Andhra govt to sell lands to raise Rs 2,000 crore

The Andhra Pradesh government is planning to sell some of its lands to raise at least Rs 2,000 crore to meet pressing budgetary commitments in irrigation and other sectors during the current financial year.

This extraordinary move is considered necessary as the state government is already under severe financial strain on account of huge annual plan besides additional non-plan expenditure arising from the recent pay hike for its employees and the obligation to observe a fiscal discipline imposed by the Centre. The huge revenue deficit has further weakened the government's financial position.

Moreover, chief minister Y S Rajasekhara Reddy recently indicated that an additional expenditure between Rs 700 crore and Rs 1,000 crore "� over and above the plan allocation "� would be required to complete the eight irrigation projects by next year as promised by his party. About Rs 6,850 crore has been allocated to the irrigation sector in the current annual plan.

According to highly-placed sources, the government had already identified some lands for sale, including 300 acres of land at Rayadurg, which is in great demand due to its close proximity to the Hitec City.

Sources said that the Hyderabad Urban Development Authority (Huda) would auction some of these lands in Hyderabad. The government had also issued instructions to the AP Industrial Infrastructure Corporation (APIIC) to deposit the money raised through the sale of lands, sources revealed.

Borrowing money from different agencies is not a problem at all, but the government's hands are tied as the Fiscal Responsibility and Budget Management Act (FRBMA) would not allow it. Ironically, the Act was brought in by the Congress government itself.

In addition to the present performance obligations laid down by the 12th Finance Commission, the state government is under pressure to bring some more amendments to the FRBMA to fulfil the three conditions laid down by the Union finance ministry for forwarding the state's application for the third Structural Adjustment Loan (SAL-III) to the World Bank.

As per the first condition, the state government is required to achieve the reduction of fiscal deficit to 3 per cent of GSDP by 2008-09 instead of 2009-10 as mentioned in the Act.

This means that the government has to look for other resources instead of depending on borrowing to meet its expenditure. Curiously, the finance department officials said, the government would bring necessary changes in the FRBMA very shortly.