Saturday, February 18, 2012

AP Budget evokes mixed responses

AP State Budget 2012 evokes mixed response
The fourth largest State of the country, Andhra Pradesh has as many credits as discredits at the time of its Annual Budget 2012. It has a growth rate of 9.26% surpassing the National GDP 8.5% in the five-year period 20045-12. Over 40% of its geographical space is farm land and has 22% forest cover. 8744km river length and a coast line of offers scope for port development. It has tainted bureaucracy; Ministers and politicians deeply entrenched in corruption and controversies; though second in the country in mining, the growth of the sector is marred by unholy exploitation. The State saw the farmers queuing up for fertilizers; burning the crops like cotton and mirchi; throwing of onions in the streets for want of better price; crop holiday etc. Several of the recommendations of Jayati Ghosh Committee in the wake of farmer suicides and Mohan Kanda Committee Report in the wake of crop holiday have not seen light of the day. Liquor mafia in the State is under seize of the ACB and the estimated amount is Rs.5000cr and some informed sources place it ten times more.
The Rs.1.45lakhcrore budget of Andhra Pradesh Finance Minister in this backdrop is a hopeful estimate against the poor performance in 2011-12 both on tax revenue and capital receipts. Non-plan expenditure indicates a rise of around 15percent.
Sectorwise Allocation in regard to Economic Services (%) in Budget 2012-13
Sector RE.2012 BE 2012-13
Economic Sectors 36.46 37.99
Agriculture & Allied activities 3.56 4.04
Rural Development 5.93 6.48
Irrigation & Flood control 16.09 16.56
Energy 4.05 4.07
Industry & Minerals 0.70 0.70
Transport 3.05 3.04
Science, Technology & Environment 0.01 0.01
General Economic Services 3.08 3.09
Social Services 22.87 31.74
General Services 40.67 30.28

The tax buoyancy is seen in the expectation of nearly 20percent rise to Rs.66021crores in 2012. The growth euphoria of 9.26percent compared to the National GDP growth rate of 6.88% whittles down when one sees the number of farmers’ suicides and the lowest human development index ranking of the State (10th). Agriculture budget in a predominant agriculture State is a meager Rs. 3175crores (2.2% of the total budget or 3% of the revenue budget). There is no announcement of Market price stabilization fund the farmers have been seeking for the last five years. Regarding drought relief, except looking to central grant, nothing more could be seen.
The best part of the Budget is higher allocation to Education that touched 18% of the Revenue budget, the highest in the recent years. Allocation to Health dropped by a notch over the previous year from 4.16% to 4.04%. Allocation of just Rs.633crores in the backdrop of CII-organized Global conclave that promised investments of Rs.6.48lakhcrores would make the investors turn a nelson’s eye on the State.
Power sector is reeling under weekly power-off for the industry sector; farmers cry foul over the free power/seven hours a day; and severe voltage fluctuations speak of the quality of power. Investments seem trifle in this scenario for this sector too. Budget has long verbose where the allocations are least; the irrigation sector cleverly sticks to whatever was spent last time: it is actually Rs.8459crores against the allocation of Rs.15000croress. This helps in Fiscal Responsibility Budget Management of the State even in the year 2012 as releases are hinted only at the levels attained in 2011-12.
If the Social sector expenditure got a higher share it is only to be expected in the wake of by-elections in Telangana region and the impending General Elections a year after. The unsustaining sops would certainly cast a shadow on the growth prospects of the State. The Chief Minister’s keenness on sports led the Finance Minister to announce well-equipped sports stadia in each District. Legislature Constituency Fund of Rs.382crores goes for non-monitored investments/expenditure. The tiresome speech of the Finance Minister faces trying times in reaching the expected outcome.