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GOVERNMENT of ANDHRA PRADESH
FINANCE DEPARTMENT
Previous Budget Speeches

FINANCE MINISTER'S BUDGET SPEECH 1958-59

Speech of

Sri Dr.B.Gopala Reddi

Hon'ble Finance Minister while Presenting

The Budget for 1958-59

To The Andhra Pradesh Legislative Assembly

on the 26th February, 1958.

 
Introduction

Sir,

I rise to present to the House the Budget of the Andhra Pradesh State for the year 1958-59. This is the 8th time I rise to make a budget speech. I had the privilege of presenting four budgets before the Madras Legislature, two before the Andhra Legislature and this is my second budget before the Andhra Pradesh Legislature. When I look back to the times when I presented my first Budget, I really feel happy. The parent Madras State and the districts which were taken away from that State and the districts which were taken away from that State and now form part of Andhra Pradesh have made considerable progress in many directions in the post-Independence period. Our achievement is not insignificant and let us hope that the momentum of progress would be continued for a long time to come. 1957 is a remarkable year in many ways. We celebrated the 100th Anniversary of our First War of Independence in 1857, and paid tributes to all those brave men who raised their banner of revolt against foreign authority in the country. We celebrated the 10th Anniversary of our Independence and took account of our achievements and our aspirations and resolved to quicken the tempo of progress in the next decade. We also celebrated the First Anniversary of the formation of Andhra Pradesh State and feel happy that the initial problems of reorganisation and integration are, to a great extent, resolved. Thus 1957 is an important milestone on the highway of our country's history of the struggle for political independence and economic emancipation. We have also seen this year artificial moons circling around the earth opening new vistas for scientific exploration. Nature's secrets are thus being unfolded, one by one, and vast realms of knowledge are coming within our reach. I hope India's contribution to the quantum of knowledge will be substantial ere long.

I drew a gloomy picture of our finances when I made my last budget speech but this time I am more cheerful as I am presenting a surplus Budget for next year. Ever since the Andhra State was formed, it was a tale of deficits. This year, for the first time, you are listening to a speech announcing a surplus Budget and couched in a hopeful tone. Our taxation effort, on the whole, has been good and the Finance Commission's recommendations also have helped us considerably in turning the corner of our difficulties. But our ways and means position continues to be bad. If only we can raise substantial amounts through loans or small savings, we will be free from all anxieties. The last two years of our Plan period may offer us some more difficulties again. Therefore, I caution the Hon'ble Members not to be vigilant to provide for the requirements of the near future. I take this opportunity of thanking publicly Sri K.Santhanam, Chairman and his colleagues of the Finance Commission for appreciating our difficulties and recommending to the Government of India for a grant-in-aid of four crores of rupees a year under article 275 (1) of the Constitution, during this quinquennium.

The State's share in the divisible pool of Income Tax (excluding the Corporation Tax) has been raised from 55 per cent to 60 per cent and the share of Andhra Pradesh in the amount allocable to States has been fixed at 8.12 per cent as against 8.01 per cent previously. The list of items on which Union Excise Duties are to be shared with the State Governments has also been expanded and now includes tobacco, matches, sugar, tea, coffee, paper and vegetable non-essential oils. The percentage of State's share in the collection has, however, been reduced from 40 to 25. Andhra Pradesh will now get 9.38 per cent., as against 8.9 per cent which it was previously getting out of the States' share of the divisible excises.

The Commission also suggested that each State Government should set apart every year a substantial amount ( the amount indicated for Andhra Pradesh is Rs.75 lakhs per annum) towards a fund to be constituted for meeting unforeseen expenditure on natural calamities such as floods, famines, etc.

With regard to the proceeds of the Estate Duty the Finance Commission has laid down definite principles for the distribution of the proceeds:

         (1) On the basis of the gross value of the immovable property located in each State, and

         (2) On the basis of population, in so far as the realisations relate to property other than                immovable property.

The Commission has also laid down the principles which should govern the distribution, among the States, of the proceeds of Tax on Railway Fares and the additional Duties of Union Excise on mill-made textiles, sugar and tobacco which have recently replaced Sales Tax on these commodities. The income from these additional Union Excise Duties will, however, go towards meeting the corresponding loss due to the abolition of Sales Tax.

The overall improvement in the State Finances as a result of the recommendations of the Second Finance Commission will be as follows:-

Rs. in Crores

1957-58

1958-59

Budget

Revised

Budget

1. Share in Income Tax

4.88

5.95

6.25

2. Share in Union Excise

Duties

1.71

2.69

2.76

3. Grant-in-aid

0.24

4.00

4.00

4. Tax on Railway fares

....

0.46

0.87

Total

6.83

13.10

13.88


In order to simplify the arrangements regarding the period of repayment and rate of in interest on Central loans to the State Governments and with a view to providing financial relief to the States in respect of interest liability on loans granted by the Central Government, the Second Finance Commission recommended that the outstanding balances on 31-3-1957 of all loans by the Government of India to State Governments made between 15-8-1947 and 31-3-1957, excluding the loans given for rehabilitation of displaced persons and interest-free loans, should be consolidated into four loans carrying interest at 1/2 and 3% and repayable after 15 years and 30 years. The Government of India had originally announced their decision to accept all the recommendation of the Finance Commission including the above arrangements relating to the consolidation of Central loans. Later, however, they intimated that this particular recommendation is under further consideration and, pending final decision on the question, provision for interest and repayment of the Central loans should continue to be made according to the existing arrangements. No credit has, therefore, been taken in the Revised Estimates for 1957-58 or Budget Estimates for 1958-59 on account of the anticipated savings in interest charges and the repayment of principal. Let us hope that even on reconsideration the Government of India will decide the issue in favour of the States.

