HYDERABAD, 31 January — The Andhra Pradesh government has decided to lay out a broad framework for reducing fiscal deficit, improving efficiency and resource mobilization in the budget for 2002-03 as part of its reforms agenda.
The government, which has removed the veil of secrecy over budget preparation by placing the draft budget for 2002-03 for public debate, has also decided to indicate broad allocation for each department and priorities for investment.
The draft state budget projects 11 percent growth in plan and non-plan allocations and 12 percent growth in state’s own tax revenues over current year.
Andhra Pradesh Chief Minister Chandrababu Naidu released draft budget for 2002-03 for public debate Tuesday. This is a significant step toward bringing transparency to the budget making process in the country.
India still clings to the archaic tradition of keeping the budget proposals top secret.
The state government has decided to circulate the copies of the draft budget document to political parties, academia and experts. It has also been put on the Internet for general public to discuss it.
“My government believes in transparency. We will provide every information to the public,” said Naidu, adding the suggestions from the public would be taken into account while giving a final shape to the budget. The document gives the status of finances this year and projections for the next year. It also highlights the government’s development strategy and priorities for investment. Analysts say the idea behind the exercise is to take people into confidence before initiating tough measures in the budget. The document has indicated some measures the state could take in the next financial year to push ahead with reforms.
The draft budget has proposed a total cut in the subsidies and grants amounting to 6.94 billion rupees. The power subsidy alone will be cut from the present 24.38 billion rupees to 17.92 billion rupees. The state plans to completely stop subsidizing power by 2006-07. The debt is expected to rise from 425.56 billion rupees in 2001-02 to 499.12 billion rupees in 2002-2003, accounting for 30.1 percent of gross state domestic product (GSDP).
Naidu said heavy borrowing was required for the state to move ahead on the path of reforms. He said the borrowings were necessary to increase state’s revenues through asset creation, better infrastructure facilities and attracting investments.
The draft budget shows an overall deficit of 73.90 billion rupees and it is likely to be bridged through loans from the central government, structural adjustment loans and market loans. The state’s revenue receipts are expected to touch 255.91 billion rupees against 225.89 rupees billion envisaged for year ending March. The expenditure during 2002-03 is projected at 329.81 billion rupees, against 299.86 billion rupees in the current year.
According to the document, the state economy grew at the rate of 7.2 percent in the last three years compared to 6.1 percent overall national growth.
Andhra Pradesh’s revenue deficit went up from 0.96 percent in 1995-96 to 2.66 percent in 2000-01, and fiscal deficit rose to 5.4 percent in the same period.
