The Finance Minister of Andhra Pradesh, Mr. Yanamala Ramakrishnudu, presented the Budget for financial year 2018-19 on March 8, 2018.
Budget Highlights
- The Gross State Domestic Product of Andhra Pradesh for 2018-19 (at current prices) is approximately Rs 8,70,326 This is 10% higher than the revised estimate for 2017-18.
- Total expenditure for 2018-19 is estimated to be Rs 1,91,064 crore, a 19.5% increase over the revised estimates of 2017-18. In 2017-18, there was an increase of Rs 2,823 crore (1.8%) in expenditure over the budget estimates.
- Total receipts (excluding borrowings) for 2018-19 are estimated to be Rs 1,57,599 crore, an increase of 25.4% as compared to the revised estimates of 2017-18. In 2017-18, total receipts (excluding borrowings) fell short of the budgeted estimate by Rs 1,328 crore.
- Revenue surplus for the next financial year is targeted at Rs 5,235 crore, or 0.6% of the Gross State Domestic Product (GSDP). Fiscal deficit is targeted at Rs 24,205 crore (2.8% of GSDP).
- The departments of education, municipal administration and urban development, health, medical and family welfare are estimated to witness the highest increase in allocations over the previous year.
Policy Highlights
- A Youth Policy will be formulated for the implementation of youth empowerment and advancement programmes. Rs 1,000 crore is allocated for this purpose.
- A Mega Seed Park project is initiated to ensure availability of quality seeds to farmers at low cost, and to develop Andhra Pradesh as a global seed hub. Rs 100 crore is allocated for this purpose.
- It is proposed to launch a new livestock insurance scheme to insure 10 lakh animals. Rs 50 crore is allocated for this purpose.
- It is proposed to provide pucca housing to every poor person in urban areas by 2022. Rs 1,000 crore has been allocated to the Andhra Pradesh Township and Infrastructure Development Corporation Ltd.
- Rs 1,168 crore is allocated to complete two out of four nodes (Visakhapatnam and Srikalahasti-Yerpedu) under the Visakhapatnam-Chennai Industrial Corridor.
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Andhra Pradesh Economy
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Figure 1: Sector-wise growth in Andhra Pradesh (year-on-year) Source: Andhra Pradesh Socio Economic Survey 2017-18; PRS. |
Budget Estimates for 2018-19
- The total expenditure in 2018-19 is targeted at Rs 1,91,064 crore. This is 19.5% higher than the revised estimates of 2017-18. This expenditure is proposed to be met through receipts (other than borrowings) of Rs 1,57,599 crore, and borrowings of Rs 33,461 crore. Total receipts for 2018-19 (other than borrowings) are expected to be 25.4% higher than the revised estimates of 2017-18.
Table 1: Budget 2018-19 - Key figures (Rs crore)
|
Items |
2016-17 Actuals |
2017-18 Budgeted |
2017-18 Revised |
% change from BE 2017-18 to RE of 2017-18 |
2018-19 Budgeted |
% change from RE 2017-18 to BE 2018-19 |
|
Total Expenditure |
1,66,699 |
1,56,999 |
1,59,822 |
1.8% |
1,91,064 |
19.5% |
|
A. Borrowings |
59,923 |
30,020 |
30,500 |
1.6% |
33,461 |
9.7% |
|
B. Receipts (except borrowings) |
1,06,959 |
1,26,968 |
1,25,640 |
-1.0% |
1,57,599 |
25.4% |
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Total Receipts (A+B) |
1,66,882 |
1,56,988 |
1,56,140 |
-0.5% |
1,91,060 |
22.4% |
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Revenue Deficit (-)/Surplus (+) |
-17,194 |
-416 |
-4,018 |
866.3% |
5,235 |
-230.3% |
|
As % of GSDP |
-2.5% |
-0.1% |
-0.5% |
|
0.6% |
|
|
Fiscal Deficit (-)/Surplus (+) |
-30,909 |
-23,054 |
-27,603 |
19.7% |
-24,205 |
-12% |
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As % of GSDP |
-4.5% |
-2.9% |
-3.5% |
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-2.8% |
|
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Primary Deficit (-)/Surplus (+) |
-19,211 |
-8,272 |
-12,847 |
55.3% |
-9,128 |
-28.9% |
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As % of GSDP |
-2.8% |
-1.0% |
-1.6% |
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-1.0% |
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Notes: GSDP has been calculated based on public debt as % of GSDP as given in the budget in brief document. BE is Budget Estimate; RE is Revised Estimate.