On the whole the Finance Commission’s recommendations have helped us to a large extent.

But unfortunately, seasonal conditions in the dry districts of Andhra and Telangana have not been favourable. Due to the failure of rains, crops have failed and the Government have decided to give remissions and to postpone taccavi and land revenue arrears wherever necessary. We are also providing relief measures by getting irrigation tanks repaired.

Telangana Regional Council

The Telangana Regional Council is to be formed soon. The Regional Council can satisfy itself that enactments and administrative orders do not adversely affect the districts of Telangana. The Council, while safeguarding legitimate interests of the Telangana people, should also strive for the emotional integration of the two areas.

Legislative Council


A ninety-member Legislative Council is soon to be formed in Andhra Pradesh. We expect the Council to come into being from 1st July, 1958 after going through various elections.

ACTUALS 1956-57

Revenue and Expenditure

The Andhra Budget for 1956-57 provided for revenue receipts of Rs.23.71 crores and revenue expenditure of Rs.26.95 crores, thus revealing a revenue deficit of Rs.3.24 crores. The receipts and expenditure of Telangana area of the erstwhile Hyderabad State were merged with those of Andhra as from the 1st November 1956 as a result of which the accounts of Andhra Pradesh as finally closed at the end of March 1957, are made up of:-

(a) full 12 months’ revenue and expenditure of Andhra, and

(b) 5 months’ (i.e., from 1st November, 1956 to 31st March, 1957) revenue and

      expenditure of Telangana.

These accounts show a total revenue of Rs.38.44 crores and a revenue expenditure of Rs.38.01 crores. There was thus a revenue surplus of Rs.43 lakhs for the year 1956-57.

Capital Expenditure

The total capital expenditure incurred in 1956-57 (for 12 months in respect of Andhra and 5 months in respect of Telangana) amounted to Rs.21.24 crores.

According to the latest available information the revenue and expenditure of the composite Hyderabad State for the first seven months of 1956-57 amounted to Rs.13.04 and Rs.16.62 crores, respectively, thus revealing a revenue deficit of Rs.3.58 crores. Capital expenditure incurred in the composite Hyderabad State from 1st April to 31st October, 1956 was Rs.3.17 crores. 60% of these figures can be taken as roughly representing the revenue, expenditure, etc., relating to Telangana.

Public Debt

At the end of March 1957, the total public debt liability of Andhra Pradesh, including the provisional share of Telangana in the public debt of the erstwhile Hyderabad State but excluding temporary advances from the Reserve Bank of India, amounted to Rs.129.11 crores.

Debt. Deposit ,etc., Transactions

The net effect of the Debt, Deposit, etc., transactions in the year 1956-57 was Rs.18.94 crores.

Cash Balance

The closing cash balance at the end of March 1957 was Rs.16 lakhs against which there was an outstanding overdraft of Rs.3.71 crores on the Reserve Bank of India. The effective closing cash balance was thus minus Rs.3.55 crores.

REVISED ESTIMATES 1957-58

Revenue Receipts

The Budget Estimates for 1957-58 provided for a total revenue of Rs.53.14 crores of which Rs.5.19 crores represented the anticipated grants from Central Government towards their share of Plan expenditure on revenue account. The balance of Rs.47.95 crores represented to the ordinary revenues of the State. The Revised Estimates have placed the revenue receipts at Rs.61.08 crores, made up of :-

Ordinary receipts Rs.57.51 crores.

Central grants for Plan Schemes Rs. 3.57 crores.

The increase of Rs.9.56 crores in the ordinary revenue receipts for 1957-58 is primarily due to larger accretions of revenue under the award of the Second Finance Commission. The new taxes introduced during the year are also partly responsible for this improvement in revenue. On the other hand there is a fall of Rs.1.62 crores in the Central grants for Plan expenditure due largely to the short fall in revenue expenditure on Plan Schemes in 1957-58.

Revenue Expenditure

The total revenue expenditure for which provision was made in the Budget for 1957-58 was Rs.58.62 crores, against which the Revised Estimate now comes to Rs.57.96 crores as follows:-

Budget

1957-58

Revised

1957-58

(Rs. in Crores)

Ordinary Expenditure

48.69

50.05

Plan expenditure

9.93

7.91

Total

58.62

57.96


Ordinary expenditure has increased by Rs.1.36 crores while Plan expenditure has registered a fall of Rs.2.02 crores. The increase in ordinary expenditure has occurred under Interest (Rs.16 lakhs), Education (Rs.7 lakhs), Medical (Rs.16 lakhs), Industries (Rs.7 lakhs), Miscellaneous Departments (Rs.21 lakhs), Civil Works (Rs.27 lakhs),Famine Relief (Rs.76 lakhs) and Community Projects and National Extension Service (Rs.34 lakhs), counterbalanced by reduction under Contribution to Sinking Fund (Rs.58 lakhs) and other heads (Rs.10 lakhs).

The large provision under Famine Relief represents contribution to the Famine Relief Fund. After examining the expenditure incurred by the State Governments during the last ten years on relief measures in connection with famine, drought, floods and other natural calamities and the dislocation in the State finances caused by the unexpected demands, the Second Finance Commission came to the conclusion that the State Governments should build up suitable reserves for meeting such emergencies and have, for this purpose, allowed necessary margins in the amounts of grants-in-aid recommended for the various States. For Andhra Pradesh they have recommended that a sum of Rs.75 lakhs should be set apart annually for this purpose and invested in readily marketable Government securities. This proposal has been accepted and necessary provision has been made in the Revised Estimates for 1957-58 as well as Budget Estimates for 1958-59.

