'Drought may dry up AP's reform gains'

Q&A/AP FM Y RAMAKRISHNUDU

The Andhra Pradesh government, which has struggled to tackle the worst-ever drought in recent years, is now looking at ways to make the state "drought-proof."

Concerned over the persistent drought , the state finance minister, Yanamala Ramakrishnudu, fears the drought may undo all the reforms-led achievements in the secondary and tertiary sectors.

Ramakrishnudu observes that the state would have achieved 12 per cent growth rate in the last four years, had it experienced normal monsoon.

"This once again reminds us of the fact that despite the progress in several fields of economy, the state is basically agrarian. A majority of people still depend on agriculture. That is why future programmes should be to strengthen the agriculture and allied sectors," he said. Excerpts:

There is a growing gap between allocation and actual spending. How do you explain it?
FM: For the ninth plan period, the plan expenditure was higher than the actual plan allocation. But yes, last year's plan expenditure was about Rs 800 crore lower the allocation.

This year also same trend is expected. This is mainly because the resources could not be mobilised as envisaged in the budget due to unforeseen reasons.

Almost 90 per cent of the non-plan expenditure is inevitable expenditure. So whenever there is a resource crunch normally we go for the cut in the plan.

The government is over dependent on borrowings which rose to about Rs 57,000 crore this year. What is your comment?
FM: Borrowing per se is not bad but it all depends on how you are going to utilise it. As the aspirations and needs of the people are growing at a fast rate, the government could not entirely meet these developmental needs with its own resources, even though the state revenues have considerably increased.

That is why, borrowings have become necessary. But I agree that debts should not be allowed to grow. As a percentage of GSDP, it would go up to 31 per cent and efforts should be made to bring down these debts gradually. In the last budget, we envisaged borrowings of about Rs 7,600 crore.

But we took only about Rs 6,600 crore as actual requirements decreased. Though the government envisaged the borrowings at Rs 7,000 crore this year, they will go up by about Rs1,000 crore as the state government has started the Godavari lift irrigation project. The revenue expenditure is very low, whereas it is almost 50 per cent in some other states.

But the average growth rate has been low at 5.54 per cent...
FM: This was due to drought. If you look at the growth rates separately, the drought years registered only four per cent growth, while normal years witnessed around nine per cent growth.

This was despite the fact that agriculture sector dropped to the second place behind the services in the 80s in terms of contribution to the GSDP.

This phenomenon clearly shows the importance of agriculture to the overall economic growth of the state.

Agriculture now contributes 29 per cent to the GSDP. We could have achieved 12 per cent growth, had we not faced drought in three successive years.

What would be your priorities, if voted to power again?
FM: One of our top priorities would be agriculture sector and drought- proofing of the entire state.

Optimum utilisation of surface waters for irrigation purposes, strengthening minor irrigation should be taken up in a big way to reduce dependence on the Rain God. Power, welfare and development of backward areas would be our other priority areas.

Are you a satisfied man as finance minister?
FM: I am a very happy man because I have introduced and implemented all these reforms under the able guidance of my chief minister.

Results are there for all to see. Once termed a very dull department, the finance wing has now become one of the most active departments of the state government.

(This is the second and last part of an interview with the state finance minister, Y Ramakrishnudu.)