Budget proposals: Challenges galore for AP Govt

Fiscal and non-fiscal challenges galore for the Andhra Pradesh Government in the forthcoming budget proposals for the year 2014-15.

The budget exercise, which has commenced after the end of the first Assembly session of the residuary state last month, is faced with multiple challenges and officials are racing with time to give a shape to draft proposals.

"In terms of meeting the deficit which we inherited with the bifurcation, fulfilling the ongoing commitments and meeting the new requirements have become a challenging proposition,’’ a top official of the Department of Finance, Government of Andhra Pradesh, told Business Line here on Thursday.

To fathom the difficulty, just consider this. Out of an existing contractual obligation of around Rs 80,000 crore in various programmes, half of the funds have to be provided for in the current year.

"In addition, the implantation of the pay revision for the State Government employees with an interim relief of 27 per cent is expected to result in Rs 7,000 crore fresh burden on the state exchequer,’’ he said.

Debt-waiver promise

Further, the Government would have to make a provision for execution of its debt-waiver promise for farmers (including gold loans) and members of self help groups.

Though the outstanding portfolio in this regard is Rs 87,000 crore, according to State Level Bankers Committee data, the finance department is awaiting the actual outgo figure which would only be decided after the P Kotaiah Committee submits it report on the modalities of the waiver.

If the report gets delayed, provision for an interim amount is likely to be made in the ensuing budget. The promised special category status from the Centre is yet to be notified along with the tax sops and other financial support the state would be entitled for.

FRBM Act

The Government is also worried on the need to harmonise the deficit with the Fiscal Responsibility and Budget Management Act which caps the fiscal deficit of the states’ budget at 3 per cent. Given the commitments in the pipeline, it is now certain that there would be deficit budget. But the question is about the quantum of the deficit.

There are more troubles, indeed. Most of the departments do not yet have complete information on the revenue receipts and expenditure, thanks to the one-month old bifurcation. Routine work in some ministries/departments is yet to take off.

So, it remains to be seen how the Government would tide over all these difficulties and bring out is most-eagerly awaited budget.

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