In view of the scarcity conditions prevailing in certain parts of Mahaboobnagar, Srikakulam, Anantapur, Nellore, Kurnool and Guntur, the Government have recently issued orders to suspend the collection of the current and arrear land revenue and taccavi loans installments for a period of one year in the affected villages. In addition, it has been decided to sanction an additional allotment of Ts.10.20 lakhs for taking up minor irrigation works in the following scarcity affected districts:

Srikakulam Rs.7.00 lakhs (Out of which Rs.5 lakhs will be spent in the current year and Rs.2 lakhs will be spent next year). Nellore Rs.2.00 ,, Cuddapah Rs.1.00 ,, Kurnool Rs. 20 ,, An additional allotment of Rs.2.15 lakhs has been sanctioned for distribution as taccavi loans in the affected villages of Alampur and Gadwal taluks while another Rs.16,000 have been sanctioned for the purchase and distribution of fodder on taccavi basis to 8 villages in Alampur taluk. Further reports from Collectors of other areas are awaited. All the above expenditure will be met from the Famine Relief Fund.

As regard reduction of Rs.58 lakhs in the contribution to Sinking Fund, the position is that under the provisions of the States Reorganisation Act, the liability for the loans raised by the former Hyderabad State from the public and from H.E.H., the Nizam has been assumed by the Government of India. It is not, therefore, considered necessary for the State Government to build up a Sinking Fund for the redemption of these loans. The provision Rs.58 lakhs made in the Budget Estimates for 1957-58 for this purpose has been deleted from the Revised Estimates for 1957-58 as well as the Budget Estimates for 1958-59.

Revenue Surplus


As a result of the large improvement in receipts and fall in expenditure, the year 1957-58 is now expected to close with a revenue surplus of Rs.3.12 crores as against the anticipated deficit of Rs.5.48 crores.

Capital Outlay

The Budget Estimates for 1957-58 provided for a total capital outlay of Rs.25.04 crores against which the Revenue Estimates come to Rs.24.75 crores as follows:-

Budget

1957-58

Revised

1957-58

Rs. in crores

Plan Outlay

21.93

21.40

Non-Plan Outlay

3.11

3.35

Total

25.04

24.75


Public Debt

The public debt liability of the State is expected to rise to Rs.144.46 crores by the end of March, 1958.

Debt, Deposit, etc., Transactions


The debt, deposit, etc., transactions for the year 1957-58 are expected to reveal a net receipt of Rs.10.30 crores.

Cash Balance

As a result of the above transactions, the year 1957-58 is now expected to close with a minus cash balance of Rs.11.17 crores.

BUDGET ESTIMATES 1958-59

Revenue and Expenditure

Budget Estimates for 1958-59 provide for a revenue of Rs.63.66 crores and an expenditure of Rs.62.87 crores as compared to the Revised Estimates of revenue and expenditure in 1957-58 amounting to Rs.61.08 crores and Rs.57.96 crores, respectively. The revenue surplus in 1958-59 is thus estimated at Rs.79 lakhs as against Rs.3.12 crores in the Revised Estimates for 1957-58.,

Rs. in lakhs

(1) Additional Union Excise Duties in lieu of

Sales-tax on Textiles and Tobacco and Sugar.

202

(2) Income Tax .. .. ...

32

(3) Tax on Railway Fares .. .. ...

41

(4) Land Revenue ... ... ...

76

(5) State Excise Duties ... ... ...

41

(6) Forest ... ... ...

17

(7) Taxes on Motor Vehicles

19

(8) Other Taxes and Duties

-131

(9) Agriculture

34

(10)Receipts from Electricity Schemes

-33

(11) Receipts from Road Transport Rural Transport Schemes

-10

(12) Community, etc.

-21

(13) Other Heads ...

-9

258


Or Rs. 2.58 crores.

As compared to the Revised Estimates for 1957-58, the revenue expenditure in 1958-59 has rised by 4.91 crores as follows:-

Rs. in Crores

Revised

Estimate

1957-58

Budget

Estimate

1958-59

Increase

Plan

7.91

9.30

1.39

Non-Plan

50.05

53.57

3.52

Total

57.96

62.87

4.91


I shall presently explain the position regarding allotments for Plan schemes. The increase of Rs.3.52 crores for non-Plan items is the result of variations under the following heads:-

Rs. in lakhs

1. Land Revenue

22

2. Forest

9

3. Interest

65

4. Police

16

5. Education

64

6. Medical and Health

63

7. Civil Works

77

8. Miscellaneous and other heads

36

Total

352


Or Rs.3.52 crores

These variations have been explained in the Finance Secretary's Memorandum on the Budget for 1958-59. The provision for Part II Schemes outside the Plan has been limited to Rs.21.37 lakhs only.

Capital Outlay

A sum of Rs.21.29 crores has been provide in the year's budget for capital expenditure as shown below:-

Rs. in lakhs

Compensation to land-holders on the abolition of Zamindaris

18.75

Irrigation Schemes

429.16

Improvement of Public Health

27.20

Agricultural Improvement and Research

49.35

Industrial Development

87.80

Multi-purpose River Valley Schemes

715.00

Civil Works

365.71

Electricity Schemes

356.70

Other State Works outside the Revenue Account

60.13

Commuted Value of Pensions

9.43

Miscellaneous

9.53

Total

2128.76


Or Rs.21.29 crores

Provision for Important Irrigation Projects


Rs. in lakhs

1. Nagarjunasagar Irrigation Project

700.00

2. Rajolibanda Diversion Scheme

36.06

3. Krishna Regulator-cum-Road Bridge

23.07

4. Bhairavanitippa Project

28.67

5. Tungabhadra Low Level Canal

55.70

6. Tungabhadra High Level Canal

40.00

7. Remodelling and Improvement to Kurnool      Cuddapah

Canal

26.03


Provisions for Electricity schemes

Rs. in lakhs

8. Machkund Hydro-Thermal Schemes

173.94

9. Tungabhadra Hydro-Thermal Schemes

81.64

10.Telangana Hydro-Thermal Schemes

55.12


Loans and Advances

Important items of loans and advances for which provision has been made in the Budget Estimates for 1958-59 are indicated below:-