Sources: Andhra Pradesh Budget Documents 2018-19; PRS.
Expenditure in 2018-19
- Capital expenditure for 2018-19 is proposed to be Rs 40,792 crore, which is an increase of 25.3% over the revised estimates of 2017-18. This includes expenditure which affects the assets and liabilities of the state, and leads to creation of assets (such as bridges and hospitals), and repayment of loans, among others.
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In 2018-19, Andhra Pradesh estimates to spend Rs 25,836 crore on centrally sponsored schemes. This is 32% more than the revised estimate in 2017-18. In 2017-18, there was a decrease of Rs 2,492 crore (11%) in the expenditure towards centrally sponsored scheme over the budget estimates (Rs 22,132 crore). |
- Revenue expenditure for 2018-19 is proposed to be Rs 1,50,272 crore, which is an increase of 18.1% over revised estimates of 2017-18. This expenditure includes payment of salaries, maintenance, etc.
- In 2018-19, Andhra Pradesh is expected to spend Rs 25,928 crore on servicing its debt (i.e., Rs 10,851 crore on repaying loans, and Rs 15,077 crore on interest payments. This is 11.4% higher than the revised estimates of 2017-18.
Table 2: Expenditure budget 2018-19 (Rs crore)
|
Item |
2016-17 Actuals |
2017-18 Budgeted |
2017-18 Revised |
% change from BE 2017-18 to RE 2017-18 |
2018-19 Budgeted |
% change from RE 2017-18 to BE 2018-19 |
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Capital Expenditure |
50,520 |
31,088 |
32,550 |
4.7% |
40,792 |
25.3% |
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Revenue Expenditure |
1,16,178 |
1,25,912 |
1,27,272 |
1.1% |
1,50,272 |
18.1% |
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Total Expenditure |
1,66,699 |
1,56,999 |
1,59,822 |
1.8% |
1,91,064 |
19.5% |
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A. Debt Repayment |
34,776 |
8,009 |
8,525 |
6.4% |
10,851 |
27.3% |
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B. Interest Payments |
11,697 |
14,783 |
14,756 |
-0.2% |
15,077 |
2.2% |
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Debt Servicing (A+B) |
46,473 |
22,792 |
23,281 |
2.1% |
25,928 |
11.4% |
Notes: BE is Budget Estimate; RE is Revised Estimate.
Sources: Andhra Pradesh Budget Documents 2018-19; PRS.
Department expenditure in 2018-19
The departments listed below account for 54% of the total budget of Andhra Pradesh in 2018-19. A comparison of Andhra Pradesh’s expenditure on key sectors with 18 other states can be found in the Annexure.
Table 3: Sector-wise expenditure for Andhra Pradesh Budget 2018-19 (Rs crore)
|
Department |
2016-17 Actuals |
2017-18 Revised |
2018-19 Budgeted |
% change from RE 2017-18 to BE 2018-19 |
Budget Provisions for 2018-19 |
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Education |
17,461 |
20,225 |
24,961 |
23.4% |
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Rural Development and Panchayati Raj |
18,574 |
21,687 |
23,439 |
8.1% |
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Water Resources |
10,638 |
15,511 |
16,978 |
9.5% |
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Agriculture and Cooperation |
6,691 |
8,057 |
10,097 |
25.3% |
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Health, Medical and Family Welfare |
6,332 |
6,542 |
8,464 |
29.4% |
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Municipal Administration and Urban Development |
5,073 |
5,049 |
7,741 |
53.3% |
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Home |
4,727 |
5,451 |
6,227 |
14.2% |
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Backward Classes Welfare |
4,118 |
4,783 |
6,213 |
29.9% |
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% of total expenditure |
44% |
55% |
54% |
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Total expenditure |
1,66,699 |
1,59,822 |
1,91,064 |
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Notes: BE is Budget Estimate; RE is Revised Estimate.
