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The Finance Minister, Mr. Buggana Rajendranath, presented the budget for Andhra Pradesh for financial year 2019-20 on July 12, 2019.  Previously, the interim budget for the year was presented in February 2019.

Budget Highlights

  • The Gross State Domestic Product (GSDP) of Andhra Pradesh for 2019-20 (at current prices) is estimated to be Rs 10,80,657 crore[1]. This is 17.6% higher than the revised estimate for 2018-19. 
     
  • Total expenditure for 2019-20 is estimated to be Rs 2,27,975 crore, a 40.6% increase over the revised estimate of 2018-19. In 2018-19, as per the revised figures, there is an estimated decrease of Rs 28,929 crore (15.1%) of expenditure over the budgeted estimate.
     
  • Total receipts (excluding borrowings) for 2019-20 are estimated to be Rs 1,79,297 crore, an increase of 56% as compared to the revised estimate of 2018-19. Borrowings are estimated to be Rs 46,921 crore, an increase of 22.7% over the revised estimate of 2018-19.
     
  • Revenue deficit for 2019-20 is targeted at Rs 1,779 crore, or 0.16% of the Gross State Domestic Product (GSDP). Fiscal deficit is targeted at Rs 35,261 crore (3.26% of GSDP). 
     
  • Sectors such as energy (247%), welfare of SC, ST, OBC and minorities (157%), and agriculture and allied activities (135%) saw the highest increase in allocations in 2019-20.

Policy Highlights

  • YSR Rythu Bharosa: Farm investment support of Rs 12,500 per year will be provided to farmers, including tenant farmers.  Rs 8,750 crore has been allocated for the scheme in 2019-20.
     
  • Jagananna Ammavodi: Rs 15,000 will be provided to every mother for sending her children to school.  The scheme will cover children from class I to XII.  Rs 6,456 crore has been allocated for the scheme.
     
  • Jagananna Vidya Deevena: 100% fee reimbursement will be provided to SC, ST, BC, minorities, Kapu, EBC, and differently abled students, along with a maintenance support of Rs 20,000 per year to each student.  Rs 4,962 crore has been allocated for the scheme in 2019-20.

Andhra Pradesh’s Economy

  • GSDP:  The growth rate of Andhra Pradesh’s GSDP (at current prices) has marginally decreased from 15.4% in 2016-17 to 15.3% in 2018-19.
     
  • Sectors:  In 2018-19, the sectors of agriculture, manufacturing, and services respectively contributed 34%, 23%, and 43% of the Gross State Value Added by all sectors.  Between 2017-18 and 2018-19, these sectors grew by 12.4%, 18.1%, and 16.1%, respectively.
     
  • Unemployment:  According to the Periodic Labour Force Survey (2017-18), the unemployment rate in Andhra Pradesh in 2017-18 was 4.5%, as compared to 6.1% in the country.

Figure 1: Growth in GSDP and sectors in Andhra Pradesh (year-on-year)

Note: As per CSO, agriculture here includes mining and quarrying.  SRE: Second Revised Estimate.  FRE: First Revised Estimate.  AE: Advanced Estimate.   All numbers are as per current prices.

Sources: Andhra Pradesh Socio Economic Survey 2018-19; PRS.

Budget Estimates for 2019-20

  • The total expenditure in 2019-20 is targeted at Rs 2,27,975 crore. This is 40.6% higher than the revised estimate of 2018-19.  This expenditure is proposed to be met through receipts (other than borrowings) of Rs 1,79,297 crore and borrowings of Rs 46,921 crore.  In 2019-20, receipts (other than borrowings) are expected to be 56% higher than the revised estimate of 2018-19. 

Table 1: Budget 2019-20 - Key figures (in Rs crore)

Items

2017-18 Actuals

2018-19 Budgeted

2018-19 Revised

% change from BE 2018-19 to RE of 2018-19

2019-20 Budgeted

% change from RE 2018-19 to BE 2019-20

Total Expenditure

1,46,944

1,91,064

1,62,134

-15.1%

2,27,975

40.6%

A. Receipts (except borrowings)

1,05,113

1,56,007

1,14,962

-26.3%

1,79,297

56.0%

B. Borrowings

28,433

33,461

38,246

14.3%

46,921

22.7%

Total Receipts (A+B)

1,33,546

1,89,468

1,53,207

-19.1%

2,26,218

47.7%

Revenue Deficit (-)/ Surplus (+)

-16,152

5,235

-11,655

-322.6%

-1,779

-84.7%

As % of GSDP

-2.01%

0.60%

-1.27%

 

-0.16%

 

Fiscal Deficit (-)/ Surplus (+)

-32,373

-24,205

-33,619

38.9%

-35,261

4.9%

As % of GSDP

-4.03%

-2.78%

-3.66%

 

-3.26%

 

Primary Deficit (-)/ Surplus (+)

-18,526

-9,128

-19,315

111.6%

-18,017

-6.7%

As % of GSDP

-2.30%

-1.05%

-2.10%

 

-1.67%

 

Notes: BE is Budget Estimate; RE is Revised Estimate. 