Rs. in lakhs

1. Loans to Municipalities for Water Supply, Drainage,

Roads, etc., Works

119.79

2. Advances to Cultivators-

(a) Short-term loans for supply of Ammonium

Sulphate

(b) Seed Multiplication and Distribution Schemes

(c) Other Taccavi Advances

(d) Loans under the Agricultural Loans Act

160.65

23.51

31.12

47.00

3. Advances for Small Scale and Cottage Industries

14.60

4. Loans under the Community Projects and National

Extension Service Schemes

72.92

5. Loans for Industrial and Low-Income Group Housing

Schemes

68.35

6. Short-term Loans to Co-operative Land Mortgage Banks

42.00

7. Loans to Co-operatives under the Scheme for

Development of Co-operative Marketing

22.45

8. Loans for other minor schemes

89.26

Total

691.65


Public Debt

The Budget Estimates for 1958-59 take credit for a Central loan assistance of Rs.17.88 crores and a further sum of Rs.6.00 crores which is expected to be raised from small savings and open market loan next year.

On the disbursements side, a provision of Rs.6.22 crores has been made for the repayment of the loans taken from Government of India, etc., for various purposes. The principal items are:

Rs. in lakhs

1. Short-term loans for purchase of chemical manures

60.00

2. Installments of principal of loans repayable on      equated payment system

423.10

3. This Government's share of repayment of Madras      Government loan

38.86

Total

521.96


PLAN OUTLAY

The Second Five-Year Plan of Andhra Pradesh envisages a total outlay of Rs.175 crores. During the first year of the Plan, i.e., 1956-57, the actual expenditure was Rs.24.96 crores against a provision of Rs.29.78 crores. For 1957-58 a provision of Rs.35.2 crores was made in the Budget for expenditure on Plan Schemes. Having regard to the performance so far, it is unlikely that the actual expenditure will be anything more than Rs.31 or Rs.32 crores.

The Annual Plan for 1958-59, as approved by the Planning Commission, stands at Rs.30.02 crores as follows:-

Rs. in crores

On Revenue Account

9.31

On Capital Account

18.42

Loans and Advances

2.29

Total

30.02


I am sure the House will share my disappointment with this modest ceiling of the Annual Plan of 1958-59. But in the determination of this ceiling the main considerations that weighed with the Planning Commission were difficulties regarding Foreign Exchange, the need to invest more money on what is known as `the core of the plan' and the ability of our State to contribute its own share of the cost. Apart from this, an amount of Rs.2.61 crores will be provided by the Government of India for Centrally sponsored programmes.

At the rate of investment made on the Plan Schemes for the first two years of the Plan period and what is proposed for 1958-59, the tempo of expenditure during the last two years will have to be stepped up considerably to attain the ceiling of Rs.175 crores.

A complete list of all Plan Schemes is given in separate volume circulated along with the Budget. Provisions under individual heads are as follows:-

For financing the Plan outlay of Rs.30.02 crores in 1958-59, the Government of India have promised to give financial assistance of Rs.18 crores by way of grant and loans, and the balance of Rs.12.02 crores will have to be raised by the State Government as follows:

Rs. in crores

(1) Revenue Surplus

6.69

(2) Additional Taxation by State and the Centre

1.00

(3) Public Loan and Small Savings

6.00

(4)Miscellaneous Capital Receipts, such as, recovery of taccavi arrears and other loans`

4.55

(5) Repayment of Central loans

-6.22

Total

12.02


ON REVENUE ACCOUNT

Rs. in lakhs

7-Land Revenue

1.71

10-Forest

10.61

25-General Administration

13.99

37-Education

126.22

38-Medical

68.17

39-Public Health

39.98

40-Agriculture

132.62

41-Veterinary

46.36

42.Co-operation

78.91

43-Industries

68.98

47-Miscellaneous Departments

109.56

50.Civil Works

24.25

52-A Other Revenue Expenditure connected with

Electricity Schemes

3.00

57. Miscellaneous

7.66

63-B. Community Development and National

Extension Services, etc.

198.37

Total (A)

930.39


ON CAPITAL ACCOUNT

65-A Capital Outlay on Forests

6.19

68. Construction of Irrigation, etc., Works

(Commercial)

324.38

68. Construction of Irrigation, etc., Works

(non-Commercial)

23.58

70. Capital Outlay on Improvement of Public Health

14.03

71. Capital Outlay on Schemes of Agricultural

Improvements and Research

62.62

72. Capital Outlay on Industrial Development

59.80

80-A Capital Outlay on Multipurpose River

Schemes

715.00

81. Capital Account of Civil Works outside the

Revenue Account

267.72

81-A Capital Outlay on Electricity Schemes

310.70

82. Capital Outlay on other State Works Outside the

Revenue Account

52.05

85-A Capital Outlay on State Schemes of

Government Trading

6.08

Total

1842.15



LOANS AND ADVANCES

Loans and Advances

229.08



COMMUNITY DEVELOPMENT PROGRAMME

The Community Development and National Extension Service programme has been in operation in the State since 1952-53. We are at present having 185 Blocks (47 Community Development Blocks, 112 National Extension Service Blocks, 22 Post-Intensive Blocks and 4 Multi-purpose Projects) covering an area of 43,886 square miles, 12,917 villages and a population of 136 lakhs. This programme will be expanded during the next year by adding 65 new National Extension Service Blocks and covering 18 National Extension Service Blocks into Community Development Blocks. 17 Community Development Blocks of the 1955-56 series will enter the Post-Intensive phase on 1st April, 1958 making a total of 30 Post-Intensive Blocks.

