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GOVERNMENT of ANDHRA PRADESH
FINANCE DEPARTMENT
Previous Budget Speeches

FINANCE MINISTER'S BUDGET SPEECH 1956-57

Government of Andhra

Budget Speech

1956-57

Speech of
Sri B.Gopala Reddy,
Chief Minister and Minister in charge of Finance

The Budget for 1956-57
to the Andhra Legislative Assembly
on the 2nd March 1956.
Introductory

Sir,

       I rise to present the House the Budget of the Andhra State for 1956-57. This is my second Budget and if Visalandhra is formed soon, as we all hope it will be, this will be the last Budget of the present Andhra State.

2. Since I presented the Budget last July, two important matters which affect the future of our country have dominated the political horizon, the preparation of the Second Five-Year Plan and the Report on States Reorganisation. While the former relates to the needs of the people and the economic betterment of the country, the latter represents their emotional urge to get the people of the same culture or language-group welded together into one administrative pattern. While planning set a few people thinking, reorganisation of States made a far larger number of people get excited creating suspicion among neighbours. It looked as though the bonds of good neibourliness snapped overnight.

3. Hon'ble Members are aware that our Assembly had passed a resolution urging all Telugu-speaking people to be brought together into one unit of administration. There is no tinge of jingoism or imperialism in the demand. It is only a natural aspiration of the people speaking the same language to come together. But unfortunately during the long course of Indian History, due to wars or to the ambitions of certain rulers, people were vivisected and artificial barriers were created, so that they could not come together for certain common purposes. If we study closely the cultural growth of Telugu-speaking people in Kolar district or in the Andhra districts and in the districts of Telangana, we see a marked difference. Had they been under one administrative set-up, those marked differences would have been at the minimum. What we want is that the land hallowed by the footsteps of Bammera Pothana, Allasani Peddana, Ramaraja Bhushana, Tikkana and Nannaya be brought together so that all Telugus may chant their hymns without any feeling of estrangement. The achievement of Visalandhra has its own difficulties and responsibilities and calls for greater adjustments. As our frontiers get enlarged, our responsibility for the neglected portions of the State and the weaker sections of the community also increases. Otherwise frustration will grow.

4. Our needs are every increasing. The days of asking for an elementary school or a village road, or a rural dispensary are gone. People now ask for colleges, polytechnics, electricity to every village, protected water-supply and drainage, pumpsets, bull-dozers and veterinary hospitals. The scale of our needs has risen steeply, while our resources are far behind our requirements. There is a great imbalance between our requirements and resources, which will lead to large scale frustration. Our constant efforts must therefore be to step up our resources so as to match our needs so that we may be in a position to fulfil them within a measurable space of time. Let us understand once for all that without augmenting resources, even necessities cannot be met. If we refuse to tax ourselves, we place ourselves in the helpless position of being mere spectators of the tragic scenes of life which we see all round. Poverty, disease, illiteracy and misery will continue to raise their ugly hoods, benumbling the people into utter despondency. Having been born at a momentus period of Indian History, shall we not become valiant fighters against our formidable enemy? If we fail in our duty at this critical period, posterity will blame us for failing to do the right thing at the right time. We have pledged ourselves to the socialistic pattern of society, and it is our duty to lessen the gulf between the privileged and underprivileged. Attainment of the socialistic pattern of society is a slow process. If we can achieve this objective within the next quarter of a century without ill-will or violence against anybody, we must congratulate ourselves. It is not a slogan to deceive anybody. It is a path which we have chalked out for ourselves. Nationalization of the Imperial Bank of India and of life insurance business is a step in that direction. The tax on inherited property is also another step towards the same goal. We on our side have taken action to make the Estate Duty Act applicable to agricultural property. This will help to bring about a more equal distribution of wealth. Secondly for the first time in the history of our land revenue we have introduced the element of graded taxation. All these centuries we were accustomed to uniform tax on land of comparable fertility. By introducing the graded surcharge on land revenue, we have discarded the principle of uniformity by asking the people who owned larger acreage to pay higher land revenue. This will also discourage accumulation of landed property in the hands of a few people, apart from bringing a little revenue to the Government. This is also indicative of our economic policy as it relates to land. It is also the fore runner of a series of land reforms under the contemplation of the Planning Commission and State Government. What should be the extent of holding which a person can have or what a land owner can get from the lesee if his land is leased out and what he should pay to the Government if he raises commercial crops which give him a larger income than food-crops, are some of the matters which are under the active consideration of the Government.

Review of the Financial position during 1953-54 (Second Six months) and 1954-55

5. A summary of the financial position of the State for the period 1st October 1953 to 31st March 1955 is given in Appendix I. The State had no resources to start with, except its share of the 4 percent loan floated by the Composite Madras Government Position during in July 1953 amounting to Rs. 2.45 crores. The Revenue Account for the half year closed with a deficit of Rs.1.14 crores. The capital expenditure on Irrigation, Electricity and other schemes and the net disbursements of loans and advances together amounted to Rs. 375 lakhs. A new Irrigation project'' construction of a regulator-cum-bridge on the Krishna river'' estimated to cost Rs. 2.71 crores was sanctioned during the year. A loan of Rs. 6.85 crores was taken from the Government of India for various purposes. There were also large credits on account of advance payments made by other States for supply of rice to them. After meeting the Revenue deficit, Capital expenditure, etc., the year closed with a balance of Rs. 8 crores.

