Andhra Pradesh Finance Minister K Rosaiah on Monday presented a tax-free state budget for the ensuing financial year 2007-08 with a record state plan outlay of Rs 30,018 crore (Rs 30.18 billion).
In his budget speech for 2007-08, the finance minister told the State Legislative Assembly that the overall expenditure in the financial year 2007-08 would be Rs 80,996 crore (Rs 809.96 billion), comprising Rs 48,023.43 crore (Rs 480.23 billion) under non-plan and Rs 32,973.17 crore (Rs 329.73 billion) under plan. This would result in a revenue deficit of Rs 36.48 crore (Rs 364.8 million), which would be a mere 0.01 percent of the Gross State Domestic Product (GSDP). The fiscal deficit is estimated to be Rs 8,620.64 crore (Rs 86.20 billion), which would be three percent of the GSDP.
"After taking into account the overall transactions of the year, we will have a net surplus of Rs 25.01 crore (Rs 250.1 million). However, the financial year 2007-08 is expected to end with a negative balance of Rs 33.08 crore (Rs 330.8 million)," he added.
He said that the transactions, as per the revised estimates of 2006-07, indicated a revenue deficit of Rs 53.54 crore (Rs 535.4 million) against the budget revenue deficit of
Rs 995.84 crore (Rs 9.958 billion). The overall transactions of the current financial year are estimated to result in a net surplus of Rs 30.81 crore (Rs 308.1 million). After taking into account the negative balance of Rs 88.90 crore (Rs 889 million), the year-end balance is estimated to be negative at Rs 58.09 crore (Rs 580.9 million).
"In the three years that we are in power, our government have successfully managed the state economy which moved from dormancy to the state of prosperity. Although budget expenditure is increasing every year, the decline in revenue and fiscal deficits in an ample proof of successful fiscal management. For the third successive year, we have not resorted to any overdraft from RBI which speaks volumes about our fiscal prudence and discipline and sound cash management," he said
"We hope to continue in the same path and eliminate revenue deficit by 2008-09 and would have revenue surplus thereafter. In the same fashion, we would also contain fiscal deficit to three percent of GSDP," he added.
The finance minister that "our aim, as far as tax administration is concerned, is to augment tax collection by curbing tax evasion without increasing tax rates. In the preceding three years, tax collection has increased by 18 percent a year. There are two main reasons for this phenomenon. Firstly, the state's economy has been performing well and recorded an annual growth rate of seven percent every year. Secondly, reforms in tax administration, VAT implementation, personnel recruitment and computerisation have resulted in efficient tax administration culminating in revenue buoyancy."
He said that the state's tax revenues would increase to Rs 31,399 crore (Rs 313. 99 billion), representing a 24 percent increase vis-à-vis the current year. Non-tax revenue has also increased mainly due to increase in revenue from mines and minerals. Total non-tax revenue estimate for the year 2007-08 is Rs 6,857 crore (Rs 68.57 billion).
"Our government is increasing the plan expenditure substantially every year. For the financial year 2007-08, the annual state plan outlay has been fixed at Rs 30,018 crore, which is a 53 percent increase to the current year plan allocation of Rs 19,557 crore (Rs 195.57 billion).
The percentage of plan expenditure to total expenditure increased to 37 percent," he pointed out.
Stating that "our government believes that development and welfare are two sides of the same coin," he said that allocations to irrigation projects, housing, education and health have been increased substantially. Irrigation sector, which is of paramount importance to the cultivators, has got a major chunk of plan expenditure at Rs 13,000 crore (Rs 130 billion).
Housing sector has been allocated Rs 4,793 crore (Rs 47.93 billion). Education sector has been provided Rs 823 crore (Rs 8.23 billion) and health sector Rs 759 crore (Rs 7.59 billion). "We have allocated Rs 2,277 crore (Rs 22.77 billion) to rural development, Rs 1,842 crore (Rs 18.42 billion) to urban development, Rs 1,462 crore (Rs 14.62 billion) to welfare sector and Rs 1,877 crore to infrastructure development," he explained.