The Hindu Business Line : AP Govt told to boost private investment

THE Institute of Public Auditors of India (IPAI) on Wednesday asked the Andhra Pradesh Government to encourage more private participation in the areas of social infrastructure and review rationalisation of tax structure every three years.

Mr V. Prakasa Rao, President IPAI's Hyderabad chapter, in his presentation at the seminar on `Finances of the State of Andhra Pradesh - Improvements,' said the State Government should ensure that incentives and subsidies are linked to productivity and reduction of costs.

In a detailed presentation on the State's finances, Mr Rao said there was a steep decline in the developmental expenditure from 68.5 per cent (of the total expenditure) in 1998-99 to 65 per cent in 2002-03. The net funds available on account of debt declined from 11.7 per cent in 1998-99 to 4.81 per cent in 2002-03 mainly due to debt servicing.

He said interest payments alone comprised an average 15.26 per cent in the last five years. The revenue deficit was at Rs 4,637 crore in 2002-03 against Rs 2,684 crore in 1998-99. "The fiscal deficit, which represent the gross borrowings of the Government, worked out to around Rs 8,640 crore during the current year," he added.

The ratio of revenue deficit to fiscal deficit increased to 51.44 per cent in 2002-03 indicating that over 50 per cent of borrowings were for revenue expenditure.

The fiscal liabilities (debt and guarantees) of the Government stood at Rs 54,831 crore by the end of 2002-03. "The liabilities have grown at an average of 21 per cent during the last five years," he added. . The ratio of liabilities to Gross State Domestic Productincreased from 24 per cent in 1998 to 34 per cent in 2002-03.

He asked the government to curtail non-productive expenditure and identify two or three sectors as growth engines for development, while listing various reforms introduced by the Government to streamline the financial position.

Mr Rao said the institute was likely to upgrade 30-year-old account manuals of the State. "The Secretary (Finance) has asked us to do the job. We will take it up after having a formal agreement," he added. .

Mr C.V. Avadhani, Principal Accountant General of Andhra Pradesh, also felt that huge debt and growing interest on borrowings left little for developmental plans.

"The State has invested Rs 4,300 crore on public sector undertakings, while the return on investments stood at less than one per cent," Mr Avadhani said. Mr M. Gopalakrishna, Chairman of AP State Financial Corporation, said that all the governments had to change. "The Government is highly structural. We have to redesign it by improving communication and conformity," he said. He asked the IPAI to work with government departments to improve their performance.

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