The Hindu Business Line : `Reforms have yielded stability'

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Hyderabad Feb. 20 The Economic Survey for 2006-07 for Andhra Pradesh states that fiscal reforms have finally yielded results, bringing stability on both the revenue and fiscal fronts.

Efforts to reduce revenue expenditure remained the cornerstone of the State's fiscal management and the reduction in interest rates of Central loans and the low-interest regime that prevailed over the last three years also helped ease the pressure on State finances. This was also due to the Government's measures to swap high-cost debt and freeze the interest rates at lower level.

The survey stated that the economic growth was due to copious rainfall and easy availability of bank credit, which helped the State mop up higher tax revenue during the last three years of the Tenth Plan period.

While the introduction of the Value Added Tax regime was witness to initial setbacks, during 2006-07 however there was growth both in VAT collections and AP General Sales Tax collections.

Despite the fact that the State reduced tax rates, the Stamps and Registration Department garnered 45.03 per cent higher revenue, and the mines and geology sector too was witness to higher returns.

During 2006-07, capital expenditure constituted 17.76 per cent of the total plan expenditure and this has gone up to 18.2 per cent as per budget estimates. The shift in expenditure pattern is mainly due to increased allocation to the irrigation sector. Alongside, the welfare sector was a major beneficiary.

The State's total outstanding debt as of 2005-06 was Rs 70,408 crore, which is about 30.31 per cent of the Gross State Domestic Product, with Central loans accounting for 22.79 per cent and market borrowings constituting 30.32 per cent.

Lower crop output

Significantly, 2006-07 is likely to have lower foodgrain output at 147.82 lakh tonnes as against 169.50 lakh tonnes in 2005-06. The crop pattern and output is likely to witness some changes with crops like rice and groundnut set to have lower output this year.

The per capita income of the State at current prices for 2006-07 is estimated at Rs 29,074 as against Rs 26,211 last fiscal, a growth of 10.2 per cent.

The Tenth Five Year Plan, which began in 2002-03, reflected priorities for some sectors. The Planning Commission had fixed a growth target of 6.8 per cent for the Tenth Plan and the average growth is at about 6.72 per cent. The GSDP growth over the last four years was 6.01 per cent and 5.78 per cent over five-year period respectively.

The survey noted that the growth recorded during the Tenth Plan could be termed significant as it is reflective of revival of economic growth after an initial setback.

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