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Panchayat Raj and Rural Development · Chapter 7

Rural Economy of Andhra Pradesh

What to remember

  • Agriculture is the base of the AP rural economy, supported by allied sectors (dairy, poultry, fisheries) and by artisans, small industries and the rural non-farm sector.
  • AP has three broad farming zones: the Coastal region (river deltas, paddy, aquaculture), Rayalaseema (dry, groundnut, horticulture) and the Uttarandhra region (cashew, pulses, millets, paddy).
  • Rural non-farm activity (crafts, MSMEs, services, processing) gives income and jobs that reduce the pressure on farming.

1. Features of the rural economy

A rural economy is the sum of all earning activities in villages. In AP it shows these features:

  • Dependence on agriculture: large numbers of people earn mainly from crops, livestock or fishing.
  • Small holdings: most farmers are small or marginal, so incomes are low and risk is high.
  • Seasonal work: farm jobs are available only in some months, which causes seasonal unemployment.
  • Disguised unemployment: more people work on a farm than are really needed.
  • Dependence on rain and irrigation: a monsoon failure hurts incomes quickly.
  • Tenancy: many cultivators work on leased land (tenant farmers), often without proper papers.
  • Rural-urban migration: workers move to towns or other States when local work is short.

2. Agriculture

AP has long coastline, two great rivers (Godavari and Krishna) with delta systems, and also dry upland areas.

RegionTypical featuresImportant crops and activities
Coastal AndhraDeltas, canal irrigation, fertile soilPaddy, sugarcane, banana, coconut, aquaculture, tobacco
RayalaseemaLow rainfall, black and red soils, tanks and borewellsGroundnut, cotton, millets, pulses, fruit orchards
UttarandhraHills and rivers, tribal beltsPaddy, cashew, millets, pulses, spices

Other notable points:

  • AP is among the leading States in rice production and is often called a rice-surplus State.
  • Guntur area is well known for chilli, and tobacco is grown in coastal and some other districts.
  • Horticulture (mango, citrus, banana, papaya, oil palm, spices) has grown strongly in AP.
  • Aquaculture: coastal brackish-water ponds raise shrimp and fish, and AP is among the main producers of farmed shrimp.
  • Allied activities: dairy, poultry, sheep and goat rearing, and inland fishing are important sources of extra income.
  • Irrigation sources: canals, tanks, tube wells and lift schemes. Polavaram, the multipurpose project on the Godavari, is meant to add irrigation (the project is under construction; check the latest official release for status).

3. Challenges in farming

  • Small land holdings and fragmentation.
  • Cyclones, floods and drought.
  • Dependence on a few cash crops and price fluctuations.
  • Debt and high cost of inputs.
  • Weak storage, processing and marketing.
  • Falling groundwater in dry areas.

Responses include: crop insurance, minimum support price (MSP), soil health cards, micro-irrigation (drip and sprinkler), natural farming promotion, Rythu support centres at village level, e-crop booking of crops sown, and market yards.

4. Natural farming

AP promotes natural farming (also called zero-budget natural farming in its early form), which avoids chemical fertilisers and pesticides and uses cow dung, urine, mulching and local seed. The aim is to cut input costs and improve soil health. The programme is run through community resource persons and SHG women.

5. Artisans and handicrafts

A rural artisan is a skilled person who makes goods by hand, often as a family tradition. AP has many well-known crafts, several with a Geographical Indication (GI) tag, which protects a product's name and origin.

CraftPlace or areaProduct
Kondapalli toysKondapalliSoft-wood painted toys
Etikoppaka toysEtikoppakaLacquered wooden toys
KalamkariSrikalahasti and Machilipatnam stylesHand-painted or block-printed cloth
Dharmavaram silkDharmavaramSilk sarees
MangalagiriMangalagiriCotton sarees and fabrics
VenkatagiriVenkatagiriFine cotton sarees
Uppada JamdaniUppadaSilk sarees
BudithiBudithiBrass and bell-metal ware
Bobbili veenaBobbiliMusical instrument
Leather puppetsNimmalakuntaShadow-puppet leather figures

Problems of artisans: low wages, middlemen, competition from machine-made goods, lack of credit and marketing. Remedies: cluster development, common facility centres, design support, e-commerce, GI protection, handicraft emporia (such as Lepakshi) and credit through banks and SHGs.

