In the mid sixties, the green revolution brought significant changes in the agrarian production in Andhra Pradesh. The irrigation potential created earlier was coupled with modern inputs like technology in terms of farm machinery. High yielding seeds and large use of fertilisers triggered this revolution. As observed by Upadhya, this (green revolution) has strengthened the capitalist tendencies in the agrarian economy, and big and landowning farmers have become what can best be termed as ‘capitalist-farmers’.
One of the important factors that contributed to the economic development of these landowning castes especially the Kamma caste is the caste based social network in business and agriculture. This caste consciousness and identity among the dominant castes has become instrumental for successful economic development.
The present low rate of industrial growth in Andhra Pradesh has its roots in the nature of reinvestment of the agrarian surplus, of irrigation facilities and green revolution. This capital could not be invested back into the agrarian sector because of its inelastic nature and failure to engender quick and attractive returns. As a part of this process, there was penetration of this capital into backward regions like Telangana, which remained underdeveloped under prolonged feudal dominance. Though this efforts to the spread of capitalist development through industrialisation was resisted by the people organised under Telangana agitation in the late sixties. Particularly the educated youth, who were finding employment opportunities diminishing, resisted. The capital that retracted from its earlier efforts was in search of new avenues for investment. It was during this time, there was large scale of investment in the construction industry, hotels and cinema theatres. A large part of the capital went into the cinema production, distribution and exhibition itself. This created as base for the lumpen economy in the socio- economic structure.
However, the industrialisation efforts in the state gained momentum and rapidity from the mid-seventies. This is largely the result of limitations to absorb the capital by the lumpen economy. This led to the emergence of a ‘local industrial class’ with its roots in the agrarian surplus of coastal Andhra. By the late seventies “the rich peasantry and the emerging regional industrial class were looking for a strong government at the state level, which is intended to maintain industrial peace and mobilise resources for further capital support to the growing industrial base”.
Along with this resentment among rich peasants, the poor and middle peasantry belonging to the backward classes also began to feel alienated and disillusioned with the Congress party under Mrs. Gandhi. Their condition in many parts of the rural areas was found to be worse than that of the agricultural labourers. Finally, the breakdown in client-patron relations at the local level, resulted in the failure of political communication and created a void which went unfulfilled in the absence of any new grassroots party organisation.