AP budget: CM Jagan Mohan Reddy has every reason to smile

Hyderabad: Andhra Pradesh Chief Minister Y.S. Jagan Mohan Reddy has every reason to smile after the regular budget for 2021-2022 was presented in the Assembly on Thursday.

It will ensure successful implementation of cash transfer schemes that had built an emotional connect between him and the beneficiaries as reflected in the ruling party wiping the principal Opposition Telugu Desam out in the local bodies.

Proving wrong the doomsday prophecies on welfare schemes, the Chief Minister could roll out all the Direct Benefit Transfer (DBT) schemes in the last fiscal despite the worst pandemic impacting the economy. Some capital expenditure or asset building in simplistic form, might suffer but the electorate’s choice of cash transfers over it will keep the bondage intact.

As such, the Jagan Mohan Reddy-led state government did well in asset creation in the crucial education and health sectors, both tangible in the form of buildings and equipment and intangible by way of incentivising mothers to send their children to school. On top of it, the availability of cash, thanks to DBT, came in handy for the poor in facing the Covid-19 pandemic.

With revenue growth projections being close to reality for the current fiscal, excluding the exponential growth projected in state’s own tax revenue, the Chief Minister seems to be confident about cash transfers this year too. He went on to announce an additional scheme for the economically backward classes women.

The state might have witnessed a huge gap between the budget outlay and actuals for 2020-21, Rs.1.85 lakh crore being realised out of the Rs.2.24 lakh crore outlay, but it has become a regular feature for successive governments ever since Y.S. Rajasekhar Reddy, then Chief Minister of combined Andhra Pradesh, came up with a Rs.1 lakh crore budget some two decades ago. The outlay for this year will be Rs.2.29 lakh crore.

If the dream versus reality is left to the Opposition of the day to criticise the government, a close look at the Revised Estimates for 2020-2021 reveals that the finance department could manage the heavy load of DBTs with the revenue receipts, which grew at a very low rate due to the lockdowns, standing at Rs.1.85 lakh crore. The unforeseen expenditure due to Covid-19 management had to be factored in while the huge pendency of payments which will be carried forward to the current fiscal, again a regular feature, was discounted.

The seven per cent overall expenditure growth from Rs.1.73 lakh crore in 2019-2020 to Rs.1.85 lakh crore in 2020-21 was manageable for DBTs with six per cent growth in revenue from Rs.1.74 lakh crore to Rs.1.85 lakh crore for the corresponding period. The revenue expenditure growth was close to 11 per cent.

This year, the state will borrow Rs.6,000 crore less than last year’s Rs.50,000 crore from the open market. The borrowing from the Centre was also slashed to Rs.2,000 crore from Rs.5,000 crore. It showed a meagre Rs.2,000 crore hike in the share of Central taxes from Rs.24,441 crore, all coming close to the reality.

This was possible partly due to the government offloading some of its loan burden to power utilities and other corporations. For instance, of the total power subsidy of Rs.8,000 crore, the government agreed to pay only Rs.6,000 crore.

However, the exceptions to realistic projections are grant in aid from the Centre and state’s own tax and non-tax revenues. The state fell Rs.21,000 crore short of the projected grant-in-aid from the Centre last year but it continued to project Rs.25,000 crore excess this year. Similarly, the state projected Rs.85,000 crore from state tax revenues against Rs.57,000 crore realised last year and Rs.7,000 crore from non-tax revenue against Rs.3,300 crore.

“The GST growth in worst conditions was 18 per cent and we are expecting the growth to be higher this year once normalcy is restored. We lost heavily on tax on petrol and diesel because of low consumption and this will definitely improve. Non-tax revenue will also go up through auction of prime government land,” explained a senior finance official. Even after all positive factors contributing to revenue receipts, there will still be shortfall in achieving budget outlay. “This means no deviation from the regular phenomenon witnessed year after year and enough ammo for the Opposition,” he quipped.