Targets for the year 1957-58 have been fixed for all the Blocks in consultation with the District Officers and the progress of work done in the Blocks is closely watched and reviewed at the District and State levels every month. Greater stress has been laid on agricultural activities for stepping up food production. The targets for the period from 1st April, 1957 to 31st December, 1957 have been reached in most cases under Agriculture, Irrigation and Reclamation.

A sum of about Rs.151 lakhs was spent in all the Blocks on various developmental activities and the people's contribution was of the order of about Rs.76 lakhs.

The programme of Local Development Works, which is financed ;to the extent of 50 percent by the Central Government, has been in operation for the last four years. In the current year, the Central grant amounted to Rs.49.72 lakhs and an equal amount was raised locally from the public, local bodies, etc. The progress of expenditure generally satisfactory but in certain districts of Telangana it has suffered on account of inadequate response from the people. There were also certain other bottle-necks, such as, absence of separate Engineering staff for the execution of Local Development Works. Government have now agreed to the appointment of a separate Engineering staff fort his purpose. The Collectors and other revenue officers have also been directed to take special interest in the implementation of this programme.

WAYS AND MEANS

The year 1957-58 opened with a cash balance of Rs.16 lakhs against which there was an outstanding overdraft on the Reserve Bank of India amounting to Rs.3.71 crores. The effective Cash balance was therefore minus Rs.3.55 crores. The Revised Estimates for 1957-58 reveal a revenue surplus of Rs.3.12 crores and a deficit of Rs.10.74 crores on capital account which means an overall deficit of Rs.7.62 crores. If this is added to the opening balance the year 1957-58 will close with a minus Cash Balance of Rs.11.17 crores. The above figures are, however, based on an assumed Plan outlay of Rs.33.11 crores as worked out by the Departments. Considering the present tempo of work, the actual expenditure on Plan Schemes may not exceed Rs.31 crores. The actual closing Cash Balance may therefore amount to minus Rs.9.06 crores.

As regard 1958-59, it is likely to close with a Cash Balance of Rs.11.75 crores as a result of the transactions summarised below:

Rs. in lakhs

(a) Opening Balance

(-) 1117.11

(b) Revenue Surplus

78.54

(c) Capital Expenditure

2128.76

(d) Loans from Central Government

1783.33

(e) Open Market loan and share of Small Savings

Collections

600.00

(f) Repayment of loan to the Union Government and

Madras Govt.

621.96

(g) Loans and advances by the State Government

(net disbursements)

6.07

(h) Other Debt, deposit heads, etc. (net)

237.49

(i) Closing Balance

(-) 1174.54



PUBLIC DEBT

The Public debt liability, excluding temporary advances by Reserve Bank, stood at Rs.120.11 crores at the end of March 1957. The Budget Estimates for 1957-58 were framed on the assumption that apart from the Central loan assistance for Plan schemes and other purposes, according to the normal pattern, the State will be able to raise a Public Loan of Rs.5 crores and another Rs.89 lakhs will be received as the State's share in the Small Savings collections. Monetary conditions in the country generally and the prevailing low prices of State loans in particular, however, prevented the State Government from raising the public loan and it was decided to concentrate on Small Savings. The Government of India also indicated that the State will, in future, be entitled to receive additional loans from the Central Government to the extent of 2/3rds of the net collections from Small Savings. A target of Rs.9.25 crores for collections under Small Savings was fixed so that the State may be entitled to received Rs.6 crores under this head. The State's share in Small Savings collections in 1957-58 is now estimated at Rs.4 crores including arrears of previous years. The Central loan assistance under various heads is expected to be Rs.17.85 crores. The repayments of old loans to the Centre will amount to Rs.6.50 crores and the Public debt at the end of March 1958 is thus expected to stand at Rs.144.46 crores. As for 1958-59, the Central loan assistance has been estimated as Rs.17.83 crores under the following heads:-

Rs. in crores

1. Loan assistance for Plan Schemes

14.60

2. Short-term loan for purchase and distribution     of Fertilizers

1.60

3. Loan for Flood Control Schemes

0.51

4. Loan for Water Supply Schemes

0.80

5.Loan for Housing Schemes (Outside the Plan)

0.26

6. Other Miscellaneous loans

0.06

Total

17.83



Small Savings and open market loans next year are expected to contribute about Rs.6 crores. A sum of Rs.6.22 crores is being towards repayment of loans to the Central Government, etc. In this way, the Public debt liability is expected to rise by 17.61 crores in 1958-59 and will stand at Rs.162.07 crores at the end of March 1959. The liability on account of interest on Public Debt has also risen from Rs.5.45 crores in 1957-58 to Rs.6.66 crores in 1958-59.

SMALL SAVING

Small Savings have been assigned a very important place in the scheme of capital resources for the Second Plan. The State Governments can no longer depend on big institutional investors like banks, insurance companies, etc., for subscribing to the State loans directly or for providing financial accommodation to individual investors. Instead, they have now to depend very largely on internal resources particularly from the rural areas, which can be suitably tapped through Small Savings.

Several agency systems have been introduced in the State to promote in every possible manner the expansion and intensification of the savings movement and for creating the necessary consciousness amongst all sections of the community, such as, the Internal Agency System for those working in Government offices, factories, shops, educational institutions, etc., the Primary School Agency System for the school teachers, the General Authorised Agency System for other members of the public and the village officials. The question of reviving the Panchayat President’s Agency System, which was in force till about a year back, is under consideration.

