 "Public finances: Hyderabad is the revenue trophy")
For the remaining 10 months of 2014-15, residual Andhra Pradesh, home to 58 per cent of the 84 million population (2011 Census) of the undivided state, will have a non-plan revenue deficit of Rs 10,000 crore. This excludes pending financial commitments like the Rs 7,000 crore reimbursements for power and sales tax concessions to industries.
In contrast, Telangana, is likely to have a non-plan revenue surplus of Rs 7,500 crore in the same 10 months. This means the plan size of residual Andhra would be under Rs 10,000 crore while that of Telangana could be Rs 18,000-20,000 crore.
Plan size shows the amount of funds that can go for public investments, high on the agenda of both states. For residual Andhra, building a state capital that can become a new engine of growth is priority. Hyderabad, an integral part of Telangana, made all the difference to both parts in terms of government revenue, especially in important streams like commercial taxes (CT).
The income difficulties in store for residual Andhra and the relative advantage for Telangana will be amplified by the differential in non-plan expenditure. The finance department has prepared separate budgetary estimates for the two states for the financial year's remaining 10 months. Residual Andhra will have a Budget of Rs 76,000 crore, including its share of central taxes, grants, plan assistance and borrowings. It will have a total revenue of Rs 52,000 crore. Estimated non-plan revenue expenditure is Rs 62,000 crore.
Telangana's 10-month Budget is estimated at Rs 65,000 crore, of which non-plan revenue expenditure will be Rs 43,240 crore. However, total revenue should be Rs 50,750 crore, a decent surplus.
Tax and non-tax revenue for residual Andhra and Telangana are pegged at Rs 28,000 crore and Rs 7,000 crore and Rs 32,000 crore and Rs 5,800 crore, respectively. The base of CT, the most important source of state revenue, is 55:45 in favour of Telangana because Hyderabad and its suburbs drive consumption in the state. In 2013-14, revenue from CT made up Rs 64,000 crore of undivided AP's Rs 72,444 crore of own tax revenue.
Excise and stamp duty are the other two important revenue generators in the undivided state, budgeted to collect Rs 7,500 crore and Rs 6,414 crore, respectively, though overall tax growth fell short of target last year. These two streams provide immediate hope for residual AP as 55 per cent of excise came from Seemandhra. Though contribution from stamp duty is high in Telangana because of relatively large property transactions in and around Hyderabad, this is expected to balance out once residual AP starts work on its new capital city, say officials. Others, however, say this gap will widen as Seemandhra misses on the 18-20 per cent average annual growth in stamp duty collection from Hyderabad.
A special status as well as the promise to provide funds to build essential infrastructure in the new state capital are targeted to compensate the loss of Hyderabad to residual Andhra.
The undivided state had public debt of Rs 1.6 lakh crore, of which the residual state's share is Rs 93,000 crore. About 12 per cent of total revenue go to service this debt.
Wages, promises
The bargaining power of state government employees on both sides went up considerably because of their active role in the pro- and anti-bifurcation agitations. The new governments might have to raise their pay without much delay. The annual salary bill rose from Rs 42,000 crore to Rs 52,000 crore after the government offered 27 per cent interim relief in January. Accordingly, the pension bill went up by about Rs 2,000 crore to little over Rs 18,500 crore. The Rs 70,500 crore wage and pension bills are almost equal to the state's own tax receipts in 2013-14.
Employees of the undivided state have been split according to share of total population -- 58 per cent for residual AP and 42 per cent for Telangana.
Andhra is also one of the highest spending states in welfare. These include free power, a scheme for rice at Re 1 a kg and a Rs 5,000 crore tuition fee reimbursement programme for students in professional courses. Adding to this, chief minister-designates of the two states have promised to waive farm loans. And, to waive loans taken by women's self-help groups.
In contrast, Telangana, is likely to have a non-plan revenue surplus of Rs 7,500 crore in the same 10 months. This means the plan size of residual Andhra would be under Rs 10,000 crore while that of Telangana could be Rs 18,000-20,000 crore.
Plan size shows the amount of funds that can go for public investments, high on the agenda of both states. For residual Andhra, building a state capital that can become a new engine of growth is priority. Hyderabad, an integral part of Telangana, made all the difference to both parts in terms of government revenue, especially in important streams like commercial taxes (CT).
The income difficulties in store for residual Andhra and the relative advantage for Telangana will be amplified by the differential in non-plan expenditure. The finance department has prepared separate budgetary estimates for the two states for the financial year's remaining 10 months. Residual Andhra will have a Budget of Rs 76,000 crore, including its share of central taxes, grants, plan assistance and borrowings. It will have a total revenue of Rs 52,000 crore. Estimated non-plan revenue expenditure is Rs 62,000 crore.
Telangana's 10-month Budget is estimated at Rs 65,000 crore, of which non-plan revenue expenditure will be Rs 43,240 crore. However, total revenue should be Rs 50,750 crore, a decent surplus.
Tax and non-tax revenue for residual Andhra and Telangana are pegged at Rs 28,000 crore and Rs 7,000 crore and Rs 32,000 crore and Rs 5,800 crore, respectively. The base of CT, the most important source of state revenue, is 55:45 in favour of Telangana because Hyderabad and its suburbs drive consumption in the state. In 2013-14, revenue from CT made up Rs 64,000 crore of undivided AP's Rs 72,444 crore of own tax revenue.
Excise and stamp duty are the other two important revenue generators in the undivided state, budgeted to collect Rs 7,500 crore and Rs 6,414 crore, respectively, though overall tax growth fell short of target last year. These two streams provide immediate hope for residual AP as 55 per cent of excise came from Seemandhra. Though contribution from stamp duty is high in Telangana because of relatively large property transactions in and around Hyderabad, this is expected to balance out once residual AP starts work on its new capital city, say officials. Others, however, say this gap will widen as Seemandhra misses on the 18-20 per cent average annual growth in stamp duty collection from Hyderabad.
A special status as well as the promise to provide funds to build essential infrastructure in the new state capital are targeted to compensate the loss of Hyderabad to residual Andhra.
The undivided state had public debt of Rs 1.6 lakh crore, of which the residual state's share is Rs 93,000 crore. About 12 per cent of total revenue go to service this debt.
Wages, promises
The bargaining power of state government employees on both sides went up considerably because of their active role in the pro- and anti-bifurcation agitations. The new governments might have to raise their pay without much delay. The annual salary bill rose from Rs 42,000 crore to Rs 52,000 crore after the government offered 27 per cent interim relief in January. Accordingly, the pension bill went up by about Rs 2,000 crore to little over Rs 18,500 crore. The Rs 70,500 crore wage and pension bills are almost equal to the state's own tax receipts in 2013-14.
Employees of the undivided state have been split according to share of total population -- 58 per cent for residual AP and 42 per cent for Telangana.
Andhra is also one of the highest spending states in welfare. These include free power, a scheme for rice at Re 1 a kg and a Rs 5,000 crore tuition fee reimbursement programme for students in professional courses. Adding to this, chief minister-designates of the two states have promised to waive farm loans. And, to waive loans taken by women's self-help groups.