Hyderabad: Andhra Pradesh is finding it hard to pay salaries to its staff despite a hike in its revenues in the first half of the fiscal year. The state recorded a 12.26% growth rate in the first quarter of the fiscal and is eyeing a 15% annual growth. “We have no money for salaries. We are already running on a huge overdraft,” Chief Minister N Chandrababu Naidu admitted last evening, bringing out ironies in the state’s economic story.
The state’s revenue earnings rose to Rs 22,800 crore in the first half of 2016-17 financial year as against Rs 20,166 crore in corresponding period last year, a 13.05% increase. But what has become worrisome is the mounting revenue deficit which stood at Rs 6,641 crore during the first half of this fiscal. In fact, the government estimated an overall revenue deficit of Rs 4,868 crore in 2016-17, but increased spending has widened gap. “There is heavy pressure on government expenditure and adjustment of finances has become problematic,” Finance Minister Yanamala Ramakrishnudu said.
While the state estimated its borrowings to be Rs 20,497 crore during the year, the government has already borrowed Rs 13,673 crore. “We have reached the fiscal deficit but we are somehow pulling the cart either by borrowing or through internal adjustments,” Yanamala pointed out.
Asked about the jump in state’s revenues during the first half, the Finance Minister remarked “the situation is still worse”. Official sources, however, attribute the sorry state of affairs to “unmindful spending”.
More than Rs 500 crore have been spent so far on the construction of the Government Transitional Headquarters (interim Secretariat) at Velagapudi and the expenditure is not complete.
Over Rs 100 crore was spent on the Chief Minister’s offices and residences in Hyderabad and the capital region (including Vijayawada). Now, another sum of Rs 5.82 crore is being spent on
“repairs, renovation, modification and refurbishment” of bunglow at 1, Janpath in New Delhi, that has been allotted to the AP Chief Minister.
A private airline, in which actor and former Union minister K Chiranjeevi’s family has a stake, has been granted Rs 4.90 crore a few days ago as “viability gap funding” for operating flights on Vijayawada-Tirupati-Kadapa sector for a six-month period. “These figures appear small and are just an example. But when the government is virtually on a hand-to-mouth existence, such largesse will only add to the misery,” a senior bureaucrat remarked.
The TDP government in the state has been desperately pleading with the Centre for over a year to relax the Fiscal Responsibility and Budgetary Management Act norms to increase the borrowing limit by at least 0.5%, if not 1%, from the current three per cent cap. An increase of 0.5% limit would enable the state to borrow an additional Rs 2,800 crore from the market, but the Centre turned down AP’s request given the bad state of its finances.
Interestingly, the Centre granted neighbouring Telangana a 0.5% hike in its borrowing limit, much to the chagrin of the AP administration. Though the Centre has released large quantum of funds under different heads to the state, including construction of the capital city, but they were ostensibly not spent or rather diverted for other purposes.
Hence, the state is in no position to press for more releases from the Centre, officials point out.