Village Officials, who are responsible for the collection of revenue and who wish to take up General Authorised Agency, have been exempted from furnishing cash or personal security for a period of one year.

The Collectors have been placed in charge of this work in their respective districts. A complementary organisation has been set up in the Board of Revenue with the 1st Member as the ex-Officio Director of Small Savings to co-ordinate the work of the Regional National Savings Officer of the Government of India and the Collectors of the various districts. Other Members of the Board of Revenue and the Ministers, when on tour in the districts, also take active interest in promoting the various measures for popularising the Small Savings. The National Savings State Advisory Committee has also been reconstituted with members of the Legislature and prominent social workers, etc. A Savings Fortnight is being celebrated throughout the State from 15th February.

The progress of collections so far has not been up to expectations. I suppose that with a little more effort on the part of the Government officials, as well as social workers, it should be possible to put up a better performance next year.

TACCAVI, ETC., ARREARS

The outstanding arrears of agricultural and revenue taccavis, land revenue and excise exceed Rs.10 crores. Recently after a review of the position in regard to taccavi arrears in Telangana, the Government have decided to grant the following concessions:-

(i) The entire interest arrears accrued up to 1-4-1952 will be written off. No
    refund will, however, be allowed of any amount already paid towards interest.

(2) The entire loan amounts issued prior to 1-4-1952 will be written off in all cases
     where the loanees have been assessed to a land revenue of less than Rs.100 during F.1366.

(3) All taccavi arrears outstanding on 1-7-1957 will be allowed to be paid in six
     annual installments. In cases where the outstanding loan amounts are already repayable in      six or more installments, the number of such installments will remain unaltered.

While Government is always prepared to consider cases of real hardship and the grant of such concessions as are warranted by the circumstances of the situation, there is no point in allowing land revenue, excise and taccavi to fall in arrears and accumulate at a time when Government is faced with financial difficulties and needs every rupee for meeting the gap between the available resources and the expenditure targets under the Second Five-Year Plan. It is proposed to make special efforts during the course of the ensuing year for collecting the arrears of land revenue, excise and the various taccavis and a credit of Rs.2 crores has been taken in the next year’s budget on this account.

RURAL CREDIT

The Apex Co-operative Banks and the Land Mortgage Banks in the State, which are the main instruments for the expansion of rural credit facilities, have been doing good work and the Government is also assisting these banks, by extending guarantees for loans which are being obtained by them from the Reserve Bank of India and other sources. For instance, the following guarantees have been given by the State Government in the current year:-

Object

Amount

guaranteed

Rs. in Lakhs

Andhra State Co-operative Bank, Ltd.,

Vijayawada

(1) Special credit limit for seasonal agricultural operations

150

(2) Medium-term loan for financing agricultural operations

50

(3) Loan for financing distribution of chemical manures

100

(4) Loan for financing Weavers' Co-operative Societies

75

Hyderabad Co-operative Apex Bank

(1) Medium-term loan for financing agricultural operations

25

(2) Short-term loans for seasonal agricultural operations

100

(3) Loan for financing Weavers' Co-operative Societies

47


The Andhra State Co-operative Bank expects to finance agricultural operations in the current year to the extent of Rs.11 crores made up of short-term loans (Rs.7 crores), medium-term loans (Rs.1 crore) and produce loans for marketing finance (Rs.3 crores). Their programme for 1958-59 envisages a total loan business of Rs,.12.50 crores in the shape of short-term loans (Rs.8.3 crores), medium-term (Rs.1 crore) and produce loans (Rs.3.2 crores). The Hyderabad Co-operative Apex Bank will be distributing about Rs.1.4 crores in the current year and Rs.3.4 crores next year under the same heads.

As regards Land Mortgage Banks, the Andhra Co-operative Central Land Mortgage Bank advanced loans to the extent of Rs.71 lakhs in 1956-57 and expects to distribute Rs.92 lakhs in 1957-58. Its programme for 1958-59 for the distribution of Rs.1.10 crores. The Bank also floated, during the year, its 4th series debentures of the value of Rs. one crore and the entire amount has been subscribed. The Hyderabad Co-operative Central Land Mortgage Bank has also a programme of distributing Rs.23 lakhs next year.

STATE LIFE INSURANCE FUND

In the old Hyderabad State there was a Life Insurance Fund for the State Employees. On 1-11-1956 the Insurance work relating to the employees transferred to the Mysore State was taken over by the Mysore Government Insurance Department. Policy holders gone over the Bombay State continue to pay premia to the Andhra Pradesh Life Insurance Fund and are borne on our books at present. The Bombay Government have, with a view to provide quicker service to their policy holders of the Fund who are now employees of the Bombay Government, decided to take over and administer its share of the Fund with effect from 1st April, 1958. The Government considered the question of extending the benefits of the Life Insurance Fund to the Andhra employees also. In the old Andhra State, the Government servants were governed by the Contributory Pension Provident Fund Rules under which they had to insure their according to a prescribed scale with the Life Insurance Corporation or the Postal Life Insurance Fund. It has been decided that in future the Andhra employees shall have to take out their policies in the State Life Insurance Fund of the State Government instead of with the Life Insurance Fund to the State Government instead of with the Life Insurance Corporation or the Postal Life Insurance. It has also been decided that instead of the existing rate of compulsory subscription (which is 2% of the basic pay) the employees have to be subscribe at the rate of 4% of their basic pay so that they may get a larger insurance cover. Further, insurance is being made compulsory for all the women employees also for whom so far it was only optional.

The balances of the Andhra Pradesh State Insurance Fund are deposited with the State Government on which interest is paid by Government.