6. MSMEs and small-scale industry

MSMEs (Micro, Small and Medium Enterprises) are classified under the MSME Development Act, 2006 by investment and turnover (limits have been revised, so check the latest official release). They are important because they:

  • create large employment with low capital,
  • use local raw material and skills,
  • spread industry to rural and backward areas,
  • reduce regional inequality.

Agencies and schemes:

  • District Industries Centre (DIC): the district-level office that helps start small industries.
  • Khadi and Village Industries Commission (KVIC): promotes khadi and village industries.
  • Prime Minister's Employment Generation Programme (PMEGP): credit-linked subsidy for new micro enterprises, run through KVIC, DICs and banks.
  • MUDRA loans: collateral-free small loans for micro enterprises.
  • One District One Product (ODOP): a national approach that picks a main product for each district.
  • Industrial clusters and parks: common facilities for groups of units.
  • APIIC: the State agency that develops industrial areas and land.

7. Rural non-farm sector

The non-farm sector includes all rural earning activity outside crops and livestock.

  • Manufacturing: food processing, rice mills, oil mills, brick kilns, handlooms, carpentry.
  • Services: shops, transport, repair work, tourism, education, health.
  • Construction: houses, roads and canals, often employing rural labour.
  • Trade and marketing: markets, commission agents, cold storage.

Its importance: it raises family income, gives work in the off-season, supports women's employment through SHG enterprises, and keeps workers in villages.

8. Rural infrastructure for growth

Roads, electricity, cold storage, warehouses, markets, mobile and internet connectivity, and banks all increase rural incomes. Producer organisations (Farmer Producer Organisations) help small farmers sell together. SHG-run enterprises are becoming linked to local value chains.

9. Livestock, dairy and fisheries

Livestock is a steady source of income for landless and small farmers. Dairy co-operatives collect milk from villages, chill it and sell it, which gives families a regular daily income. Poultry farming is also well developed in the State, and sheep and goat rearing is common in the dry parts. Inland fishing in tanks and reservoirs, and marine fishing along the long coast, provide jobs for fishing communities. Cold chains, feed supply and veterinary care are the key needs of this sector. Women's groups often run dairy and small livestock units with bank credit.

10. Marketing and value addition

A farmer earns more when produce is graded, stored, processed and sold in a good market. Regulated market yards, e-trading platforms and Rythu support centres help farmers reach buyers. Food processing units (rice mills, spice grinding, fruit pulp, cashew processing, oil extraction) add value and create rural jobs. Small farmers gain when they sell through producer groups rather than alone. Warehouses and cold storage reduce post-harvest loss.

Exam traps

  • Kondapalli and Etikoppaka are both wooden-toy places; Kondapalli uses soft wood and Etikoppaka uses lacquer.
  • Dharmavaram is known for silk sarees; Venkatagiri and Mangalagiri are known for cotton.
  • Pochampally is in Telangana, not AP.
  • Disguised unemployment means extra workers add nothing to output; seasonal unemployment means no work in some months.
  • A GI tag protects origin and name; it is not a trademark of a private company.
  • PMEGP gives credit-linked subsidy; MUDRA gives loans; KVIC is a statutory body.
  • MSP is a price-support promise by the Government; crop insurance covers crop loss.
  • Rayalaseema is dry; the Coastal region has deltas.

One-liners

  • 1. The Godavari and Krishna deltas are the rice bowl of AP.
  • 2. Rayalaseema is a low-rainfall region.
  • 3. Aquaculture is concentrated along the AP coast.
  • 4. A GI tag protects a product's name and origin.
  • 5. Kondapalli toys are made of soft wood.
  • 6. Etikoppaka toys are lacquered.
  • 7. Dharmavaram is famous for silk sarees.
  • 8. Kalamkari is hand-painted or printed cloth.
  • 9. The MSME Development Act dates from 2006.
  • 10. PMEGP is operated through KVIC, DICs and banks.
  • 11. District Industries Centres help start small industries.
  • 12. Natural farming avoids chemical fertilisers and pesticides.

Practice questions

  1. Which two rivers form the major delta systems of coastal Andhra Pradesh?

    1. Tungabhadra and Penna
    2. Narmada and Tapi
    3. Vamsadhara and Nagavali
    4. Godavari and Krishna
    Answer

    D. Godavari and Krishna

    The Godavari and Krishna deltas are the rice bowl of the coast.

  2. Which region of AP is the driest and known for groundnut cultivation?

    1. Godavari delta
    2. Rayalaseema
    3. Krishna delta
    4. Uttarandhra coast
    Answer

    B. Rayalaseema

    Rayalaseema has low rainfall and grows groundnut and millets.