Source: Andhra Pradesh Budget Speech 2018-19 and Demands for Grants; PRS.
- In 2018-19, the department of municipality administration and urban development saw the highest growth (53.3%) in allocation. This is followed by the department of backward classes welfare (29.9%), and the department of health, medical and family welfare (29.4%).
- In 2017-18, the department of water resources saw an increase of 21.5% (Rs 2,740 crore) in expenditure at the revised stage. On the other hand, the department of education, saw a decrease of 4.2% (Rs 884 crore) in expenditure at the revised stage.
Receipts in 2018-19
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Between 2012-13 and 2018-19, the share of non-tax revenue in the total revenue receipts of Andhra Pradesh has decreased from 15% to 3%. |
- The total revenue receipts for 2018-19 are estimated to be Rs 1,55,507 crore, an increase of 26.2% over the revised estimates of 2017-18. Of this, Rs 70,882 crore will be raised by the state through its own resources (46% of the revenue receipts), and Rs 84,626 crore will be devolved by the centre in the form of grants and the state’s share in taxes (54% of the revenue receipts).
- Non Tax Revenue: Andhra Pradesh has estimated to generate Rs 5,347 crore through non-tax sources in 2018-19. This is an increase of 34% over the revised estimates of 2017-18. In 2017-18, the estimated revenue from fell short by 21.7% at the revised stage. This was due to a fall in collections from the sale of red sandalwood.
Table 4: Break up of state government receipts (Rs crore)
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Item |
2016-2017 Actuals |
2017-2018 Budgeted |
2017-18 Revised |
% change from BE 2017-18 to RE 2017-18 |
2018-2019 Budgeted |
% change from RE 2017-18 to BE 2018-19 |
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State's Own Tax |
44,181 |
53,717 |
52,716 |
-1.9% |
65,535 |
24.3% |
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State's Own Non-Tax |
5,193 |
5,092 |
3,989 |
-21.7% |
5,347 |
34.0% |
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Share in Central Taxes |
26,264 |
29,139 |
29,001 |
-0.5% |
33,930 |
17.0% |
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Grants-in-aid from Centre |
23,346 |
37,548 |
37,548 |
0.0% |
50,696 |
35.0% |
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Total Revenue Receipts |
98,984 |
1,25,496 |
1,23,254 |
-1.8% |
1,55,507 |
26.2% |
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Borrowings |
59,923 |
30,020 |
30,500 |
1.6% |
33,461 |
9.7% |
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Other receipts |
7,975 |
1,472 |
2,386 |
62.1% |
2,091 |
-12.3% |
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Total Capital Receipts |
67,897 |
31,492 |
32,886 |
4.4% |
35,552 |
8.1% |
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Total Receipts |
1,66,882 |
1,56,988 |
1,56,140 |
-0.5% |
1,91,060 |
22.4% |
Notes: BE is Budget Estimate; RE is Revised Estimate.
Sources: Andhra Pradesh Budget Documents 2018-19; PRS.
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The central government will compensate state governments for any revenue loss due to the implementation of GST for a period of five years. In 2018-19, Andhra Pradesh has estimated to receive Rs 2,000 crore from the central government as compensation. The state is estimated to receive Rs 1,000 crore in 2017-18 (revised estimates). Note that, it had not estimated any compensation in its budget for 2017-18 presented last year. |
- Tax Revenue: The total own tax revenue of Andhra Pradesh is estimated to be Rs 65,535 crore in 2018-19. The composition of the state’s tax revenue is shown in Figure 2.
- The tax to GSDP ratio is targeted at 7.5% in 2018-19, which is higher than the revised estimate of 6.6% in 2017-18. This implies that growth in collection of taxes is expected to be higher than the growth in the state economy.
