Speech of Sri.K.Brahmananda Reddi, Finance Minister
presenting the Budget for 1961-62
to the Andhra Pradesh Legislative Assembly
on the 20th February , 1961.
I rise to present to this House the Annual Financial Statement for the year: 1961-62.
Before explaining my Budget proposals for the coming year, I shall give a brief account of the economic trends in 1960, our expectations and actual achievements during the 2nd Five - Year Plan and the prospects of the 3rd Five-Year Plan.
Review of Economic Trends in 1960
The favourable trends witnesses during the preceding year especially in the field of agriculture and the consequent relaxation in the food situation, as well as, the level of wholesale prices that followed were to some extent reversed during the year under review. The main factors responsible for these conditions were the adverse seasonal conditions obtaining during the early part of the year as a result of the failure of the south-west monsoon. Even though the sowings in most parts of the State were reported to be timely, the failure of the monsoon during the subsequent weeks severely affected the kahrif and rabi crops particularly in the Rayalaseema and Telangana regions especially crops such as jawar, bajra, ragi, small millets, redgram, kharif pulses, greengram and blackgram and important commercial crops like groundnut, sesamum and varities of cotton sown early.
The seasonal conditions curing the north-west monsoon were generally favourable and as a result the condition of the standing rabi and tabi crops are reported to be satisfactory.
Food situation: During the period under review the food situation in Andhra Pradesh was generally satisfactory. The movement of rice was free within the Southern Zone and no difficulties were encountered in obtaining supplies. On May 20th, the Government decided to purchase immediately 5,000 tons of rice from the Central Reserve Depots at Hyderabad, in order to build up a buffer stock for release during the lean months of the current year.
Foodgrains were available in the open market and wheat was issued from the Central Storage Depots at Hyderabad. Fair Price Shops were ordered to be opened in most of the districts, which were supplied with adequate quantities of foodgrains, with the help of 50,000 tons of rice made available by the Government of India.
Prices: During the year under review the annual average wholesale prices of most of the important foodgrains, such as, paddy, rice I and II, jawar, bajra, ragi and wheat (red) firmed up as compared with those of the preceding year. In the case of bansi wheat, however, a decline was noticed.
The annual average wholesale prices of all important pulses in 1960 declined as compared to 1959 but later firmed up to some extent.
Level of consumer prices :- The annual average consumer price index numbers at all the 5 centres viz., Hyderabad city, Warangal, Nizamabad, Visakhapatnam, and Eluru, generally indicated an upward trend during the year 1960 as compared to the preceding year.
Industry:- Industrial production in 1960 indicated an upward trend in the case of almost all the major industries as compared to 1959. It was as high as 43.7% in the case of the paper industry, 34.4% in the case of rayon, 33.2% with regard to asbestos cement products, 37.2% in the case of liquors, 22.5% in the case of cement, while it stood higher by 11.8% in the case of coal when compared to that of the preceding year. The production of salt in the State during 1960 was more than double (105.7%) that of 1959. However, the production of cotton piece-goods jute, glass and vanaspati declined by 34.7%, 0.4%, 8.0% and 12.7% respectively as compared to 1959 , while other industries showed only a sight increase in their production.
Labour:- The labour situation during the first ten months of 1960 showed considerable improvement as compared to the corresponding period of the previous year in terms of the number of industrial disputes, workers involved and man-days lost.
Employment:- The employment position in 1960 showed a marked improvement over that of 1959. This was mainly due to the brighter employment opportunities in the State Government establishments which registered an increase of 14.31% over that of last year. Despite this improvement, the situation cannot be said to be satisfactory and continues to cause concern to Government. It is, however, hoped that it will considerably improve when the new 3rd Plan Scheme gets going.
2nd Five-Year Plan
The 2nd Five-Year Plan of Andhra Pradesh, as originally prepared in consultation with the Planning Commission, contemplated a total outlay of Rs.174.47 crores which was later raised to Rs.180.59 crores in order to accommodate certain schemes which had been omitted at the time of preparing the original Plan. Broad distribution of the 2nd Plan outlay among the several heads of development is given below:-
Agricultural Programmes 36.58
Social Services 32.30
On the resources side it was expected that the State would be able to raise a sum of Rs.48.8 cores through fresh taxation, public loans, small savings and current revenue surpluses, while the balance of Rs.125.67 crores was expected to be received from the Government of India partly as grants and partly as loans. As a result of a number of measures of taxation introduced on the eve of the commencement of the Second Plan, and also the co-operation which the State has received from the investing public, both within and outside the State, we now expect to contribute a total sum of Rs.84.13 crores to the resources required for financing the Second Five-Year Plan.