During the year 1954-55, large expenditure was incurred on developmental schemes included in the First Five-Year Plan, with the result that there was a Revenue deficit of Rs. 5.18 crores. Capital expenditure was also incurred on a large scale, particularly under Electricity schemes. Owing to complete decontrol of rice, advances received from other States during the preceding year had also to be refunded. In order to meet these commitments, a loan of Rs. 13.62 crores was taken from the Union Government, including the allotment of Rs. 2.5 crores out of the National Plan Loan. Against this, has to be off-set the amounts that fell due for repayment to the Government of India during the year. The net effect of the transactions of the year was to leave a small closing balance of Rs. 85.87 lakhs. During the year, a separate High Court for Andhra was established at Guntur and the new Venkateshwara University was started at Tirupathi.

Revised Estimate, 1955-56. Revenue Account

6. The Revised Estimate anticipates a Revenue of Rs. 22.39 crores and an expenditure of Rs. 26.37 crores, against Rs. 21.98 crores and Rs. 25.64 crores respectively anticipated at the time of framing the Budget. The Revenue deficit has increased from Rs. 3.66 crores in the Budget to Rs. 3.98 crores in the Revised Estimate. Increased receipts under Land Revenue, and General Sales-tax are expected, due to certain taxation measures and under Electricity due to extension of supply of power from Machkund. These increases are partly off-set by decreases under certain heads. The expenditure on Revenue Account is likely to show an increase mainly under Irrigation, Interest on debt, etc., off-set by a decrease under Public Health and certain other Heads.

Capital Expenditure

Under capital expenditure, there was an increase under Irrigation due to more rapid progress on works in scarcity areas and larger expenditure on Nagarjunasagar Project, partly counter-balanced by decrease under Electricity.

Loans and Advances

Under Loans and Advances, the net disbursements are likely to show an increase on account of provision for loans to municipalities under the housing scheme for low income groups an larger provision under loans to weavers' co-operative societies.

Ways and Means

The total loan expected to be taken from the Union Government for various purposes amounts to Rs. 17.71 crores. Besides, a sum of Rs. 4.95 crores was raised as loan in the open market. Taking credit for these sums and setting off against them, the Revenue deficit, Capital expenditure, Loans and advances, etc., the year is expected to close with a small balance of Rs. 53.13 lakhs.

Seasonal Conditions

7. As Hon'ble Members are aware, rainfall this year was much above the normal. During the south-west monsoon period, even dry areas like Rayalaseema received heavy rains. Some areas in East and West Godavari districts were under flood which caused damage to crops. Cotton and groundnut crops in Kurnool district were also affected by the heavy rains during the south-west monsoon season. The condition of crops in the State was otherwise satisfactory.

Prices

8. The General Index Number of wholesale prices of foodgrains fell during April and May 1955, but rose steadily thereafter. In December, 1955, the Index Number of foodgrains showed an increase of 13 points when compared with that in December 1954. The General Index Number of wholesale prices of commercial products also showed an upward trend. The Index Number in December 1955 was six points higher than that in December 1954.

Price Support Scheme

9. With a view to stabilising the prices of paddy and rice at levels which ensure a fair minimum price to the cultivator, the Government of India decided to extend the price support policy to coarse varieties of rice during the current crop season. In pursuance of this decision, the State Government have made arrangements for the purchase of certain coarse varieties of paddy from cultivators through purchasing agents appointed for the purpose. Under the scheme, purchases of paddy will be made at the village site by purchasing agents at Rs. 7 per maund, whenever prices fall below this level. It has however not been found necessary so far to make purchases under the scheme.

Land Reforms

10. Hon'ble Members are aware that a committee was constituted to examine the question of land reforms in the State. The committee submitted its report towards the end of October 1955. The report is now under the consideration of the Government and suitable proposals for land reform will be formulated after the recommendations of the committee have been examined.

Reorganisation of Treasuries

11. During the war and post-war periods, the work in treasuries increased considerable owing to the expansion of all departments. Additional staff was sanctioned in treasuries to cope with the increase in work, but experienced clerks could not be found to man the additional posts. There were also frequent transfers of clerks and accountants in treasuries to other posts in the Revenue Department. The result was that nearly half of the accounts staff in treasuries consisted of inexperienced persons and serious irregularities and delays in treasuries came to notice. The Government have therefore decided to separate the treasury Accounts staff from revenue establishment an constitute them into a separate service. The scheme involves enhancement of the scales of pay of treasury accountants and the creation of a new cadre of Assistant Treasury Officers. It is hoped that this reorganisation will bring about considerable improvement in the working of treasuries.

First Five-Year Plan

12. While presenting the Budget for the current year, I dealt with the State's First Five-Year Plan. The main heads of development included in the plan, the estimated outlay in respect of each, the actual expenditure to end of 1954-55 and the estimated outlay in 1955-56 are given in Appendix V. With our large undeveloped water resources, Power and Irrigation Projects naturally had the highest priority in the Plan. Apart from major projects, the Plan made provision for irrigation schemes for the permanent improvement of scarcity areas. Provision was made among others for Community Development and National Extension Service according to a programme drawn up by the Community Project Administration. It will be seen from Appendix V that against the total estimated outlay of Rs. 69.42 crores an expenditure of Rs. 47.04 crores was incurred to end of 1954-55 and that the total expenditure to end of 1955-56 is estimated at Rs. 65.08 crores, leaving a short fall of only Rs. 4.34 crores.