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Figure 2: Composition of Tax Revenue in 2018-19 (BE) |
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Deficits, Debts and FRBM Targets for 2018-19
The Andhra Pradesh Fiscal Responsibility and Budget Management (FRBM) Act, 2005 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit and fiscal deficit of the state government.
Revenue deficit: It is the excess of revenue expenditure over revenue receipts. A revenue deficit implies that the government needs to borrow in order to finance its expenses which do not create capital assets.
The budget estimates a revenue surplus of Rs 5,235 crore (or 0.6% of GSDP) in 2018-19. This implies that revenue receipts are expected to be higher than the revenue expenditure, resulting in a surplus. The estimate indicates that the state is expected to meet the target of eliminating revenue deficit, as prescribed by the 14th Finance Commission.
Fiscal deficit: It is the excess of total expenditure over total receipts. This gap is filled by borrowings by the government and leads to an increase in total liabilities. In 2018-19, fiscal deficit is estimated to be Rs 24,205 crore, which is 2.8% of the GSDP. The estimate is within the 3% limit prescribed by the 14th Finance Commission. The Finance Commission had recommended that this limit may be relaxed to a maximum of 3.5% if states are able to contain their debt and interest payments to certain specified levels.
Outstanding Liabilities: It is the accumulation of borrowings over the years. In 2018-19, the outstanding liabilities are expected at 28.7% of the GSDP.
Table 5: Budget targets for deficits for Andhra Pradesh (% of GSDP)
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Year |
Revenue Deficit (-)/Surplus (+) |
Fiscal Deficit (-)/Surplus (+) |
Outstanding Liabilities |
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2016-17 |
-2.5% |
-4.5% |
28.8% |
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2017-18 (RE) |
-0.5% |
-3.5% |
28.4% |
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2018-19 (BE) |
0.6% |
-2.8% |
28.7% |
Sources: Andhra Pradesh Budget Documents 2018-19; PRS.
Figures 3 and 4 show the trend in deficits and outstanding liabilities targets from 2016-17 to 2018-19:
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Figure 3: Revenue and Fiscal Deficit (% of GSDP)
Sources: Andhra Pradesh Budget Documents 2018-19; PRS. |
Figure 4:Outstanding liabilities (% of GSDP) Sources: Andhra Pradesh Budget Documents 2018-19; PRS. |
Annexure
The graphs below compare Andhra Pradesh’s expenditure on four key sectors as a proportion of its total budget, with 18 other states.[1]
- Education: Andhra Pradesh has allocated 14.8% of its total budget on education in 2018-19. This is lower than the average expenditure allocated to education by 18 other states (using 2017-18 BE).
- Between 2016-17 and 2018-19, there is a gradual increase in the spending on education from 13.2% to 14.8%.
- Rural development: Andhra Pradesh has allocated 6.7% of its expenditure on rural development. This is higher than the average (5.6%) of the 18 other states.
- In 2017-18, spending on rural development was estimated to account for 8.7% of the total budgeted expenditure. However, there was a substantial fall in expenditure at the revised stage (5.9%).
- Health: Andhra Pradesh has allocated 4.9% of its total expenditure on health, which is marginally higher than the average expenditure of 18 other states. Further, the overall trend in spending on health has been constant. Between 2016-17 and 2018-19, the state spent between 4.5%-5% of its total budget on health.
- Agriculture: The state has allocated 4.7% of its total budget towards agriculture and allied activities. This is lower than the allocations of 18 other states (6.4%). Further, this is also a sharp drop in spending on agriculture from 6.1% in 2016-17 within the state.
Note: 2016-17, 2017-18 (BE), 2017-18 (RE), and 2018-19 (BE) figures are for Andhra Pradesh.
Source: Annual Financial Statement (2017-18 and 2018-19), various state budgets; PRS.
[1] The 18 states apart from Andhra Pradesh are: Assam, Bihar, Chhattisgarh, Delhi, Gujarat, Haryana, Jammu and Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, and West Bengal.
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