Andhra Pradesh’s fiscal position grim: Governor

Andhra Pradesh Governor E.S.L. Narasimhan has said the state’s fiscal position is grim, as the revenue growth rate fell to 5 percent in the first nine months of the current fiscal.Addressing both houses of the legislature on the first day of the budget session, Narasimhan said the government was exploring all possibilities to revive the economy by increased capital expenditure “to ensure that the virtuous cycle of economic growth continues to move”.He pointed out that the global economic downturn that started in October 2008 continued eroding development activity and revenues like never before, compelling the government to defer a major portion of planned and capital expenditures budgeted.“The revenues of the state that grew at more than 19 percent per annum for four year period 2004-08 have suddenly fallen to 10 percent in 2008-09. The situation in the current fiscal as per available indications has been grimmer with revenue growth rate further falling to 5 percent for nine months period April-December 2009,” he said“The good news is that there is light at the end of the tunnel. The GSDP growth rate of the state which fell to 5.5 percent for 2008-09 from 10 percent for the preceding four year period 2004-08 has recovered to 7.5 percent for 2009-10 as per the advanced estimates,” he said.He pointed out that because of the fall in revenues from second half of last fiscal the growth rate in respect of planned expenditure fell to 13 percent while the capital expenditure recorded a negative growth rate for 2008-09 over the pervious year.“Situation could have been worse had not the central government implemented three fiscal stimulus packages benefiting among others the state governments in the form of increased fiscal deficit to GSDP ratio.”Narasimhan said the state has a positive growth rate of 5 percent in the revenues as against negative growth of 22 percent in indirect tax revenues of central government for first eight month period April-November 2009.“However, unlike in the case of central government the fiscal deficit of the state can’t go beyond 4 percent of our GSDP in view of FRBM (Fiscal responsibility and budget management) compulsions,” he said.The governor assured the legislature that the government would continue development and welfare programmes launched by former chief minister Y.S. Rajasekhara Reddy, who died in a helicopter crash in September last year.The schemes include free electricity to farmers, rice at Rs.2 a kg, health insurance for the poor, land distribution and construction of irrigation projects under the Jalayagnam programme, (thanks to way2online),
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