Second Five-Year Plan

13. The National Plan has been drawn up with the aim of increasing the National income by about 25% over a period of five years and providing employment opportunities to about 8 million persons. The Plan also gives an indication of the measures to be taken for raising the necessary resources.

The Second Five-Year Plan of this State has been built from the village upwards. The Plan aims at doubling real income within the shortest possible period. Village plans have been prepared on the basis of the widest participation of the people and have been integrated into district plans. The district plans have been correlated to the plans prepared at the State level. As Hon'ble Members are aware, the Plan underwent a number of revisions with reference to the resources of the country as a whole and also the resources which we can hope to raise ourselves at the State level. Not only is there difficulty in regard to financial resources but the problem of securing materials and trained personnel for execution of schemes imposes a severe restriction on the pace of development. The size of the Plan has now been fixed at Rs. 116.2 crores. The programmes now included in the Plan are only tentative. They will have to be reviewed annually with reference to the revenues available and the targets achieved; attention will be concentrated on the programmes to be implemented during a particular year and forward planning will be confined to the programmes proposed for the year immediately following.

As in the First Plan, Irrigation and Power Projects have been given top priority in the Second. The progress made in rural areas through Community Development and National Extension Service is well known to members of the House and the Community Development programme occupies a very important place in the Plan. The details of the outlay proposed under the individual heads of development are given in Appendix VI.

Irrigation

14. The Prime Minister of India laid the foundation stone of the Nagarjunasagar Project on the 10th December 1955. The project is a joint venture with the Government of Hyderabad. It consists of a dam at Nandikonda and two canals on either side, will irrigate extensive areas. The project is estimated at cost Rs. 122 crores. On completion, it will bring 31.83 lakhs acres under irrigation and produce 75,000 K.W of electric power. The construction of the dam and other common works is under the control of a Board constituted by the Government of India and consisting of representatives of the two Governments and also of the Government of India. Canal works in the two States are under the control of the respective Governments. The Government of India have sanctioned a loan of Rs.60 lakhs to this State for expenditure on the project in the current year.

Certain other Irrigation projects of lesser magnitude are also in progress, namely, the Tungabadra Low Level Canal, the Krishna Barrage, the Upper Pennar Project, the Rallapad Project and the Romperu drain. In addition, there are 17 Irrigation works under execution for the benefit of scarcity areas. The progress on these works is good and some of them are expected to be completed by June and September this year. It is estimated that the area irrigated which stood at 28.80 lakhs acres at the beginning of the Plan period will increase to 30.65 lakhs acres.

The Second Five-Year Plan provides for the Nagarjunasagar Project and the other irrigation schemes mentioned above which are not likely to be completed in the current year. Provision has also been made in the Second Plan for the Tungabadra High Level Canal and the Vamsadhara Project and for investigation of the Pulichintala and Sidheshwaram Projects. At the end of the Second Five-Year Plan Period, an additional area of 5.68 lakhs acres of land is expected to be brought under Irrigation.

Electricity

15. Machkund and Tungabhadra are the two principal electricity projects in the State. The Machkund Project commenced operation on the 19th August 1955, when the President of India switched on the first generator unit. The Tungabhadra Hydro Electric Project is expected to begin operation by December 1956. The other schemes in progress are the Nellore and Chittoor schemes. In pursuance of the policy of taking over electrical undertakings owned by Local Bodies and private persons, the Government have sanctioned the acquisition of the East Coast Company undertaking and also those at Rajahmundry and Guntur.

The number of towns and villages which had power supply at the beginning of the First Five-Year Plan Period was only 170; by the end of this month, their number will go up to 700. The per capita consumption of electricity which was 5 units in 1950-51, will soon be to 10 units.

During the Second Plan Period, three additional generating units will be installed at Machkund which will complete the project. Provision has also been made for the installation of 2 additional generating units at the Dam Power House of the Tungabhadra Hydro-Thermal Project, one more unit at Canal Power House and also a Thermal Station at Nellore with an inter-connecting transmission line between Hampi and Nellore which is required to transmit seasonal power from the Tungabhadra to Chittoor area. At the end of the Second Five-Year Plan Period about 1,600 towns and villages are expected to receive power supply and the per capita consumption is expected to increase from 10 to 20 units.

Highways

16. The total road mileage at the commencement of the First Five-Year Plan was 14,794. The additions during the current Plan Period will bring it to 15,430 miles comprising 900 miles of National highways ( constructed and maintained from Central revenues), 5,808 miles of roads under the control of the State Government and 8,722 miles of roads under Local Bodies out of 5,808 miles under the State Government's control, 1,365 miles are State highways, 4,429 miles are major district roads and 14 miles are classed as other district roads. Roads classed as major district roads to a length of 2,300 miles are under the control of District Boards. The policy of the Government is to take over these roads gradually from District Boards.

