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The Andhra Pradesh government on Wednesday presented its first Budget in the state legislative Assembly with a proposed expenditure of Rs 1.12 lakh crore for the full year 2014-15. This includes the two months prior to the state bifurcation.
The Budget size of the truncated AP is about 61 per cent of the total expenditure (Rs 1.83 lakh crore) proposed for the undivided state for the same period earlier this year.
Finance minister Yanamala Ramakrishnudu maintained a status quo on the tax front even though the share of state’s own estimated income climbed down to a little over 50 per cent of the total revenue receipts for the period. The state’s own income in the undivided AP accounted for 68 per cent of the total revenue receipts in 2013-14.
The Budget comes with a revenue deficit of Rs 6,064 crore and a fiscal deficit of Rs 12,064 crore.
“These estimates include the receipts and expenditure of two months relating to the undivided state of Andhra Pradesh and the anticipated additional assistance of Rs 14,500 crore from the Government of India in the context of state reorganisation,” the finance minister said.
If these factors are excluded, the revenue deficit of residuary AP will be Rs 25,574 crore and the fiscal deficit Rs 37,910 crore as per the vote-on-account approved by the Assembly in the undivided AP, according to Ramakrishnudu.
“The residuary state being agrarian has tax to GSDP ratio of only 6.8 per cent, while for more urbanised Telangana it is 9.7 per cent. No provision to compensate for this investment had been made by the then Government of India. This neglect alone points out the kind of loss the residuary state of Andhra Pradesh is subjected to because of irrational and unfair division process that the then government at the Centre followed,” the minister said in a 50-page speech.
Grants-in-aid
Indicating a heavy financial dependence in the first year of bifurcation, the state government has pegged the grants-in-aid it expects to get from the Centre at Rs 28,830 crore as compared with Rs 15,393 crore estimated for the whole of undivided AP in 2013-14.
The minister said with limited availability of resources it would be very difficult to create all the infrastructure in the social and economic sector in the new state. He also made it clear that it was highly difficult for the state to comply with the norms prescribed by the AP FRBM Act in terms of following the borrowing limits or reducing the revenue and fiscal deficit levels.
The Budget also marked a heavy tilt in favour of non-Plan spending, which stood at Rs 85,151 crore accounting for 76 per cent of the total expenditure whereas the Plan outlay was proposed with Rs 26,673 crore (23.85 per cent) for the year.
While continuing with the existing welfare programmes, the government made new commitments such as farm loan waiver, increase in old-age pension to Rs 1,000 from the present Rs 200 leading to further shrinkage of resources for asset building. It has earmarked Rs 6,094 crore for social security pensions.
It may be recalled that the annual Plan outlay touched 40 per cent of the total Budget in the undivided AP during some years in the last decade.
Rs 5,000 crore for farm loan waiver
Despite these financial constraints, the government has managed to provide Rs 5,000 crore for the waiver of farm loans in the present Budget —Rs 1,000 crore under Plan and Rs 4,000 crore under non-Plan.
The AP government, headed by chief minister N Chandrababu Naidu, has announced several new initiatives in the maiden Budget, including mission-based strategy to improve the important sectors of economy, decentralisation of service delivery, supply of filtered water in rural areas and Anna canteens.
The government also proposed to develop new ports in public-private mode at Machilipatnam, and other 14 minor ports including Bhavanapadu and Calingapatnam in Srikakulam district.
