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Our Bureau

Hyderabad, Dec. 2 A Bill to amend the Andhra Pradesh Fiscal Responsibility and Budget Management Act (FRBM), 2005 has been tabled in the State Legislative Assembly on Tuesday.

The move to amend the enactment has been necessitated by the unprecedented global financial crisis on one hand and the need to push up public spending for some ongoing projects and welfare measures.

Since this can be achieved by higher capital expenditure, the Government plans to raise funds through market borrowings.

According to the statement of objects and reasons, for the Government to step up expenditure, it has to raise funds through market borrowings. The Government had recently indicated that they might raise up to Rs 16,000 crore.

This is being necessitated due to lower than projected revenues from sale of lands and lower tax collections and lesser than projected devolutions.

Unless the Government meets certain norms according to the fiscal management Act, it will not be entitled to incentives under the debt relief programme. By borrowings, the fiscal deficit is likely to go up more than three per cent of gross state domestic product (GSDP) for 2008-09.

According to plan projections, the fiscal deficit which was projected at three per cent of the GSDP, now it is likely to be about 2.82 per cent. Last fiscal, the fiscal deficit was 3.14 per cent and in the year before that, it was 3.52 per cent.

By amending the Act and also raising funds through borrowings, the Government is keen that it continues to allocate funds required for some of the ongoing projects and some new welfare measures.

While achieving this objective, it does not want to lose the financial incentives from the Centre in keeping its fiscal deficit lower.

More Stories on : Financial Policy | Andhra Pradesh

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