For a ''Swarna'' Andhra Pradesh

THE PLANNING COMMISSION'S call to the Government of Andhra Pradesh to pursue fiscal reforms and to take measures to reduce the burden on the exchequer caused by losses by the public sector undertakings aptly sums up the economic policy priorities for many States. In finalising the Rs. 8,378-crore Annual Plan for the year 2001-02, the Planning Commission has also factored in the performance of the State during the past few years, especially the path to economic reforms taken by it. That the State has been in the forefront of economic reforms and it has been in the pro-active mode in attracting foreign investment is now widely acknowledged. However, for the reforms to be effective and for the State's economy to sustain itself, especially against the backdrop of declining Central transfers, it is imperative that Andhra Pradesh addresses the hard issues that affect its finances. In a way, a crucial measure of the State's progress on reforms will be how efficiently it manages the ongoing transitory state of its economic affairs. The challenges lie as much in managing the economy as in ensuring that the benefits of the reforms mark a true change from the past.

That Andhra Pradesh does face serious difficulties and has to set its finances in order is obvious from the pressures that the Government has had in its annual budgetary exercises. Simply put, the urgency for the State to embark on the measures suggested by the Planning Commission is directed by the fact that a considerable part of its own tax revenues goes to meet salaries and pensions. In addition are its commitments towards interest payments. And, with other Central grants going towards meeting social commitments, the Government, as in many other States, is left with few choices other than to resort to Central borrowings, a continuation with which will not translate into a real and sustainable economic development for the State. The State's progress on power reforms, which has drawn the appreciation of the Planning Commission, however, will have to be watched for the financial as well as social signals it sends to other States that would have to go ahead with the task of restructuring their power sectors. In addition, the sensitive task of restructuring its 40 public sector units - most of which are in the red - will have to be carried out in a transparent manner.

For the Plan allocations to be effective, it is imperative that the State's policy-makers take measures to ensure that social sector investments are continued with and improved upon. In preparing a vision statement aimed at reaching a sustained growth rate of close to 11 per cent by the year 2020, the State Government has set itself a stiff challenge. Meeting this goal will require huge investments in the infrastructure sector. The sense of urgency on the part of the Andhra Pradesh Chief Minister, Mr. N. Chandrababu Naidu, to take his State to higher orbits of economic development should not come in the way of addressing the reasoned concerns that have been expressed. One such is the State's financial crisis, which has been brought on Andhra Pradesh, and several others, by higher commitments on the salaries front and the recommendations of the Tenth Finance Commission. The signal from the Planning Commission now is that the task of raising resources will be an increasingly difficult one unless hard decisions are taken by a combination of measures at cost-cutting as well as a restructuring of the State's economy. Mr. Naidu's request to the Union Government for resources to meet the growing demands of development, especially infrastructure development, is to be seen as a part of the changed economic role of individual States. Efficiently managing the change from an active economic participant to that of a facilitator and ensuring a narrowing of social inequities is the challenge ahead for Andhra Pradesh.

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