The improvement under various heads is shown in the following table:-
Current Revenue Surpluses
Additional Taxation by State
Public Loans (Gross)
Miscellaneous Capital Receipts including withdrawals from reserves (Net)
The estimate for current revenue surpluses rose from Rs.5.10 crores to Rs.24.30 crores mainly on account of the benefits accruing to the State under the Award of the Second Finance Commission.
The yield from public loans has more or less followed the anticipated pattern while small savings collections have more than doubled. It is, however, felt that we have not yet fully reached the masses in the rural areas and various measures for strengthening the organisation for small savings, better publicity, etc., are under the active consideration of Government. It is hoped that the Zilla Parishads and Panchayat Samithis will play a leading role in giving a fillip to this movement in future.
As regards achievements under the Second Plan, it is a matter of great satisfaction that all the principal objectives in the Second Plan have been achieved in spite of a number of serious handicaps, such as, non-availability of technical personnel, equipment, material, etc., of desired quality and in sufficient quantities, as well as the administrative problems arising out of the reorganisation of States. The difficulties are a little more pronounced in Telangana area which is relatively backward in the matter of social services and economic development. Special attention had, therefore, to be paid to the needs of Telangana, and I am gald to say that these efforts have been fruitful. This is fully borne out by the facts and figures mentioned in the White Paper on Development of Telangana recently published by Government.
In terms of physical targets also, the achievements have been most satisfactory. But I shall not burden the Honourable Members with the detailed facts and figures about this. Instead, I am separately placing before the House, along with the Budget documents, a note indicating briefly the physical targets have been reached in each case.
Impact on State Finances:- There has been a tremendous growth of revenue and expenditure as well as public debt liability of the State during the Second Plan period as evidenced by the following table:-
Public Debt (approximate)
Principal items contributing to the growth of revenue are mentioned below:-
Share in Central Taxes
On the expenditure side the rise is mainly reflected under nation-building activities and servicing of public debt as shown below:-
Expenditure on Development Heads
Third Five-Year Plan
The 3rd Five-Year Plan as finalised with the approval of the Planning Commission envisages a total outlay of Rs.305 crores. A comparative statement showing the distribution of Plan outlay during the 2nd and 3rd Plans is given below:-
(Rs. in crores)
2 nd Plan
3 rd Plan
Industries & Supplies
Out of Rs.305 crores, a sum of nearly Rs.120 crores represents the amount required for completing the schemes started during the 2nd Five-Year Plan, while the balance is available for undertaking new projects and schemes.
The allocation of funds under various heads in the States’ 3rd Five-Year Plan follows, more or less, the principles adopted in the National Plan under the State Sector, the pride of place being naturally assigned to Agricultural and Irrigation Schemes , the next item being development of Power. A list of principal projects and schemes costing more than Rs.50 lakhs during the 3rd Plan period is given below:-
Provision during 1961-66.
1.Integrated Milk Supply Scheme for Vijayawada town: 110
2.Integrated Milk Supply Scheme for twin cities of Hyderabad
and Secunderabad. 99
3.Nagarjunasagar Project 4500
4.Tungabhadra High Level Canal 752
5.Kurnool-Cuddapah Canal 100
6.Kadam Project 90
7.Pochampad Project 400
8.Vamsadhara Project 300
9.Pulivenda Scheme (Stage-I) 140
10.Tungabhadra Nellore Hydro-Thermal Scheme 619
11.Upper Sileru Hydro-Electric Scheme 707
12.Srisailam Hydro-Electric Scheme in conjunction with
Nagarjuna Hydro-Electric Scheme 800
13. Andhras’ share of Dam at Duntavada or Balimela 300
1. Ramagundam Thermal Station Extension Scheme 486
2. Kothagudem Thermal Scheme 955
3. Telangana Hydro-Thermal Scheme 572
4. Expansion of Andhra Paper Mills (Stage-I) 400
5. Visakhapatnam Water Supply Scheme 202
6. Manjira Water Supply Scheme 200
Financial Resources for the 3rd Plan
As regards financial resources required for the 3rd Plan, it is expected that the Central assistance by way of loans and grants will be about Rs.200 crores and the balance of Rs.105 crores will have to be raised by the State through fresh taxation, borrowings, recovery of loans, etc. The resources in sight are, however, of the order of Rs.90 crores only as follows:-
1. Revenue Surpluses at existing rates 14.77
2.Public loans after providing Rs.16 crores for
repayment of old loans 40.00
3.Small Savings 17.50
4.Additional taxation by State 38.00
5.Contribution of public enterprises 6.23
6.Excess of non-Plan capital disbursement,
over capital receipts 26.50
Total : 90.00
It is premature to make a guess, at this stage, about the exact nature of new taxation measures which will have to be introduced for raising Rs.38 crores during the 3rd Plan period.
