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.
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Andhra Pradesh’s Economy
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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% |
|
|
Social Welfare and Nutrition |
15,469 |
19,969 |
22,779 |
27,461 |
21% |
|
|
Agriculture and allied activities |
7,569 |
8,420 |
8,766 |
20,558 |
135% |
|
|
Welfare of SC, ST, OBC and minorities |
10,423 |
13,688 |
5,479 |
14,088 |
157% |
|
|
Irrigation and flood control |
8,877 |
16,594 |
13,991 |
12,712 |
-9% |
|
|
Water Supply, Sanitation, Housing, and Urban Development |
8,781 |
13,390 |
10,451 |
12,296 |
18% |
|
|
Health and Family Welfare |
6,389 |
8,758 |
7,398 |
11,610 |
57% |
|
|
Rural Development |
8,859 |
12,068 |
7,640 |
10,672 |
40% |
|
|
Energy |
3,440 |
3,255 |
1,910 |
6,623 |
247% |
|
|
Police |
4,696 |
5,738 |
5,243 |
5,798 |
11% |
|
|
Transport |
1,928 |
4,100 |
1,979 |
4,267 |
116% |
|
|
% of total expenditure |
66% |
69% |
65% |
70% |
|
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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
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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.
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Figure 2: Composition of the state’s tax revenue in 2019-20 (Budget Estimates)
Sources: Andhra Pradesh Budget in Brief 2019-20; PRS. |
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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.
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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.
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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%).
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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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