Sources: GSDP values have been calculated using total liabilities as a percentage of GSDP figures given in Andhra Pradesh Budget in Brief 2019-20; PRS.

Expenditure in 2019-20

  • Capital expenditure for 2019-20 is proposed to be Rs 47,499 crore, which is an increase of 32.7% over the revised estimate of 2018-19. Capital expenditure includes expenditure affecting the assets and liabilities of the state, such as: (i) capital outlay, i.e. expenditure which leads to creation of assets (such as bridges and hospitals), and (ii) repayment and grant of loans by the state government. 
     
  • Andhra Pradesh’s capital outlay for 2019-20 is estimated to be Rs 32,293 crore, which is 58.3% higher than the revised estimate of 2018-19. The revised figure for 2018-19 is estimated to be 28.9% lower than the budgeted estimate made for that year.
     
  • Revenue expenditure for 2019-20 is proposed to be Rs 1,80,476 crore, which is an increase of 42.9% over the revised estimate of 2018-19. This expenditure includes payment of salaries, pensions, and interest, among others.  Revenue expenditure accounts for 79% of the total expenditure proposed for 2019-20.

Table 2: Expenditure budget 2019-20 (in Rs crore)

Item

2017-18 Actuals

2018-19 Budgeted

2018-19 Revised

% change from BE 2018-19 to RE 2018-19

2019-20 Budgeted

% change from RE 2018-19 to BE 2019-20

Capital Expenditure

25,730

40,792

35,795

-12.2%

47,499

32.7%

of which Capital Outlay

13,491

28,678

20,398

-28.9%

32,293

58.3%

Revenue Expenditure

1,21,214

1,50,272

1,26,339

-15.9%

1,80,476

42.9%

Total Expenditure

1,46,944

1,91,064

1,62,134

-15.1%

2,27,975

40.6%

A. Debt Repayment

9,451

10,851

13,539

24.8%

13,417

-0.9%

B. Interest Payments

13,847

15,077

14,304

-5.1%

17,244

20.6%

Debt Servicing (A+B)

23,298

25,928

27,842

7.4%

30,661

10.1%

Note:  Capital outlay denotes expenditure which leads to creation of assets.

Sources: Andhra Pradesh Annual Financial Statement 2019-20 (July 2019); PRS. 
 

Sector expenditure in 2019-20

The sectors listed below account for 70% of the total budgeted expenditure of Andhra Pradesh in 2019-20.  A comparison of Andhra Pradesh’s expenditure on key sectors with that by other states is given in the Annexure.

Table 3: Sector-wise expenditure for Andhra Pradesh Budget 2019-20 (Rs crore)

Sector

2017-18

Actuals

2018-19

Budgeted

2018-19

Revised

2019-20

Budgeted

% change from RE 2018-19 to BE 2019-20

Budget provisions for 2019-20

Education

20,017

26,510

19,587

33,410

71%

  • Rs 6,456 crore has been allocated to the Jagananna Ammavodi programme.
     
  • Rs 1,500 crore has been allocated for modernisation of infrastructure in schools.
     
  • Rs 1,158 crore has been allocated to Samagra Shiksha scheme.

Social Welfare and Nutrition

15,469

19,969

22,779

27,461

21%

  • Rs 15,747 crore has been allocated to YSR Pension Kanuka programme.
     
  • Rs 3,000 crore has been allocated for providing subsidy on rice.
     
  • Rs 1,430 crore has been allocated to Integrated Child Development Services.

Agriculture and allied activities

7,569

8,420

8,766

20,558

135%

  • Rs 8,750 crore has been allocated to YSR Rythu Bharosa programme.
     
  • Rs 1,163 crore has been allocated to YSR PM Fasal Bima Yojana.
     
  • Rs 3,000 crore has been allocated to Price Stabilisation Fund for farm risk mitigation.

Welfare of SC, ST, OBC and minorities

10,423

13,688

5,479

14,088

157%

  • Rs 4,962 crore has been allocated to Jagananna Vidya Deevena scheme.

Irrigation and flood control

8,877

16,594

13,991

12,712

-9%

  • Rs 210 crore has been allocated to lift irrigation works.
     
  • Rs 161 crore has been allocated to Neeru Chettu, an interdepartmental coordinating portal.

Water Supply, Sanitation, Housing, and Urban Development

8,781

13,390

10,451

12,296

18%

  • Rs 2,105 crore has been allocated to PM Awas Yojana, Rs 1,356 crore to weaker section housing programmes, and Rs 1,000 crore to YSR Urban Housing programme.
     