CONSTITUTION OR TREASURY AND ACCOUNTS SERVICE

In order to improve the working of the Treasuries, the Andhra Government had decided in early 1956 to separate the Treasury establishments from the other revenue establishments in the districts. While the separation of the lower cadre has been completed, the Treasury Deputy Collectors still continue to be drawn from the cadre of the Revenue Deputy Collectors. The arrangements in Telangana area are, however, slightly different in as much as in the erstwhile Hyderabad State an accounts service had been constituted comprising the District Treasury Officers and Accounts Officers in various Departments of Government. This arrangement still obtains in Telangana and the organisation is under the administrative control of the Finance Department. The sub-treasuries both in Andhra and the Telangana Districts are, however, managed by the Tahsildars. It is now proposed to integrate the Treasury and Accounts organisations in the Andhra and Telangana regions into a common service with common scales of pay and other conditions of service. This service will in future cater to the needs of the treasuries and the accounts sections attached to the offices of the Heads of Departments and other Government offices. There will be a whole-time Director for Treasuries and Accounts with Deputy Directors, Treasury Officers, Accounts Officers, etc. The existing posts of Examiner of Local Fund Accounts and the Officer-in-Charge, Life Insurance Fund, the Inspector, Treasury Accounts with a new appellation, the District Treasury Officers, Accounts Officers, etc., will all be borne on this new cadre.

There is now an Accounts Training School at Hyderabad which trains Accountants and Accounts clerks for the Treasuries and Sub-Treasuries and the various Accounts offices. There is no corresponding institution for the Andhra area. It is proposed to open a school at Guntur for this purpose.

A provision of Rs.2.26 lakhs has been included in the next year’s budget, under Part II schemes for meeting the additional cost involved in the reorganisation and constitution of the Accounts service.

ROAD TRANSPORT CORPORATION

A Road Transport Corporation has been set up with effect from the 11th January, 1958. To begin with, the Corporation has taken over the Road Transport Organisation of Telangana and is contemplating to extend its operations in the Krishna district from April 1958. The capital of the Corporation has, for the present, been provided entirely by the State Government. The Government of India have also expressed their willingness to contribute 25 per cent. of the Capital from the Railway Funds.

The Corporation is managed by an autonomous Board consisting of the State Chief Secretary as its Chairman, four other State officials, two nominees of the Government of India and two non-officials.

It is hoped that with this change in the administrative set up and financial assistance from the Government of India, the Corporation will soon be in a position to provide a co-ordinated and efficient road transport service in the whole of the State.

STATE FINANCIAL CORPORATION

The Andhra Pradesh State Financial Corporation which was formed on the 1st November, 1956 by the amalgamation of the two Corporations of Andhra and Hyderabad has an authorised capital of Rs.4 crores and issued and paid up capital of Rs.1.50 crores divided into 1,50,000 shares of Rs.100 each. The State Government holds shares of Rs.70 lakhs . Reserve Bank has subscribed Rs.20 lakhs and the balance of the share capital is held by other Banks, Life Insurance Corporation, other insurance companies and the general public.

The management of the Corporation is vested in a Board of 10 Directors of which 3 are nominees of the State Government and one nominee each of the Reserve Bank of India and the Industrial Finance Corporation of India. The Managing Director is also nominated by the State Government.

The Corporation is designed to extend financial assistance to medium and small-scale industries whose requirements range between Rs.10,000 and Rs.10 lakhs. Applications for loans above Rs.10 lakhs are considered by the Industrial Finance Corporation of India below Rs.10,000 by the Industries Department of the State.

The Corporation also handles disbursements of loans sanctioned by the State Industries Department under various schemes. It also assists in the examination and disbursement of loans by the State Bank of India under its pilot scheme.

The rate of interest charged by the Corporation in 6 per cent which is not high as compared to what is charged by some other Financial Corporations.

In 1956-57 the Corporation made a net profit of Rs.2,29,524 and the Government had to give subvention of Rs.2,95,476 in order to enable the Corporation to pay the minimum guaranteed dividend of 3 1/2 per cent. As for 1957-58 the Corporation expects to make a gross profit of Rs.6,40,000 and, after providing Rs.4 lakhs for income tax, statutory reserves and other obligatory payments, it will be left with a net profit of Rs.2,40,000. Government will thus have to pay a subvention of Rs.2,90,000 for which necessary provision is being made in the Estimates.

The assistance offered by the Corporation is now being fully availed for the development and expansion of existing industries and starting of new industries.

Up to the end of December 1957, the Corporation sanctioned loans to the extent of Rs.112 lakhs, out of which Rs.45 lakhs have already been advanced so far to the various types of industries as follows:

S.

No.

Type of Industry

No. of

appli-

cations

sanctioned

Amount

sanctioned

Amount

advanced

Rs. in lakhs

1.

Tobacco and Cigarette

6

17.25

9.66

2.

Printing

4

3.80

0.89

3.

Chemicals

4

11.55

2.70

4.

Oilseeds Crushing

10

34.63

15.67

5.

Light Engineering

11

6.73

4.09

6.

Rice-Milling

16

4.94

2.05

7.

Textiles

4

11.60

0.23

8.

Miscellaneous

7

21.45

9.25

62

111.95

44.54



ECONOMY COMMITTE

An Economy Committee with the Hon’ble Minister for Local Administration as its Chairman was set up by government sometime back to make recommendations for the reorganisation of the administrative machinery, with a view to securing economy and efficiency in administration.

The Committee has already submitted its report regarding reorganisation of the existing set up of the Secretariat. This report has been decided to accept most of the recommendations which will result in an economy of over Rs. 10 lakhs per annum. It is proposed to implement these decisions in two stages commencing from 1st April, 1958. The Committee is now engaged on investigation into the working of the offices of Heads of Departments and will, in course of time, take up the District and Taluk Offices.