During the Second Five-Year Plan Period, it is proposed to take over from Local Bodies about 1,600 miles of roads including about 60 miles of roads executed as famine relief works. It is also proposed to lay new roads to a length of 110 miles to connect villages to main roads and to improve existing roads to a length of 300 miles. Provision is also made for the construction of 150 bridges and culverts under'' Other Roads''. The aim of this programme is to connect the more important villages with marketing centres and district headquarters.

Education

Primary

17. Certain reforms have been introduced in Primary and Secondary Education in the current year with a view to effecting improvement in the working of elementary and secondary schools. In future, only teachers with Teachers School Leaving Certificate of the Secondary Grade will be employed in elementary schools. In pursuance of this decision, 50 percent of the existing elementary grade training sections have been converted into secondary grade training sections in the current year. The remaining elementary grade sections will also be converted into secondary grade training sections during the next two or three years. Higher qualifications, have been prescribed for admission to training sections and the period of training has been reduced from two years to one year. To start with, the one-year course will be introduced in 1956-57 in eight Government institutions. Preference will be given for admission to the new course to candidates possessing higher qualifications such as those who have passed the Intermediate examination or completed the Intermediate course and SSLC candidates who have secured a high percentage of marks in all subjects. Another step taken by the Government to improve the standard of pupils of secondary schools is to place certain restrictions on the admission of students into lower forms. No privately coached candidate will be admitted in a class higher than II Form from 1956-57 and in a class higher than I Form from 1957-58. It has also been laid down that a candidate seeking admission in I Form should complete ten years of age on the 15th August of the year of admission.

As a measure of economy, the Government have decided to restrict the payment of stipends to 50 percent of students undergoing elementary grade training with effect from the current year. In the case of secondary grade training, stipends will be given only to students belonging to Scheduled Tribes and Castes and Backward Classes and to women students. All the students undergoing the one-year training course newly introduced in eight Government institutions will, however, be given the usual stipend.

Secondary

The Government have implemented some of the more important recommendations of the committee for the re-organisation of secondary education, namely, improvement of facilities for teaching science in high schools, improvement of school libraries, establishment of multi-purpose schools, introduction of crafts in the middle schools, establishment of training centres for craft instructors and refresher courses. A provision of Rs. 75.48 lakhs has been made in the current year's Budget for these schemes. The Union Government have sanctioned grants-in-aid towards both non recurring and recurring expenditure involved in the schemes.

Hindi and Sanskrit

In order to improve the teaching of Sanskrit, the Government have ordered the grant of advance increments to Pandits possessing special qualifications. Similarly Telugu Pandits who qualify themselves in Sanskrit will also be given advance increments. Another measure which has been introduced to encourage students to study in Oriental Schools is to permit free tuition to all students in Oriental Schools up to VI Form if the annual income of their parents is not more than Rs. 1,800 per annum.

Hindi has been made a compulsory subject as third language in Forms I to IV with effect from the current academic year. Its study will be continued in V and VI Forms in the succeeding years. The Government have also taken steps for propagating Hindi by opening Visaradha Vidyalayas, making grants-in-aid to Hindi Premi Mandalis, etc. The expenditure on these measures is shared by the Union Government, State Government and Hindi Pracharasabha.

During the First Plan Period, 751 new elementary schools were opened and there are now about 18,000 Primary Schools in the State. There are 600 High Schools in the State including 15 multi-purpose High Schools. There are at present 78 training schools ( 56 ordinary and 22 basic). Hon'ble Members will no doubt recall that, during the current year, the Government have sanctioned the opening of a new Engineering College at Visakhapatnam by the Andhra University and also the opening of a compressed diploma course for 2 1/2 years in civil, mechanical and electrical engineering at Ananthapur and Kakinada.

The Second Five-Year Plan contemplates increase in the number of children attending schools by 15 percent in age group 6 to 11, and 20 percent in the age groups 11 to 14 and 14 to 17. The Plan includes provision for opening the necessary number of new schools 1,000 primary, 60 middle and about 25 High Schools. Fifteen High Schools are proposed to be converted into multi-purpose schools and 30 of the existing High Schools into higher secondary schools.

Medical Relief and Public Health

18. The medical facilities in the State are poor but their improvement, like that of other social services, entails large recurring expenditure beyond our present resources. Nevertheless, some provision has been made in the Plan for improving medical relief in the State. Additional buildings, estimated to cost Rs. 17.10 lakhs have been sanctioned for the General Hospital, Kurnool. The bed strength of the Headquarters Hospital, Cuddapah, has been increased from 104 to 140. Additional buildings for the King George Hospital, Visakhapatnam and the Headquarters Hospital, Eluru, are nearing completion and are expected to be ready shortly for occupation. The establishment of a separate Chemical Examiner's Department in the State and a Regional Laboratory has also been sanctioned. The Government intend opening a new Medical College at Kurnool and have addressed the Government of India for their approval and financial assistance.

There are at present 6 B.C.G vaccination teams in the State. One unit consisting of 3 teams is working in Rayalaseema area and another unit is working in Visakhapatnam and East Godavari districts. There are two leprosy Subsidiary centres in the State, one at Tirupathi and the other at Ramachandrapuram, which were opened with Central assistance. There are now two Malaria Control units. The question of establishing four more units, two in the plains and two in the Agency areas is under the consideration of the Government. Under the National Filaria Control Scheme sponsored by the Government of India, the Government have established two survey units and one control unit with headquarters in East Godavari district. There is one Government Sanitorium for Tuberculosis. We hope to expand the facilities for treatment of tuberculosis by opening more clinics and sanatoria, and also for the treatment of leprosy. There is also a proposal for opening one mental hospital with 100 beds and two infectious diseases hospitals. It is also proposed to open 55 Primary Health Centres and ten Family-Planning Clinics.

