ASSOCHAM IndiaApex industry body ASSOCHAM has suggested the Andhra Pradesh to fulfill various electoral promises by promoting value addition in agriculture sector and creating opportunities to double farmer incomes thereby encouraging them to produce and export high-value fruits and vegetables using modern farming technologies and high quality seeds which should be duly supported by setting up food processing centres and world-class agriculture universities.

With a view to establish a vibrant entrepreneurial eco-system in Andhra Pradesh, ASSOCHAM has suggested the state government to set up an ‘AP Entrepreneurship Mission,’ based on public-private partnership (PPP) approach.

“With the ultimate objective of employment generation through acceleration of entrepreneurship and business creation to tap rural markets of Andhra Pradesh, the Mission must aim at facilitating 200 business and convenience hubs to provide services and facilities to both rural industries and households,” noted a recently-concluded paper tiled ‘Strategy for Developing the New Andhra Pradesh State,’ conducted by ASSOCHAM.

“Considering that cost of one rural entrepreneurial hub would be in a range of Rs 30-50 crore, it would require financial support worth Rs 6,000-10,000 crore to create requisite ecosystem during the course of next 10 years,” added the strategy paper prepared by The ASSOCHAM Economic Research Bureau (AERB).

As in the case of special category state, 90 per cent cost of creating this ecosystem will be a grant from the Government of India and the remaining will be treated as a loan to the Government of Andhra Pradesh, it added.

Each rural business and convenience hub would consist of an e-governance and agriculture service centre; nursing home, pathological lab and pharmacy; banks and non-banking financial institutions (NBFCs); skill development centre; rural market; proper connectivity and other such facilities.

“Such a vibrant eco-system would ensure an easy access to capital flows comprising both debt and equity to entrepreneurial ventures; venture capital required for further scaling up of businesses; angel investor services to provide mentoring and network access to entrepreneurs and others,” said Mr D.S. Rawat, national secretary general of ASSOCHAM while releasing the findings of the chamber’s paper.

Investment scenario in AP

As of March 31, 2014, the residue Andhra Pradesh state has attracted total outstanding investments worth about Rs 8.2 lakh crore with power (28 per cent), manufacturing  (other than food processing – 18 per cent), infrastructure (17 per cent) and refinery (12 per cent) sectors together comprising over 75 per cent share.

Mining (eight per cent), irrigation (seven per cent), construction and real estate (four per cent) and information technology and electronics (two per cent) are other sectors with significant share in total outstanding investments attracted by AP.

Ownership-wise, private sector (both Indian and foreign) accounts for almost 65 per cent of the total investments attracted by residue Andhra Pradesh state with domestic private sector garnering lion’s share of about 62 per cent and while private foreign investors account for the remaining share of about three per cent, further noted the ASSOCHAM Strategy Paper.

While the Central Government accounts for over 21 per cent share in the total outstanding investments attracted by AP, 13 per cent is the share of State Government and Government Local Bodies account for about one per cent share.

However, most of the investment projects attracted by AP are facing significant delays in implementation owing to a plethora of reasons like land acquisition delays, fund constraints, delay in environmental and other clearances along with law and order problems.

“Andhra Pradesh paints a grim picture vis-à-vis implementation of investment projects as over 49 per cent projects have remained non-starter as of these about 28.5 per cent projects are in announcement stage while implementation of about seven per cent projects has been stalled and there is no information about projects comprising 13.5 per cent share in total outstanding investments,” highlighted the ASSOCHAM strategy paper.

Several departments of the state government play a crucial role in the implementation of investment projects as land acquisition, shifting of utilities and others are taken at the state government’s level, besides geographical features of the state may also affect the project time, the paper added. “The new government must focus more on implementing the delayed projects on priority.”

Though projects with just 0.5 per cent share have been completed in the state, projects under different stages of implementation hold majority share of about 51 per cent in the investments attracted by residual AP.

ASSOCHAM suggestions to transform AP’s economy

In its paper, ASSOCHAM has suggested various strategies to be adopted for sector-wise and overall growth and development of AP which includes promoting the cultivation of horticulture, floriculture, medicinal herbs and plants; transforming dairy farmers into entrepreneurs to make value addition to the dairy industry of the state; setting up solar parks and wind turbine generators; revival of inland waterways; providing long-term finance to marginal, small and medium enterprises (MSMEs); carrying out agriculture reforms.

ASSOCHAM has also suggested the new state government to develop a world-class hub airport at Vijayawada with required convenience, connectivity and network.

Besides, the apex industry chamber has also urged for speedy completion of project for modernization of Machilipatnam port and an inland container depot with all logistics facilities needs to be set up near Hyderabad and linked to Machilipatnam port with a ten-lane road network.

With a view to position the state as an international trade hub, ASSOCHAM has also suggested the new government to set up an Andhra Pradesh Maritime Board as a nodal agency to prepare suitable development strategies for each of the identified natural ports alongside the state’s 1,000 kilometers long coastline and entrust this job to the private sector thereby taking a cue from Gujarat on the Western Coast which has been successful in such a venture.

ASSOCHAM has also recommended the new state government to develop food processing, IT and ITeS, health tourism and education based clusters on both sides of the proposed Vizag-Chennai Industrial Corridor.

Considering that combined AP accounts for a meagre two per cent share in India’s IT exports, ASSOCHAM has recommended the state Government to float a strategy in this regard thereby taking a leverage from region’s advantage in terms of manpower and entrepreneurship and the scope for IT and electronics to emerge as growth engines for the state’s economy.