  3. Kondapalli toys are traditionally made from

    1. plastic
    2. clay only
    3. soft wood
    4. brass
    Answer

    C. soft wood

    Kondapalli toys are painted soft-wood toys.

  4. Etikoppaka toys are known for

    1. brass casting
    2. leather work
    3. silk weaving
    4. lacquer colouring on wood
    Answer

    D. lacquer colouring on wood

    Etikoppaka toys are lacquered wooden toys.

  5. Dharmavaram is famous for

    1. leather puppets
    2. silk sarees
    3. wooden toys
    4. brassware
    Answer

    B. silk sarees

    Dharmavaram silk sarees are well known.

  6. Venkatagiri is best known for

    1. fine cotton sarees
    2. lac toys
    3. shrimp farming
    4. cashew
    Answer

    A. fine cotton sarees

    Venkatagiri is a handloom centre known for cotton sarees.

  7. Uppada is known for

    1. bell-metal ware
    2. musical instruments
    3. wooden toys
    4. Jamdani silk sarees
    Answer

    D. Jamdani silk sarees

    Uppada Jamdani is a GI-tagged saree.

  8. Budithi is famous for

    1. leather puppets
    2. silk sarees
    3. veena making
    4. brass and bell-metal ware
    Answer

    D. brass and bell-metal ware

    Budithi is known for metalware.

  9. The Bobbili veena is a

    1. puppet
    2. musical instrument
    3. saree
    4. toy
    Answer

    B. musical instrument

    Bobbili is known for veena making.

  10. Nimmalakunta is known for

    1. leather puppets
    2. silk sarees
    3. brassware
    4. lac toys
    Answer

    A. leather puppets

    Nimmalakunta makes leather shadow puppets.

  11. A Geographical Indication (GI) tag protects

    1. a company's brand logo
    2. a product's name and place of origin
    3. a worker's wages
    4. a farmer's land
    Answer

    B. a product's name and place of origin

    GI links a product's name with its region.

  12. The MSME Development Act was passed in

    1. 1976
    2. 1991
    3. 2006
    4. 2014
    Answer

    C. 2006

    The MSME Development Act dates from 2006.

  13. PMEGP is carried out mainly through

    1. KVIC, DICs and banks
    2. only RBI
    3. only Panchayats
    4. only NABARD
    Answer

    A. KVIC, DICs and banks

    These agencies handle the PMEGP subsidy and credit.

  14. DIC stands for

    1. Development Industry Committee
    2. District Income Council
    3. District Investment Corporation
    4. District Industries Centre
    Answer

    D. District Industries Centre

    DICs help small units at district level.

  15. The State agency that develops industrial areas in AP is

    1. SERP
    2. APIIC
    3. APSRTC
    4. NABARD
    Answer

    B. APIIC

    APIIC is the Industrial Infrastructure Corporation.

  16. Guntur area is especially known for which crop?

    1. Chilli
    2. Tea
    3. Apple
    4. Coffee
    Answer

    A. Chilli

    Guntur is a well-known chilli area.

  17. Kalamkari refers to

    1. bell-metal ware
    2. lac toys
    3. leather puppets
    4. hand-painted or block-printed cloth
    Answer

    D. hand-painted or block-printed cloth

    Kalamkari is a cloth art.

  18. Minimum Support Price (MSP) is

    1. a loan interest rate
    2. a tax on farmers
    3. a price support promised by the Government
    4. a crop insurance premium
    Answer

    C. a price support promised by the Government

    MSP gives farmers a floor price for notified crops.

  19. Disguised unemployment means

    1. no work in some months
    2. no wages
    3. more workers on a farm than needed
    4. work in cities only
    Answer

    C. more workers on a farm than needed

    Extra workers add nothing to output.

  20. Seasonal unemployment in rural areas means

    1. high wages
    2. no work during some months of the year
    3. work throughout the year
    4. too many tractors
    Answer

    B. no work during some months of the year

    Farm work depends on season.

  21. The main crop of the Godavari and Krishna delta areas is

    1. paddy
    2. coffee
    3. tea
    4. apple
    Answer

    A. paddy

    Canal irrigation supports paddy.

  22. Cashew is an important crop mainly in

    1. Krishna delta
    2. Uttarandhra
    3. Rayalaseema plateau
    4. Godavari delta only
    Answer

    B. Uttarandhra

    Cashew is grown in the north coastal and hill belt.