Water-supply and Drainage Schemes

19. Under the First Five-Year Plan, the improvement of nine existing protected water-supply schemes in municipalities and urban panchayat areas was taken up; eight new water-supply schemes and two Municipal drainage schemes were also taken up. Of the 17 schemes for water supply, three will be completed by the end of the current year and 14 will be continued during the Second Five-Year Plan. Of the incomplete water-supply schemes, the most important is the Gosthani Scheme at Visakhapatnam which is estimated to cost Rs. 116 lakhs. It is intended to serve the Municipality, Railway, Port and Defence establishments at Visakhapatnam. The Defence and Railway Departments will, it is expected, contribute to the cost of the scheme. The scheme is likely to be completed by the end of 1956, so that supply of water to Caltex Refineries may commence by the 1st January 1957.

Of the three drainage schemes included in the First Five-Year Plan, the one at Visakhapatnam has been completed. It is proposed to take up another scheme (Vijayawada) in the current year.

Rural Water-supply

20. It has been decided to introduce the National Water-Supply and Sanitation Scheme for rural areas sponsored by the Government in four areas at a cost of Rs. 80 lakhs. The scheme is eligible for 50 percent grant from Union Government. An expenditure of Rs. 50 lakhs for originally expected to be incurred in the current year on the scheme, but owing to certain difficulties, more than half the provision is likely to lapse. Necessary provision has been made in the Budget for next year.

Amelioration of Scheduled Tribes

21. The Government have recently sanctioned a scheme for establishing'' the Andhra Scheduled Tribes Finance and Development Corporation Limited''. The main object of the Corporation are to provide credit facilities to members of the Scheduled Tribes and to arrange for the marketing of their agricultural and other produce, to supply their agricultural needs and to encourage thrift and mutual help among them. The Corporation will have, for the present, two main depots, one at Narisipatnam in Visakhapatnam district and the other at Kurupam in Srikakulam district. Sub depots will be located in six centres in Visakhapatnam and Srikakulam districts. A Special Officer has been appointed for completing the preliminary work connected with this Corporation and for getting registered under the Indian Companies Act, 1930. The Union Government have sanctioned a grant of Rs. 3 lakhs for the purchase of vehicles and construction of godowns for the Corporation.

As the Director of Social Welfare, who is now in charge of the Scheduled Tribes in addition to his work relating to Scheduled Castes and Backward Classes, is not able pay much attention to Tribal Welfare Work, it has been decided to have a separate Director of Tribal Welfare with headquarters at Kakinada. He will be assisted by two Deputy Directors whose headquarters will be at Araku and Bhadrachalam.

The Second Five-Year Plan aims at developing the Scheduled areas by laying roads and by providing water for Irrigation and also drinking. Anti-malarial operations will be extended and more schools and medical facilities will be provided. Some of these schemes will be eligible for Central grants.

Scheduled Castes and Backward Classes

22. Hon'ble Members are aware of the several measures now adopted by the Government for amelioration of Scheduled Castes . A sum of Rs. 51.20 lakhs has been provided in the next year's Budget for these measures, including Rs. 9.49 lakhs for scholarships and stipends to pupils studying in educational institutions. During the Second Plan period, these measures will be continued and new schemes like housing, cottage industries, supply of midday meal to children of backward classes in welfare schools etc., will be taken up.

Agriculture and Animal Husbandry

23. The production of foodgrains in the State has increased from 40.69 lakhs tonnes in 1950-51 to 44.60 lakh tonnes in 1955-56. We are in a position to supply foodgrains to other States and to export fine varieties of rice abroad.

Schemes for seed multiplication and distribution and for the purchase and distribution of tractors, oil engines and electric motors on hire purchase system will be continued on a large scale. The tractor workshops at Holagundi and Bapatla will be expanded. It is proposed to open new Research Stations for fruits and vegetables which assistance from the Indian Council of Agricultural Research. At the end of Second Five-Year Plan period, it is expected there will be increase in the production of sugarcane, oil seeds and cotton by 9.85 lakhs tonnes, 1.73 lakhs tonnes and 2,000 bales respectively. It is also expected that 86,000 acres of land will be reclaimed through Soil Conservation during the Second Plan period.

A new Veterinary College was started in July 1955, with the First Year course in the Agricultural College buildings, Bapatla, as a temporary arrangement. The question of construction of a permanent college at a suitable place is under consideration. The Rinderpest eradication campaign sponsored by the Government of India is now in progress in the six districts south of the River Krishna. Provision has been made for continuance of the campaign during 1956-57 in the existing six districts, and also for its extension to other districts north of the River Krishna, so that the cattle of the entire State may be protected.

Co-operation and Housing

24. During the First Plan period, loans were given through co-operative housing societies for the construction of houses. 1,319 houses in urban areas and 125 houses in rural areas were constructed. Besides, 637 houses in urban areas and 52 in rural areas are under construction. Other activities included maintenance of training institutes, grant of loans for godowns and supervision of special societies like milk supply societies.