  • Rs 500 crore has been allocated for creation of essential infrastructure for new capital.
     
  • Rs 648 crore has been allocated to YSR interest free loans to urban self-help groups.

Health and Family Welfare

6,389

8,758

7,398

11,610

57%

  • Rs 1,732 crore has been allocated to National Health Mission.
     
  • Rs 1,740 crore has been allocated to Arogyasri.
     
  • Rs 1,500 has been allocated for infrastructure facilities at hospitals.

Rural Development

8,859

12,068

7,640

10,672

40%

  • Rs 3,626 crore has been allocated to MGNREGA programme.

Energy

3,440

3,255

1,910

6,623

247%

  • Rs 4,525 crore has been allocated to YSR nine hours free power supply programme.

Police

4,696

5,738

5,243

5,798

11%

  • Rs 575 crore has been allocated to Andhra Pradesh special police units.

Transport

1,928

4,100

1,979

4,267

116%

  • Rs 500 crore has been allocated for reimbursement of concessions provided by APSRTC to citizens.

% of total expenditure

66%

69%

65%

70%

 

 

Sources: Andhra Pradesh Budget Speech 2019-20, July 2019; Andhra Pradesh Annual Financial Statement 2019-20, July 2019; Andhra Pradesh Demand for Grants 2019-20, July 2019: PRS.

Receipts in 2019-20

In 2019-20, Andhra Pradesh is expected to borrow Rs 46,921 crore to meet its expenditure requirements, which is 22.7% higher than the revised estimates of 2018-19.  In 2018-19, the borrowings of the state are expected to be 14.3% higher than the amount budgeted for the year.

  • The total revenue receipts for 2019-20 are estimated to be Rs 1,78,697 crore, an increase of 55.8% over the revised estimate of 2018-19. Of this, Rs 82,793 crore (46% of the revenue receipts) will be raised by the state through its own resources, and Rs 95,905 crore (54% of the revenue receipts) will be devolved by the centre in the form of grants and the state’s share in central taxes. In 2019-20, grants-in-aid of Rs 61,072 crore are expected from the centre. This is an increase of 213.9% over the revised estimate of 2018-19.
     
  • Non-tax revenue: Andhra Pradesh is estimated to generate Rs 7,355 crore through non-tax sources in 2019-20.  This is an increase of 67.5% (Rs 2,963 crore) over the revised estimate of 2018-19.

Table 4: Break up of state government receipts in 2019-20 (Rs crore)

Items

2017-18 Actuals

2018-19 Budgeted

2018-19 Revised

% change from BE 2018-19 to RE of 2018-19

2019-20 Budgeted

% change from RE 2018-19 to BE 2019-20

State's Own Tax

49,813

65,535

58,125

-11.3%

75,438

29.8%

State's Own Non-Tax

3,814

5,347

4,391

-17.9%

7,355

67.5%

Share in Central Taxes

28,675

33,930

32,711

-3.6%

34,833

6.5%

Grants-in-aid from Centre

22,761

50,696

19,457

-61.6%

61,072

213.9%

Total Revenue Receipts

1,05,062

1,55,507

1,14,684

-26.3%

1,78,697

55.8%

Borrowings

28,433

33,461

38,246

14.3%

46,921

22.7%

Other receipts

51

500

277

-44.5%

600

116.3%

Total Capital Receipts

28,484

33,961

38,523

13.4%

47,521

23.4%

Total Receipts

1,33,546

1,89,468

1,53,207

-19.1%

2,26,218

47.7%

Sources: Andhra Pradesh Budget Documents 2019-20; PRS.

  • Tax Revenue: Total own tax revenue of Andhra Pradesh is estimated to be Rs 75,438 crore in 2019-20 (42% of the revenue receipts).  This is 29.8%% higher than the revised estimate of 2018-19.  In 2018-19, own tax revenue is expected to be Rs 58,125 crore, which is 11.3% lower than the budgeted estimate.
     
  • The own tax to GSDP ratio is targeted at 7% in 2019-20, which is significantly higher than the revised estimate of 6.3% in 2018-19. This implies that growth in collection of taxes is expected to be higher than the growth in the economy.

Figure 2: Composition of the state’s tax revenue in 2019-20 (Budget Estimates)

Sources: Andhra Pradesh Budget in Brief 2019-20; PRS.

  • Sales Tax and VAT (on items such as petroleum products) is the largest component of tax revenue of the state.  It is expected to generate Rs 28,000 crore in 2019-20.  This is an increase of 27.8% from the revised estimate of 2018-19.
     
  • State Goods and Services Tax (SGST) is expected to generate Rs 27,000 crore.  This is an increase of 31% over the revised estimate of 2018-19.  In most of the other states, SGST is the largest component of tax revenue of the state.
     
