No bold promises in AP Budget

Hyderabad: Faced with persisting fiscal problems following bifurcation as well as few avenues to expand the revenue base, Andhra Pradesh Finance Minister Yanamala Ramakrishnudu has nearly frozen the size of the budget, save for an incremental growth as face-saver. This, despite an impressive growth rate of 7% in the GSDP.

The first full-fledged budget, based on zero-based budgeting, unveiled by the TDP government on Thursday indicates a marginally higher outlay of Rs 1,13,049 crore tax-free budget , as compared to the Rs 1,11,823 crore in 2014-15 – a modest increase of mere 1.1 per cent.

This phenomenon subtly hints at the option left to the State government to explore possibilities of increasing the non-tax revenue. The notable feature of the State economy, according to the Finance Minister, is the steady growth in per capita income. He said all efforts are being made to sustain this growth and even improve upon it considerably. Stating that he was constrained to present a Budget with a nominal hike in its size, Yanamala, however, seeks to drive home the point that they had made all-out efforts to make this budget “realistic and practical.”

During his nearly one hour and 50 minutes speech, Ramakrishnudu budgeted for a non-plan expenditure of Rs 78,637 crore and plan expenditure of Rs 34,412 crore. The revenue deficit is estimated to be Rs 7,300 crore, while the fiscal deficit is pegged at Rs 17,584 crore. Fiscal deficit works out to 3% of GSDP and the revenue deficit works out to 1.24%. The final accounts of 2013-14 show a revenue surplus of Rs 344 crore and establish that the fiscal deficit is well within the limit of the FRBM Act – it is shown at Rs 18,050 crore which is 2.11 of GSDP.

The revised estimates of 2014-15 indicate a revenue deficit of Rs 14,242 crore. The fiscal deficit is estimated at Rs 20,320 crore which would be 3.88% of GSDP, Yanamala said. He also exuded optimism about economic growth despite the problems the state was facing on account of bifurcation and not getting adequate funds from the centre.

Promising better standard of living, the Finance Minister said the envisaged growth agenda getting fully operational, the per capita income of Andhra Pradesh is expected to double by 2018-19 from Rs 90,517 in 2014-15. The government, he added, would take all possible steps to improve the quality of services to come up to the expectations of middle classes.

Yanamala deplored that the state economy had suffered on account of the negligence on the part of Central government in bifurcating the State. Slow devolution of funds post-bifurcation as well as the devastation caused by the cyclone Hudhud had a telling effect on the finances of the State. Nevertheless, Yanamala exudes confidence and shares Chief Minister N Chandrababu Naidu’s optimism that concerted efforts would put the State finances back on track, so that the government can ground its ambitious development agenda.

“We propose to forge ahead, undaunted by setbacks,” Yanamala declared. The setbacks, which he elaborated upon, were severe resource constraints consequent to the State reorganisation and the 14th Finance Commission not considering the special problems faced by Andhra Pradesh post bifurcation. He said that the releases to the State from the Centre during the current fiscal and allocation in the Budget for 2015-16 are “not up to our expectations.”

By:V Ramu Sarma