Hon'ble Members are no doubt familiar with the recommendations of the All India Rural Credit Survey Committee. Our main task in the field of Co-operation during the next plan period will be to give effect to these recommendations. To begin with, a pilot scheme is proposed to be undertaken this select areas in Kurnool, West Godavari and Visakhapatnam Districts, as soon as the necessary assurance of financial assistance from Reserve Bank of India and the Union Government is received. The essential features of the pilot scheme ( a) a contribution to the share capital of large-sized credit societies, co-operative Central Banks and Co-operative Marketing Societies; (b) subsidizing the cost of supervisory staff employed by large-sized credit societies and marking societies; and ( c) grant of loans and subsidies for construction of godowns, the installation of processing plants by marketing societies, etc.

In pursuance the recommendations already mentioned, the Government of India are expected to pass shortly legislation to set-up a National Co-operative Development Board, a Central Ware-Housing Corporation and State Ware-Housing Corporation whose primary responsibilities will be to strengthen the Co-operative Marketing Organisation and to provide adequate storage facilities through godowns and ware-houses. It is proposed to establish a Ware-Housing Corporation in this State during 1956- 57 after legislation has been passed by the Government of India and necessary financial assistance has been given to the State. A token provision has also been made in the Budget.

Industries including Handloom Industry

25. A State Financial Corporation has been established with an authorised capital of Rs. 2 crores and an issued capital of Rs. 50 lakhs, of which the State Government have provided Rs. 20 lakhs and the Reserve Bank of India Rs. 10 lakhs. Financial accommodation for large, medium and small scale industries in the State will be greatly facilitated through the Corporation. During the current year, 18 schemes relating to the small scale industries costing to Rs. 14.20 lakhs non recurring and Rs. 10.90 lakhs recurring have been sanctioned. Central assistance in the form of grants to the extent of Rs. 4.13 lakhs and loans to the extent of Rs. 9.66 lakhs has been granted. A scheme for the construction of additional buildings and for manufacture of electrical porcelain insulators at the Government Ceramic factory has been sanctioned in the current year. Arrangements have been made to undertake at the factory, the manufacture of large number of 18'' water closets.

As regards the private sector, licenses have been issued by the Government of India for four new Spinning Mills including a Co-operative Spinning Mill of cotton growers at Tadipatri, two sugar factories, 3 Cement factories, a Ferro Managanese Plant and a factory in the manufacture of super phosphate and mixed fertilizers. Expansion of the existing Cement and sugar factories has also been sanctioned by the Government of India.

During the Second Plan Period, expansion of the Andhra Paper Mills at Rajahmundry is contemplated. It is proposed to increase the capacity of the mills from 10 tonnes to 35 tonnes per day and also to produce better varieties of paper. This will involve an expenditure of Rs. 20 lakhs towards buildings and equipment. The Government have proposed the setting up of 6 sugar factories on a co-operative basis with State participation and loan from the Industrial Finance Corporation and these are under the consideration of the Government of India. A token provision has been made in the Budget for this scheme.

As regards handloom industry, the working of the Cess Fund Scheme has shown appreciable results during the last two years. The average monthly sales of weavers' societies have risen from Rs. 11.02 lakhs during 1953-54 to Rs. 17.19 lakhs during 1955-56.

Community Development Projects and National Extension Service Schemes

26. There are two Community Development projects in the State, one in the Kakinada Peddapuram area and the other in the Kurnool-Cuddapah Canal area. They were inaugurated in October 1952. The programme originally fixed for these projects was for three years, but it has now been extended for another year, and they will be in operation up to the end of September 1956. Besides, two Community Development Blocks and 27 National Extension Service Blocks were started in October 1954. Eleven out of this twenty-seven National Extension Service Blocks were converted into Community Development Blocks from the the 1st April 1955. At the end of September last, the State had two Community Development Projects, 13 Community Development Blocks, and 16 National Extension Service Blocks covering an area of 9,626 square miles and 37.5 lakhs of population spread over 2,567 villages. An amount of Rs. 68.93 lakhs has been spent on the two Community Development Projects, of which a sum of Rs. 38.85 lakhs was realised as voluntary contribution from the public in the form of cash, labour and materials. The contribution from the people in the National Extension Service Blocks also was extremely encouraging. In addition to the above blocks which are already in operation, work will soon begin on 20 more National Extension Service Blocks. 11 more National Extension Service Blocks will be converted into Community Development Blocks with effect from the 1st April 1956. By the end of the Second Five-Year Plan period this programme will cover the entire State. According to the phased programme, a further allotment of 50 National Extension Service Blocks is expected during 1956- 57.

27. I have referred at some length to the programme for the next five years under various heads of development. As I have already said, the fulfillment of the programme will largely depend on the financial resources. The situation will have to be reviewed from year to year and the programmed phased suitably with particular reference to the resources available.

BUDGET ESTIMATE, 1956-57

Revenue Account, 1956-57

28. The figures of Revenue and Expenditure are:-

 
  Rs. Lakhs
Revenue 2,371.42
Expenditure 2,695.49
Dificit 324.07
 
As compared with the Revised Estimate for 1955-56, the Budget for 1956-57 shows an increase of Rs. 131.86 lakhs under Revenue and an increase of Rs.58.43 lakhs under expenditure.

