Andhra plans to mop up Rs 3,500cr

The Andhra Pradesh government is expected to mop up close to Rs 3,500 crore in funds mobilisation through a series of moves which would include a cut in non-plan expenditure, swapping high cost debt with low cost debt and enforcing higher levels of tax compliance.

As part of the multi-pronged efforts being initiated to raise funds, especially for new irrigation projects, the state government is expected to effect a five per cent cut in the non-plan expenditure for the current year.

The measure, that may be announced during the state budget to be presented on June 23, is expected to help the state government save about Rs 1,700 crore, based on current levels of revenue expenditure.

In addition to this, the government expects to save between Rs 200 crore and Rs 300 crore through swapping of high cost debt with low cost debt. This apart, the government hopes to increase tax receipts through better compliance by about 10 per cent and roughly mobilise an additional Rs 1,400 crore.

State Finance Department officials have ruled out any possibility of increasing taxes in keeping with the mood and compulsion of the state government leadership.

Any increase in state revenues would be only through plugging existing leaks and through growth in economic activity, officials insisted.

Senior revenue officials have expressed guarded optimism on the tax front and cited the initial growth trends in excise (six per cent) and commercial tax collections (about 10 per cent) in April and May of the current financial year.

Besides the internal efforts, the political leadership has also been optimistic about the increased plan assistance and other financial support that is expected from the Congress-led UPA government.

Through the above measures, including cutting down on wasteful expenditure, it is estimated that about Rs 3,500 crore to Rs 4,500 crore additional funds would be made available for the plan outlay, according to officials of the state finance department.

Though the plan size is yet to be finalised by the finance department, initial reports put it roughly in the range of Rs 14,500 crore, which is about Rs 3,500 crore higher than the previous plan outlay.

Based on the rough estimates of the budgetary requirements, the overall size of the annual budget is expected to be in the range of Rs 51,000 crore, according to sources. The state's annual budget for 2003-04 was about Rs 43,380 crore, which means that the government is set to mop up Rs 8,000 crore this year.

The fiscal deficit is expected to go up as the total revenues, including the state's tax, non-tax revenues, share in central taxes and other central assistance may not cross Rs 35,000 crore.

Chief minister Y S Rajasekhara Reddy (YSR) has already hinted at a higher fiscal deficit as the government has to depend mostly on borrowings for the additional plan outlay for irrigation projects.

YSR announced that his government would spend about Rs 46,000 crore in the five-year period on the new irrigation projects. He has maintained that the revenue deficit, which is about Rs 3,000 crore during the year 2003-04, would be reduced in the current financial year.

It is to be seen whether the government, which has already been paying Rs 7,000 crore annually in interest payments, will be able to withstand the impact of a further increase in the fiscal deficit.

The fiscal deficit is expected to be around Rs 16,000 crore, double the size of last year.