  • In 2019-20, the state is expected to generate Rs 8,518 crore from the levy of state excise.  This an increase of 36.9% over the revised estimate of 2018-19.  Further, in 2019-20, the state is expected to generate Rs 6,600 crore from stamp duty and registration fees and Rs 4,000 crore from taxes on vehicles.

Deficits, Debts and FRBM Targets for 2019-20

The Andhra Pradesh Fiscal Responsibility and Budget Management Act, 2005 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit, and fiscal deficit of the state government. 

Debt Servicing

In 2019-20, Andhra Pradesh is expected to spend Rs 30,661 crore on servicing its debt, which is 13% of its estimated expenditure.  This expenditure includes Rs 13,417 crore towards repayment of loans, and Rs 17,244 crore towards interest payments.  

In 2019-20, the expenditure on repayment of loans is expected to decrease by 0.9% over the revised estimate of 2018-19.

Revenue deficit:  This 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 deficit of Rs 1,779 crore (or 0.2% of GSDP) in 2019-20.  This is 322.6% lower than the revised estimates of 2018-19.  This implies that revenue receipts are expected to be lower than the revenue expenditure, resulting in a deficit.  The 14th Finance Commission had recommended that states should eliminate revenue deficits.  The 2019-20 estimates for Andhra Pradesh suggest that the state will not be able to meet this target of eliminating revenue deficit.  The budget estimate of 2018-19 had projected a revenue surplus of Rs 5,235 crore.  The revised estimate has changed this projection to a revenue deficit of Rs 11,655 crore.

Fiscal deficit:  This 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 2019-20, Andhra Pradesh’s fiscal deficit is estimated to be Rs 35,261 crore, which is 3.3% of the GSDP.  The estimate is higher than the 3% limit prescribed by the 14th Finance Commission.  Note that, in 2018-19, fiscal deficit increased by 38.9% from Rs 24,205 crore (2.8% of GSDP), as per the budgeted estimate, to Rs 33,619 crore (3.7% of GSDP), as per the revised estimate.

Outstanding liabilities:  This is the accumulation of borrowings taken by the state government over the years.  In 2019-20, Andhra Pradesh’s outstanding liabilities are expected to be at 27% of the GSDP.

Table 5: Budget estimates for deficits for Andhra Pradesh in 2019-20 (% of GSDP)

Year

Revenue

Fiscal

Outstanding Liabilities

Deficit (-)/Surplus (+)

Deficit (-)/Surplus (+)  

2017-18

-2.0%

-4.0%

27.8%

2018-19 (RE)

-1.3%

-3.7%

28.2%

2019-20 (BE)

-0.2%

-3.3%

27.0%

Sources: Budget in Brief; Andhra Pradesh Budget Documents, July 2019; PRS.

Figures 3 and 4 show the trend in deficits and outstanding liabilities targets from 2017-18 to 2019-20.

Figure 3: Revenue and Fiscal Deficit

(as % of GSDP)

 Sources: Andhra Pradesh Budget Documents; PRS. 

Figure 4: Outstanding liabilities (as % of GSDP)

Sources: Andhra Pradesh Budget Documents; PRS. 

Annexure                                                        

The graphs below compare Andhra Pradesh’s expenditure on six key sectors as a proportion of its total budget, with 26 other states.[2] 

  • Education: Andhra Pradesh has allocated 15.7% of its expenditure on education in 2019-20.  This is slightly lower than the average allocation to education by other states (using 2018-19 BE) (15.9%).
  • Health: Andhra Pradesh has allocated 5.5% of its expenditure on health, which is higher than the average expenditure by other states (4.5%).
  • Agriculture and allied activities: The state has allocated 9.7% of its total budget towards agriculture and allied activities.  This is significantly higher than the average allocation by other states (6.5%).
  • Energy: Andhra Pradesh has allocated 3.1% of its expenditure on energy.  This is significantly lower than the average expenditure (5.2%) by other states.
  • Roads and bridges: Andhra Pradesh has allocated 1.6% of its total expenditure on roads and bridges, which is significantly lower than the average expenditure by other states (4.3%).  
  • Police: Andhra Pradesh has allocated 2.7% of its total expenditure on police, which is lower than the average expenditure by other states (3.9%).

Note: 2017-18, 2018-19 (BE), 2018-19 (RE), and 2019-20 (BE) figures are for Andhra Pradesh.

Source: Annual Financial Statement of Andhra Pradesh 2019-20, July 2019; various state budgets; PRS.

 

[1] GSDP values have been calculated using total liabilities as a percentage of GSDP figures given in the Budget in Brief 2019-20 document of Andhra Pradesh.

[2] The 26 other states include all states except Arunachal Pradesh, Manipur, and Meghalaya.  It also includes the Union Territory of Delhi.

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