AP looks to Centre for aid to tide over financial crisis

Cash-strapped Andhra Pradesh government has stepped up focus on mobilising additional revenue even as there seems to be no assurance from the Centre on aid to bridge the huge revenue deficit.

“We are stretched, but cautiously optimistic that the Centre would come to our rescue to bridge the ₹13,000-crore revenue deficit which continues to haunt us as a legacy of the State bifurcation in 2014,’’ PV Ramesh, Principal Secretary, Finance, told Business Line here.

Central help The financial support from the Centre was to the tune of only ₹2,803 crore, way less than expected, he said.

The State, which was described in official circles as “a poor cousin with big family” after bifurcation, did well in the first year of bifurcation in 2014-15 and was able to balance its books. The revenues improved by about 48 per cent.

In 2015-16, the performance was impressive, going by the numbers. AP’s own tax revenue had gone up from ₹29,857 cr to ₹44,423 crore. The own non-tax revenue and regular annual flow from the Centre were at ₹5,341 crore (₹8,182 crore) and ₹40,104 crore (₹28,569 crore) respectively.

“The 49 pc jump in own tax revenue is exemplary but we need immediate support from the Government of India given the huge development agenda and expenditure line up by the state government,’’ Ramesh said.

Other healthy trends in last year include 10 per cent reduction in non plan expenditure and 37 pc hike in planned expenditure due public investments in infrastructure, among others.

Challenges The present financial year, however, seems to be a challenge with regard to revenue mobilisation. The budget for 2016-17 pegs ₹1,35,689 crore expenditure with a 20 per cent increase over outlay of 2015-16.

The revenue deficit and fiscal deficit are projected at ₹4,568 crore (at 2.99 per cent of the Gross State Domestic Product) and ₹20,457 crore (0.71 per cent of GSDP) respectively.

“We believe we are managing finances well going by these figures and expect 16 per cent spurt in revenue this year and 15 pc growth in GSDP,’’ the secretary said.

Measures To further improve own tax revenue, state government has been on a drive to improve its taxation policy and its efficiency.

“The invoices are being tracked down on a real time basis while application of IT is almost complete in commercial taxes and check-post maintenance. Mineral policy is pruned to maximise revenue,’’ the official said.

Money transfers through the Direct Benefit Transfer (DBT), complete legalisation of Red Sanders auction, over haul of expenditure management are already being implemented.

The government expects that all these measures will lead in better revenue realisation this year as DBT alone can result in 15 to 20 per cent improvement.

“But the State’s ability to extract revenue is limited in view of the predominance of agricultural economy. So, Govt of India should also come to our rescue,” Ramesh added.

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