14 0.81 0.96 1.00  

 
 

 Technical change 1 1.03 1.07 1.12 1.25 1.18 1.13 
 

 Mean efficiency (B&C) 0.91 0.86 0.81 0.80 0.92 0.92 0.86 
 

East Godavari 
TFP growth 1 1.16 1.01 1.00 1.06 1.00 1.04 

 

Efficiency change 1 1.35 1.02 1.00 1.00 1.00 1.07 
 

 
 

 Technical change 1 0.86 0.99 1.00 1.06 1.00 0.98 
 

 Mean efficiency (B&C) 0.95 0.92 0.86 0.81 0.87 0.82 0.85 
 

West Godavari 
TFP growth 1 1.00 1.00 1.00 1.13 1.00 1.02 

 

Efficiency change 1 1.00 1.00 1.00 1.00 1.00 1.00 
 

 
 

 Technical change 1 1.00 1.00 1.00 1.13 1.00 1.02 
 

 Mean efficiency (B&C) 0.61 0.60 0.60 0.66 0.80 0.91 0.71 
 

Srikakulam 
TFP growth 1 0.97 0.97 0.66 1.34 1.26 1.01 

 

Efficiency change 1 1.47 1.01 0.61 0.94 1.16 1.00  

 
 

 Technical change 1 0.66 0.96 1.08 1.43 1.09 1.01 
 

 Mean efficiency (B&C) 0.90 0.86 0.84 0.85 0.93 0.92 0.88 
 

Visakhapatnam 
TFP growth 1 1.00 1.00 1.00 1.00 1.00 1.00 

 

Efficiency change 1 1.00 1.00 1.00 1.00 1.00 1.00  

 
 

 Technical change 1 1.00 1.00 1.00 1.00 1.00 1.00 
 

 
 
 

 

formation of united Andhra Pradesh in 1956 at district 
level, by using Malmquist productivity indices. Overall, 
TFP growth in agriculture and allied activities in 
Telangana is about 1.3% per annum, the same are 1.1% 
per annum in Coastal, while TFP growth in Rayalaseema 
is stagnant. It indicates that, there is a convergence in 
TFP growth among districts of developed coastal and 
less developed Telangana regions, but districts in 
Rayalaseema region are left out of this growth process, 
as Rayalaseema region is not able to catch up with the 
other two regions in agricultural productivity. Another 
important finding is that irrespective of region most 
backward districts in agriculture, that is Srikakulam,  
Visakhapatnam, Anantapur, Kadapa, Adilabad, 

 
 
 

 

Nalgonda, Mahbubnagar and Nizamabad showed 
stagnation in TFP growth during the last 50 years. With 
the existing resource endowment and technology, 
Telangana can increase its output by more than 28% 
from the existing level, while Rayalaseema region can 
enhance its output by 25%, Coastal region by only 14% 
as revealed from efficiency estimates. Shadow input 
shares indicate that, still gross irrigated area, fertilizer use 
and availability of labour are three important inputs, which 
limits the district production frontier. Inefficiency effects 
model (Bettese and Coelli, 1995) reveals that market 
infrastructure and credit availability are two important 
variables in increasing efficiency. Study results also 
emphasize importance of resource endowment (physical 



 
 
 

 
Table 14. Region wise mean efficiency and TFP growth per decade and its decomposition from 1956 to 2007.  

 
Region Data 1956 1956-66 1966-76 1976-86 1986-96 1996-2007 Mean 

         

 Mean efficiency (B&C) 0.54 0.53 0.51 0.58 0.64 0.70 0.59 

 Mean efficiency (DEA) 0.52 0.60 0.58 0.63 0.67 0.72 0.62 

Telangana TFP growth 1 1.10 0.85 1.34 1.28 1.16 1.13 

 Efficiency change 1 1.15 0.97 1.08 1.06 1.07 1.06 

 Technical change 1 0.96 0.88 1.24 1.21 1.08 1.07 

 Mean efficiency (B&C) 0.78 0.73 0.70 0.77 0.89 0.90 0.80 

 Mean efficiency (DEA) 0.68 0.79 0.81 0.85 0.83 0.86 0.80 

Coastal TFP growth 1 1.05 1.01 1.14 1.20 1.13 1.11 

 Efficiency change 1 1.16 1.03 1.05 0.98 1.04 1.05 

 Technical change 1 0.91 0.98 1.09 1.23 1.09 1.05 

 Mean efficiency (B&C) 0.76 0.74 0.67 0.68 0.73 0.75 0.72 

 Mean efficiency (DEA) 0.77 0.85 0.77 0.71 0.78 0.75 0.77 

Rayalaseema TFP growth 1 0.91 0.83 1.02 1.25 1.04 1.00 

 Efficiency change 1 1.10 0.91 0.91 1.11 0.96 0.99 

 Technical change 1 0.83 0.91 1.12 1.12 1.09 1.01 

 Mean efficiency (B&C) 0.65 0.63 0.60 0.66 0.74 0.77 0.68 

 Mean efficiency (DEA) 0.62 0.71 0.69 0.72 0.74 0.77 0.71 

Andhra Pradesh TFP growth 1 1.04 0.90 1.20 1.24 1.12 1.10 

 Efficiency change 1 1.14 0.98 1.03 1.04 1.04 1.04 

 Technical change 1 0.91 0.92 1.16 1.20 1.09 1.05 
 

Mean efficiency (DEA) estimates are with data envelopment analysis. 
 
 
 
and human) in base year for subsequent growth. Some of 
the issues policy should address are: 
 
(i) Ensuring market access at village level to finance and 
inputs, and hence to output markets can only be 
addressed by policy intervention to promote agricultural 
diversification growth strategy,  
(ii) Direct and indirect costs and benefits need to be 
accounted while addressing exposure to risk in the more 
marginal agro-ecological regions,  
(iii) Policy analysis should consider the costs, benefits 
and difficulties of market interventions together with those 
of welfare interventions, as they both compete for the 
same resources with similar objectives and outcomes,  
(iv) Development of new institutions and market 
structures that will require less state support and become 
self sustainable,  
(v) Action research is needed in institutional innovation, 
trying out innovative institutional arrangements involving 
for example, elements of interlocking transactions, 
producer groups, regulated monopsony, cooperative 
competition and use of agents such as traders, trader 
information groups, and  
(vi) Promotion of new communication technology, 
transport, contract farming and market infrastructure to 
reduce transaction costs. 

 
 
 

 
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