I would be now publishing my first app on Google play store. I have already compressed images used in my app. And I have some questions regarding the app size.
So, Why do I see that much increase in my app size, Can it be minimized ?
The .apk-file
An .apk-file is not magical at all. It's just a bundle of files which represent the content of an Android application. If you open it in a archive-tool (like 7Zip), you can browser and extract it's contents.
Now this apk file is extracted during installation hence there is increase in the size of the App.
Some more detail regarding compilation
What happens to the .java-files?
Well, first they are normally compiled by an installed JDK implementation. After they are compiled (to .class-files), the dx-tool from the Android SDK then cross-compiles those "normal" java-classes into Dalvik-Bytecode.
This "special" java-code is then interpreted by the DVM (Dalvik Virtual Machine), which is based on the opensource JRE-implementation Apache Harmony.
What happens to the resources i put into the /asset-directory?
Android offers the /assets-directory to add some binary raw-files (e.g. a SQLite Database). Files which are put into this directory are not compiled or optimized.
If you put your files into this directory, this is the kind of behavior you would expect from Android.
What happens to the resources i put into the /res/raw-directory?
Like the /assets-directory, you can also put binary (or other) raw-files in here (e.g. HTML-files for the Help-page). These files are compiled/optimized (if possible).
What happens to the Manifest and the other XML-files?
The Android-Manifest and also the other XML-files (Layouts, Strings, etc.) are stored and "compiled" into a binary XML-format. This is a speed-optimization.
So you got the answer why app size is increased after installation.
Now Is it safer to delete them(Android Libraries), & deleting them can help to decrease apk size?
You can remove google-play-services.jar since it is required only in development environment it's not required in runtime environment.Prompt user to install it from the play store.
Coming to Proguard :: It will remove the unused java classes and will do the code obfuscation.It will not remove unused resources like layout xmls,drawables etc. So my opinion is to run the tool to remove unused resources.
Below are some tips to reduce the size.
You can remove drawable-ldpi folder if you are using it.Since there are no more devices with ldpi screen resolution.
Reduce the use of image drawables(i.e .png or jpg files).Use xml drawables and 9-patch drawables.
Remove any debug info related code.
Avoid code duplication.Follow the principal of Don't Repeat yourself.
I think this is enough to reduce app size in your case.