  23. MSMEs are important for rural areas mainly because they

    1. avoid local raw material
    2. reduce all exports
    3. need huge capital
    4. give large employment with low capital
    Answer

    D. give large employment with low capital

    Small units are labour-intensive.

  24. Natural farming aims to

    1. use more chemical fertiliser
    2. stop all irrigation
    3. grow only cash crops
    4. cut input costs and improve soil health
    Answer

    D. cut input costs and improve soil health

    It avoids chemical inputs.

  25. Drip irrigation is mainly used to

    1. save water
    2. increase rainfall
    3. remove weeds
    4. produce electricity
    Answer

    A. save water

    Drip applies water drop by drop near roots.

  26. A Farmer Producer Organisation (FPO) helps small farmers to

    1. borrow without limit
    2. stop growing crops
    3. buy and sell together
    4. avoid all taxes
    Answer

    C. buy and sell together

    Collective action increases bargaining power.

  27. Which is an example of rural non-farm activity?

    1. Operating a rice mill
    2. Ploughing a field
    3. Transplanting seedlings
    4. Sowing paddy
    Answer

    A. Operating a rice mill

    Processing is non-farm.

  28. Aquaculture in coastal AP mainly involves

    1. mining coal
    2. dry farming
    3. raising shrimp and fish in ponds
    4. growing wheat
    Answer

    C. raising shrimp and fish in ponds

    Brackish-water ponds are used for shrimp.

  29. A major problem faced by rural artisans is

    1. free raw material
    2. lack of skills in all artisans
    3. too much credit
    4. dependence on middlemen and weak marketing
    Answer

    D. dependence on middlemen and weak marketing

    Artisans often get low prices through intermediaries.

  30. A Soil Health Card tells a farmer

    1. the market price
    2. the nutrient status of the soil
    3. the rainfall forecast
    4. the loan limit
    Answer

    B. the nutrient status of the soil

    It guides fertiliser use.

  31. Tenant farmers often face difficulty in getting bank loans because they

    1. own large farms
    2. lack formal land papers
    3. earn very high income
    4. do not grow crops
    Answer

    B. lack formal land papers

    Without land records banks hesitate to lend.

  32. Which craft centre is NOT in Andhra Pradesh?

    1. Venkatagiri
    2. Mangalagiri
    3. Dharmavaram
    4. Pochampally
    Answer

    D. Pochampally

    Pochampally is in Telangana.

  33. Consider the statements: 1. Kondapalli toys are made of soft wood. 2. Etikoppaka toys are made of lacquered wood. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both statements are correct.

  34. Consider the statements: 1. Dharmavaram is known for silk sarees. 2. Dharmavaram is known for leather puppets. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    Leather puppets belong to Nimmalakunta.

  35. Consider the statements: 1. A GI tag is a private company's trademark. 2. A GI tag links a product's name with its region of origin. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    B. 2 only

    GI is about origin, not private trademark.

  36. Consider the statements: 1. Rayalaseema is a high-rainfall delta region. 2. The Coastal region has fertile deltas. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    B. 2 only

    Rayalaseema is dry.

  37. Consider the statements: 1. Disguised unemployment is seen in overcrowded farms. 2. Seasonal unemployment arises from the farm cycle. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are correct.

  38. Consider the statements: 1. MSMEs create employment with low capital. 2. MSMEs have no role in rural development. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    MSMEs help rural industry.

  39. Consider the statements: 1. PMEGP gives credit-linked subsidy. 2. PMEGP is a crop insurance scheme. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    It is for new micro enterprises.

  40. Consider the statements: 1. KVIC promotes khadi and village industries. 2. DICs help set up small industries at district level. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are correct.

  41. Consider the statements: 1. Natural farming avoids chemical fertilisers. 2. Natural farming depends on heavy pesticide use. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    It avoids pesticides.

  42. Consider the statements: 1. Aquaculture is concentrated along the AP coast. 2. Aquaculture is mainly done in hill forests. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    Coastal ponds are used.

  43. Consider the statements: 1. MSP is a minimum price promised by the Government. 2. Crop insurance covers crop loss. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are correct.

  44. Consider the statements: 1. Polavaram is a project on the Godavari. 2. Polavaram is a project on the Narmada. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    It is on the Godavari.

  45. Consider the statements: 1. Pochampally is a handloom centre in AP. 2. Mangalagiri is known for cotton fabrics. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    B. 2 only

    Pochampally is in Telangana.

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