Date:04/12/2008 URL: http://www.thehindu.com/2008/12/04/stories/2008120460921200.htm

Andhra Pradesh

State to borrow Rs.5,966 crore

Rosaiah pilots Bill seeking amendment to FRBM Act

Shortfall in the revenue receipts due to slowdown in investments
Mobilisation of resources due to steep decline in revenue anticipated through land auction

HYDERABAD: The State government has decided to raise Rs. 5,966 crore from the markets during the current financial year to tide over the shortfall in the revenue receipts due to slowdown in the investments in the State.

This is in addition to the provision of over Rs. 9,000 crore borrowings in the current budget taking the total to Rs. 15,000 crore. Mobilisation of the resources, Finance Minister K. Rosaiah said, was necessitated to bridge the gap created by the steep decline in the revenue anticipated through land auction.

Mr. Rosaiah piloted a Bill seeking amendment to the Fiscal Responsibility and Budget Management (FRBM) Act for allowing greater market borrowings and making available incentives under the debt relief programme despite a fiscal deficit higher than 3 per cent of the GSDP in the Legislative Assembly on Wednesday.

The Bill was passed amidst apprehensions expressed by the Telugu Desam members over the “precarious” financial condition of the State and the cascading impact further borrowings would have on the fiscal and revenue deficits as well as the debt stock percentage.

Fears allayed

He allayed apprehensions about the State’s financial health asserting that the borrowings were well within the limits prescribed under the fiscal prudence measures. The proposed mobilisation would take the debt stock to 27.53 per cent from the existing 27.29 per cent if the GSDP that was much below the 35 per cent permissible.

TDP member Y. Ramakrishnudu, however, criticised the Government for “over-estimating the budget” and “inflating revenue receipts” in presenting the budget for the current fiscal. In addition to the steep decline in agriculture, service and other sectors due to global slowdown, the State’s economy was adversely affected by “unproductive expenditure” like payment of mobilisation advances to contractors of irrigation projects. CPI (M) floor leader N. Narsimhaiah wanted the Government to scrap the FRBM Act as it was becoming an impediment in the spending on welfare sectors while CPI floor leader Chada Venkat Reddy wanted the Government to ensure that the funds mobilised through loans were utilised for capital expenditure.