Increases in Revenue occur mainly under Union Excise Duties, Land Revenue, General Sales Tax and Tobacco duties, partly offset by a decrease under Income-tax. Under expenditure, there were increases mainly under Irrigation, due to provision for flood repairs, under Medical, under Public Health, due to larger provision for the National Water-Supply Scheme in rural areas, and under interest on debt due to provision for interest on loans taken in 1955-56.

New Schemes

29. A list of new schemes for which provision has been made in the next year's Budget is given in Appendix I to the Budget Memorandum. I shall mention here some of the important schemes which have been provided for. Under Education, provision has been made ( a) for a grant of Rs. 8.75 lakhs to the Andhra University towards the cost of the new Engineering College opened in the current year, (b) for opening new higher elementary schools, middle schools and basic schools ( Rs. 3 lakhs) and ( c) for the Diploma courses in the Engineering Colleges at Kakinada and Ananthapur ( Rs. 3.88 lakhs). Under Public Health, a sum of Rs.1.02 lakhs has been provided for two additional Malarial Control Units. Under Veterinary, provision has been made for a pilot scheme for eradication of Rinderpest ( Rs. 4.57 lakhs). Provision has been made under'' Co-operation'' for the scheme for expansion and development of rural credit societies ( Rs. 2.03 lakhs). A sum of Rs. 1.27 lakhs has been provided for agriculture for control of pests and diseases and another sum of Rs. 1.04 lakhs for the purchase and distribution of agricultural implements and beehives. Provision has also been made for grants to Local Bodies for payment of dearness allowance to staff ( Rs. 5.00 lakhs), for village communications ( Rs. 3.01 lakhs), and for maintenance of major district roads ( Rs. 5.50 lakhs).

New Taxation Measures

30. Legislation has been passed for the following taxation measures

 
 

Expected
yield per annum
Rs. Lakhs

Levy of full assessment on inam lands

46.00

Levy of additional single-point tax on mill-made cloth and precious stones

50.00
Levy of purchase tax on unmanufactured tobacco and sales tax on cheaper varieties of manufacture tobacco, such as beedies, etc 60.00

Surcharge on Land revenue

45.00

Revision of the scale of court-fees and suits valuation

15.00
Total 216.00
 
Surcharge on land revenue will be enforced temporarily for a period of one year and will be replaced by a scheme of standardisation of land revenue and increase of water rates which are together expected to yield more than Rs. 45 lakhs per annum.

In addition to the measures mentioned above, legislation has been passed for the levy of betterment contribution on lands benefiting from Irrigation works costing over Rs. 1 lakh and for the levy of compulsory water-cess on lands benefited by Irrigation works recently executed. These two measures are expected to bring in revenue only from the second year of the next Plan period. There is little scope in this State for increasing the revenue from non-tax sources except to a very limited extent in regard to Forest revenue. Even in regard to forests, steps have been taken to augment revenue wherever possible, e.g., by enhancing the rate of grazing fees. In order to increase the resources of Local Bodies, the rate of surcharge payable on stamp duty for the transfer of immovable property has recently been increased. A Committee has been appointed to go into the working of the Sales Tax Act with particular reference to the problem of tax evasion. On receipt of its recommendations, steps will be taken to amend the general Sales Tax Act suitably. The Government have decided to raise the rate of cess on sugarcane from Re.1 to Rs. 3 per ton. An additional revenue of about Rs. 12 lakhs per annum is anticipated from this measure. It is proposed to constitute a Fund to which the proceeds of the cess will be credited. Expenditure on schemes for the development of sugarcane cultivation will be financed from the Fund. It is proposed to increase the rate of tax on motor spirit other than petrol from Re.0-1-6 to Re.0-3-0 per gallon. An additional revenue of about Rs. 9 lakhs per annum is anticipated from this measure.

Capital Expenditure

31. A sum of Rs. 15.48 crores has been provided in the next year's Budget for capital expenditure as shown below.

 
 

Rs. Lakhs

65

Compensation to land holders on the abolition of zamindaries

20.40
68

Irrigation Schemes

440.29
70 Capital outlay on improvement of Public Health 41.04
71

Capital outlay on schemes of Agricultural improvements and research

30.39
72

Capital outlay on Industrial Development

19.91
80-A Capital outlay on Multi-purpose River Schemes (Nagarjunasagar) 180.00
81 Capital Account of Civil Works 181.68
81-A Capital outlay on Electricity Schemes 569.46
82 Capital Account of other works 22.04
83 Commuted value of pensions 6.95
85-A Capital outlay on State Schemes of Government Trading 35.72
  Total 1,547.88
 
Provisions

The Budget Estimate for 1956- 57 includes provision for the following important Irrigation and Electricity Schemes.

