South India - Economy

Economy

India's economy after independence in 1947 conformed to a socialist framework, with strict governmental control over private sector participation, foreign trade and foreign direct investment (FDI). Through 1960–1990, South Indian economies experienced mixed economic growth. In the 1960s, Kerala achieved above average economic growth, while Andhra Pradesh's economy declined during this period. Similarly, Kerala experienced economic decline in the 1970s while the economies of Tamil Nadu, Andhra Pradesh and Karnataka consistently exceeded national average growth rates after 1970. Andhra Pradesh, Tamil Nadu and Karnataka were noted by some to be more reform-oriented in terms of economic policy when compared to other Indian states.

Over 48% of South India's population is engaged in agriculture, which is largely dependent on seasonal monsoons Some of the main crops cultivated in South India include paddy, sorghum, pearl millet, pulses, sugarcane, cotton, chilli, and ragi. Areca, coffee, tea, vanilla, rubber, pepper, tapioca, and cardamom are cultivated on the hills, while coconut grows in abundance in coastal areas. Andhra Pradesh is the largest producer of rice in India, while Karnataka produces 70% of India's coffee. Frequent droughts in northern Karnataka, Rayalaseema and Telangana have left farmers debt-ridden, forcing them to sell their livestock and sometimes even to commit suicide. The region also suffers from water scarcity, especially during summer. Since the liberalisation of the Indian economy, South India has seen a decrease in revenue from agriculture and agriculture related services.

Traditionally, Karnataka and Tamil Nadu have been home to large, public sector industries (referred to as Public Sector Undertakings, or PSUs), with both states posting above average growth rates in this sector following economic liberalisation. Bangalore and Hyderabad, the IT hubs of India are home to software giants. Bangalore, also known as the Silicon Valley of India, hosts majority of the IT companies of the world. Chennai, the Detroit of South Asia, accounts for about 35% of India's overall automotive components while the registered headquarters of 39% of all Central PSUs in South India are located in Karnataka and 25% each in Tamil Nadu and Andhra Pradesh. Additionally, the growth of information technology (IT) hubs in the region have spurred economic growth and attracted foreign investments and job seekers from other parts of the country. Bangalore and Hyderabad, the IT hubs of India are home to software giants. In fiscal 2006–2007, Tamil Nadu and Karnataka attracted the third and fourth highest total FDI approvals in India, respectively, totalling to over 41,700 crore (US$7.59 billion) Software exports from South India grossed over 64,000 crore (US$11.65 billion) in fiscal 2005–06.