The Hindu Business Line : AP Govt to curb `unproductive' expenses to curtail Budget deficit

THE State Finance Minister, Mr K. Rosaiah, proposes to bridge the revenue gap of Rs 1,970 crore in the 2004-05 Budget by curbing unproductive expenditure, improving tax compliance and focusing on revenue buoyancy.

The Government will not spend its own money on schemes such as Adarana, Neeru-Meeru and Janmabhoomi, which it considers "unproductive." Apart from the money granted by the Central Government, the State Government "will not allocate any amount for such schemes," Mr D.A. Somayajulu, Advisor to Government (Economic Affairs and Policy Implementation), told Business Line.

Despite ruling out imposition of fresh taxes, the Finance Minister intends to bring down the revenue deficit to zero level by 2009. In this regard, he pointed out that the revenue deficit projected in the current year Budget was nearly Rs 1,000 crore less than the revised estimates of Rs 2,904 crore for the year 2003-04.

Mr Rosaiah's confidence in wiping out the revenue deficit in the Budget spurs from the fact that the State's revenues are increasing every year. As per the current year's Budget estimates, the revenue receipts will be Rs 32,181 crore as against Rs 27,410 crore last year, an increase of Rs 4,771 crore. The increase in revenues is on account of the organic growth and not due to imposition of new taxes.

Mr Somayajulu said the State's revenues are growing at an average rate of 15 per cent a year. "Hence, there is no need to impose fresh taxes to bridge the deficit gap."

Mr Rosaiah said that as a first step towards curbing unproductive expenditure, he had tried to maintain the non-salary budget ceilings under non-Plan unchanged for most departments without giving any growth, so that the departments would adopt austerity measures.

But how much does the Government save from curbing "unproductive" expenditure? The figures are yet to be worked out. Mr Somayajulu said there would be substantial savings in this regard. For instance, he said the Government had spent Rs 1,200 crores on fulfilment of `Koti Varalu' (one crore boons) last year. "If this amount was not spent, the fiscal deficit last year would have been much lower."

For funding developmental works, the Finance Minister said there were various sources, including raising loans from national and international markets at low interest rates.

While ruling out imposition of fresh taxes, Mr Rosaiah had stated in his Budget speech that the Government was awaiting the final report of the Revenue Reforms Committee to take up further tax reforms to enlarge the base of the revenues of the State. This could be an indication that if the committee recommended, the Government could as well impose fresh taxes.

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