 
 

Rs. Lakhs

Multi-purpose River Scheme

180.00

(Nagarjunasagar Project)

Irrigation:

Tungabhadra

69.27
Krishna Regulator-cum-Bridge

82.27

Kurnool-Cuddapah Canal

149.61

Upper Pennar Project

3.76

Bhairavanithippa Project

33.50

Rallapad Project (Second Stage)

4.23

Other Irrigation Schemes in scarcity areas

59.94

Special Minor Irrigation Programme 3.12
Other Items 24.29
Pension and pro rata charges 10.30
Total 440.29
 
Electricity
 
 

Rs. Lakhs

Machkund

311.02
Tungabhadra

175.28

Chittoor

39.49

Nellore

43.67

Total 569.46
 
Provision has been made for a few new schemes under Capital heads also. The more important of them are mentioned blow. Under" Agriculture", provision has been made for ( a) the supply of tractors, oil engines and electric motors to agriculturists under hire purchase system ( Rs. 20.50 lakhs), and (b) sinking filter point tube wells ( Rs. 1.37 lakhs). A sum of Rs. 11 lakhs has been provided towards the cost of upgrading roads to be taken for district boards. A token provision of Rs. 100 has been made for each of the following schemes; ( i) establishment of a State Ware-Housing Corporation, ( ii) investments towards share capital of a Co-operative Spinning Mill to be started at Tadipatri, ( iii) investments towards share capital new Co-operative sugar factories and ( iv) construction of a new building for the District Headquarters Hospital, Ananthapur.

Loans and Advances

32. The following are the main items of loans and advances for which provision has been made in the next year's budget:-

 
 

Rs. Lakhs

1

Advances to cultivators

101.24

2 Loans for the purchase of chemical manures

125.00

3

Loans to Municipalities for water-supply and drainage schemes and for other purposes

72.22

4

Short-term loans to the Andhra Co-operative Central Land Mortgage Bank

45.00

5 Advances to Weavers' Co-operative Societies 31.94
6 Loans under National Extension Service and Community Development Projects and Blocks 90.91
7 Other items 19.83
  Total 486.14
 
It has been assumed that a total loan of Rs. 15.91 crores will be given by the Government of India in the ensuing year for the following purposes:
 
 

Rs. Lakhs

1

Purchase and distribution of ammonium sulphate

301.65

2 Irrigation Works in scarcity areas

146.00

3

Loans to Municipalities for Water-supply and Drainage Schemes

72.22

4

Gosthani Water-supply Scheme

41.04

5 Grow More Food Schemes 43.69
6 Special Minor Irrigation Programme 14.29
7 Loans from Handloom Cess Fund 31.94
8 Community Projects, Community Development and National Extension Service 91.23
9 Nagarjunasagar Project 180.00
10 Special Development Fund 669.07
  Total

1,591.13

 
On the disbursements side, provision has been made for the repayment of the loans taken from the Government of India for various purposes. The principal items are (a) loans for the purchase of chemical manures ( Rs. 322.50 lakhs), (b) installments of principal of loans repayable on the equated payments system (Rs. 98.60 lakhs) and (c) this Government's share of the repayment of the Madras Government 3 per cent loan, 1956 ( Rs. 45.04 lakhs).

Ways and Means

33.On the basis of the figures given above for loans to be taken from the Union Government, capital expenditure, loans and advances, loans to be repaid to the Central Government, etc., the ways and means position will be as follows:-

 
 

Rs. Lakhs

a

Opening balance

53.13

b Revenue deficit

324.07

c

Capital expenditure

1547.88

d

Loans from the Union Government

1591.13

e Open market loan 600.00
f Repayment of loans to the Union Government and to the Madras Government 466.14
g Loans and advances by the State Government (net disbursements)

183.31

h Other debt, deposits, etc., Heads (net) +10.15
i Closing balance -266.99
 
Finance Commission

34. The appointment of the next Finance Commission under Article 280 (1) of the Constitution is due in 1956-57. Hon'ble Members are aware that the appointment of the Chairman has already been announced. I am sure Hon'ble Members of the House will share my hope that the Commission will consider the growing financial burden of the States for improving the standard of social services and that the Commission's recommendations will add substantially to the revenues of the States.

Further Taxation Measures

35. As already indicated, even after introduction of the additional taxation measures mentioned in paragraph 30, there is a Revenue deficit of Rs.324 lakhs and an overdraft of Rs.267 lakhs. It is imperative that we should devise further measures to reduce the Revenue deficit. The Sales Tax Inquiry Committee to which a reference has already been made is expected to submit its report by the end of April, 1956. We trust that, as a result of the Committee’s recommendations, it will be possible to increase the yield from sales-tax appreciably. Apart from this, Government may have to consider other measures for improving the State’s revenues. I appeal to you, as elected representatives of the people, to lend your full co-operation to the Government in their attempt to augment the resources of the State and to strengthen the State financially.

36. I wish to take this opportunity to express our gratitude to Shri Chintaman Deshmukh, Finance Minister, Government of India, for the substantial assistance granted to us in the current year to finance Irrigation and Electricity Schemes and to the Reserve Bank of India for having given us temporary accommodation on occasions when the ways and means position was difficult.

37. In August 1955, the Andhra State raised an open market loan for the first time. The response was very encouraging and I wish to express our gratitude to the people of Andhra for their support. In order to implement the Second Five-Year Plan, we shall have to go to the market for further loans. It is hoped that the people of Andhra will continue to give their active and generous support to the Government in their efforts to raise resources.

38. I also wish to place on record the continued vigilance which Sri V.K.Rao, Finance Secretary, has ably kept on the financial position of the State and advised us on measures for economy and strengthening our resources.

I also thank Sri T.E. Veeraraghavachari, Deputy Secretary, who has served us conscientiously since the inception of the Andhra State.

 
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