REVISION OF PAY SCALES

I can assure the House that we are all very much concerned about the current level of high prices of foodgrains and other commodities that undoubtedly must be causing great strain on the meagre resources of the low-paid Government servants. There is wide disparity between the pay scales of employees of the Central Government and the State Government doing similar work, possessing the same qualifications, stationed in the same place and drawn from the same strata of society. If anything can be done to improve the conditions living of all low-paid employees of Government, such improvement should, in the first instance, apply to the employees of the State Governments who attend to more or less the same type of work as Central Government servants of the same status. It is, however, unfortunate that the Central Pay Commission has not been asked to examine the conditions of service in broad terms of State Government employees with a view to reducing the existing disparities. We have made a representation to the Central Pay Commission that even though the Pay Commission will not make any recommendation in regard to pay scales of employees of the State Governments, yet they should keep the interests of the entire country in view and not deal with pay scales of Central Government servants should be fixed firstly, having consideration for the resources of the country as a whole and its ability to meet the demands of the non-gazetted employees of both the Central and State Governments, as a whole, and secondly, not uniformly for the whole of India but with scales for the regions where living is cheaper relatively, as a base, and local or regional additions for more expensive regions. In fixing such a base or bases due regard should be had to the salaries paid by the State Governments concerned and local disparities avoided. On our part, however, our inability to raise the pay scales of employees of the State Government is not due to any lack of desire to do so but is solely due to the fact that the present financial condition of the State does not permit of entering into any large scale commitments on this account. Even so, it will be recalled that we readily agreed to give an ad hoc increase of Rs.6 p.m in the dearness allowance admissible to the employees of the State and Local Bodies, etc., as soon as we found that the Central Government were prepared to share the burden to a certain extent.

According to the formula originally indicated by the Government of India, the extra cost involved in the ad hoc increase in dearness allowance up to a maximum of Rs.12 p.m. was to be shared by the Government of India to the extent of 66 2/3% in respect of employees whose total emoluments, i.e., pay plus dearness allowance after increase, did not exceed Rs.60 p.m. and to the extent of 33 1/2% in respect of employees whose total emoluments did not exceed Rs.100 p.m. We, however, went a step further and allowed an ad hoc increase of Rs.6 p.m. to all employees whose total emoluments did not exceed Rs.106 p.m. with the necessary marginal adjustment. Again in January 1958, the Government reviewed the position and announced a further increase of Rs.6 p.m. to those drawing upto Rs.100 p.m. It was also decided that employees drawing above Rs.100 p.m. but below Rs.200 p.m. and stationed in the twin cities of Hyderabad and Secunderabad, will also be entitled to an ad hoc increase of Rs.6 p.m. in rate of dearness allowance subject to marginal adjustments. It was estimated that the total expenditure involved in the ad hoc increase in dearness allowance would be about Rs.178 lakhs out of which Centre’s share would be Rs.78 lakhs and the balance of Rs.100 lakhs will have to be provided by the State Government. The original formula has now undergone a revision, and according to the latest communication received from the Government of India, the Central Government is prepared to share two-thirds of the extra cost involved in raising the emoluments (by an amount not exceeding Rs.12 p.m. in each case) in respect of employees whose emoluments after such increase would not exceed Rs.100 p.m. This will provide a little more financial relief to the State Government on this account.

On the recommendations of the Village Officers Enquiry Committee, Government have also sanctioned the following increases in the salaries of village officers with effect from the 1st January, 1958.

Village Karnams Rs.5 p.m.

Village Headmen Rs.3 p.m.

Village Servants Rs.2 p.m.

The expenditure involved is about Rs.15 lakhs per annum.

It has also been decided to make an ad hoc increase in the emoluments of the primary and secondary school teachers and a provision of Rs.34 lakhs is being made in the next year’s budget. A portion of the expenditure on this account will be met by the Central Government.

CONCLUSION

Before I conclude, let me reiterate that there is no room for complacency. While we have made steady progress in various directions, we are also painfully aware what is yet to be done to create greater satisfaction among the people. Many are the demands of the people which are yet to be taken up for which there is no provision this year or in the Second Five-Year Plan. There is demand from some quarters for increased pay and allowances which entails a big increase in the expenditure. We must continue to be search for new sources for augmenting our resources. We must earn more and spend it towards amenities to the public. We have to borrow also in a big way for our capital expenditure . Our Small Savings must be a continuous movement without any relaxation on our side and we must continue to exhort our people to economise, save and invest. Our Second-Five-Year Plan is only like a second sputnik. It must be followed up by many more. Our promise to the Planning Commission that we would contribute over twelve crores from our resources towards the plan expenditure for 1958-59 must be fulfilled.

We must somehow wipe out large overdraft from the Reserve Bank, if necessary, by ceiling the stocks we have with them. To have huge overdraft, paying 4%, is not a healthy thing nor a desirable thing. Our average earning on our stocks is 2 3/4%. The Andhra State started in 1954-55 with revenue receipts of Rs.19.82 crores. This year, in Andhra Pradesh, we are expecting over Rs.63.66 crores of rupees. Of course this includes the receipts from Telangana side also which is a big addition. With a little more industrial output and our mining operations going according to schedule, there is no reason why we should not aim at a hundred crore revenue budget in the next three or four years.

In conclusion, I want to place on record the valuable serviced rendered by our Finance Secretary, Sri Damodar Reddy, Deputy Secretary, Sri. M.A.Abbasi and other officers and staff to the Finance Department for their continued vigilance over our revenue receipts and expenditure.

I thank the Speaker and the Hon'ble Members of the House for the patient hearing they have given me on the presentation of the Budget.

JAI HIND!

 
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