Services

Andhra Pradesh, through its mission based strategic approach envisions to overcome structural inadequacies by creating citizen and business centric environment through better governance. Service Sector Mission is one of the seven missions constituted by the Government of Andhra Pradesh.

Service sector is imperative for the economic growth of the state since every additional job in this sector contributes 3.8 times to GVA as compared to agriculture. Services sector provides an opportunity for shifting excessive and less productive work force out of the primary sector. Services has a share of 46% in State GVA, followed by Agriculture (32%) and Industry (22%). Of this GVA contribution of (46%) from services (growth rate of 16.01%), a share of 9% comes from ‘Trade hotel & restaurants’ (growth rate 13.04%), 11% from ‘Transport storage and communication’ (growth rate of 16.5%), 13% from ‘Financing, insurance, real estate and business services’ (growth rate of 15.8%), and 13% from ‘Community Social and Personal Services’ (growth rate of 17.5%) (FY 2016-17)

Despite significant growth rates, GVA contribution from services sector in the economy is low for Andhra Pradesh when compared to that of leading states like Karnataka (64%), Telangana (61%), Maharashtra (55%) and also the national average (54%). Given the benefits to the State from encouraging activity in this sector, a Task Force has been constituted under the leadership of Hon’ble Chief Secretary, with Secretaries from different line departments as its members and Secretary, Planning as its Convenor. The task force has identified important growth engines and necessary strategies to give a fillip to the sector.

‘Retail’ has been identified as a critical growth engine. The task force has directed officers of the State to come up with an action plan to promote 500 ‘Made in AP’ products, and to set up Integrated Retail parks in both Urban and Semi-Urban areas. To improve the operational efficiency of the Kirana Stores, INR 500 Cr has been earmarked in the state annual credit plan for transformation of the ‘Kirana Stores’. It has been decided to give a boost to ‘Tourism and the MICE industry’. The Tourism department has signed a strategic MOU with Ola to deploy the fleet of cabs in all the cities and tourist destinations in the state. It is planned to increase room capacity in five-star hotels from existing 750 to 3,200 in the next three years. Leveraging on the long coastline & the existing National Highway network in the state, integrated wayside and beach side amenities are being set up at identified locations.

Air transport and storage are other important growth engines that have been identified for promoting the services sector of Andhra Pradesh. Kadapa Airport has been made operational under the Regional Connectivity Scheme, and international operations are planned for commencement from Vijayawada and Tirupati airports in addition to Vishakhapatnam. Construction of Multi Modal Logistics parks (MMLP), and Cargo Terminal at the selected airports is underway, which shall promote trade (domestic/exports) and also create demand for services. Inland waterway works shall commence shortly, which shall not only provide seamless cargo movement at cheaper cost, but also create immense employment opportunities.

Ongoing construction activities (housing, engineering works, capital construction) in the state are providing fillip to the ‘Real estate services’ in the economy. Government has announced Asia’s largest ‘Fintech Hub’ along the beach in Visakhapatnam. Companies like HSBC and Paytm have already commenced operations from the plug-and-play facility developed there. Other foreign banks along with local players are expected to set up offices soon. 166 IT companies with a committed investment of INR 3,400 crores have initiated operations in the State and another 165 IT companies are expected to commence operations bringing in an investment of INR 7,670 crores.

In addition to the above ongoing initiatives, Premier educational institutions like IIT, NIT and IIM – Visakhapatnam along with other private universities have come up in the State. The Task Force has identified ‘Health, Banking and Media & Entertainment’ as other important growth engines, and plans are underway to promote the same.