The contribution of public enterprises represents the net profits and depreciation fund contributions of the Road Transport Corporation, Electricity Board, Andhra Paper Mills, ete .,which will be ploughed back into the industry for financing the development schemes.
The large figure under non-Plan disbursements mainly represents provision for repayment of Central loans falling due in the 3rd Plan period.
The financial resources which can be clearly anticipated at this stage are thus Rs.290 crores, leaving a gap of Rs.15 crores to be found by the State Government through various possible methods as the Plan proceeds and gets into full swing.
Annual Plan for 1961-62
The Plan outlay for 1960-61, was originally fixed at Rs.44.04 crores, which was later raised toi Rs.47.29 crores. Actual expenditure is likely to be of the order of Rs.47 crores. The Planning Commission, however, have advised that the Plan outlay for 1961-62 may be limited to about 15% of the total outlay and have also indicated the size of Central assistance for 1961-62 as something like Rs.29 crores. Our own resources for next year’s Plan are expected to be of the order of Rs.14.75 crores. Much against their wish, therefore, the State Government have to limit the Plan outlay for 1961-62 to Rs.48 crores the details of which have been given in Appendix-VIII to Finance Secretarys’ Explanataory Memorandum.
Accounts : 1959-60
The year 1959-60 opened with a cash balance of Rs.5.95 crores. Revenue Receipts and Revenue Expenditure for the year amounted to Rs.81.94 crores and Rs.74.63 crores respectively, thus revealing a Revenue Surplus of Rs.7.31 crores. The expenditure of Capital Account was Rs.26.13 crores, while Public Debt rose by Rs.15.93 crores. Deposits and advances and other debt head transactions resulted in a net outgoing of Rs.1.54 crores and the year closed with a balance of Rs.1.52 crores.
Revised Estimates : 1960-61
Revenue Receipts :- The original Estimates for 1960-61 provided for a total Revenue of Rs.81.72 crores. The Revised Estimates now place total Revenue at Rs.87.80 crores thus recording an increase of Rs.6.08 crores which has occurred mainly under Taxes on Income, Stamps and Sales Tax. Land Revenue collections have suffered to the extent of about Rs.50 lakhs on account of remissions, suspensions, etc., sanctioned during the year. Variations under other heads have been explained in the Finance Secretary’s Explanatory Memorandum.
Revenue Expenditure:- Revenue Expenditure which was placed at Rs.81.98 crores in the original Estimates has registered an increase of Rs.4.14 crores and has been pitched at Rs.86.12 crores. Increases have mainly occurred under Education (272 lakhs), Medical (Rs.33 lakhs), Industries and Supplies (Rs.20 lakhs), Miscellaneous Departments, etc. (Rs.89 lakhs).
Revenue Surplus:- The Revised Estimates of Revenue and Expenditure for the year thus reveal a net Revenue Surplus of Rs.1.68 crores as against the deficit of Rs.26 lakhs anticipated at the time of framing the Budget Estimates.
Capital Expenditure:- The Budget provided for a total Capital Outlay of Rs.32.44 crores, of which Rs.25.72 crores were for Plan Schemes and Rs.6.72 crores represented the non-Plan requirements, such as, Compensation to Zamindars, Departmental Buildings, Commutation of Pensions, etc. The Revised Estimates for the Plan and non-Plan items have now been fixed at Rs.27.11 crores and Rs.4.86 crores, respectively. The increase of Rs.1.39 crores in the Plan outlay has occurred under Irrigation and Power Projects, while the fall of Rs.1.86 crores under non-Plan items is mainly due to the delay in finalising the arrangements regarding the proposed Fertilizer Factory at Kothagudem.
Public Debt:- A Public Loan of Rs.9 crores was floated in August, 1960.. Actual subscriptions, however, amounted to Rs.13.28 crores, out of which Rs.9.81 crores were retained by Government in terms of the notification and the balance was refunded to the subscribers. Loans from the Government of India and credit institutions like the Life Insurance Corporation, Reserve Bank, etc., for development schemes amounted to Rs.72.65 crores. A sum of Rs.52.54 crores had to be found for the repayment of old loans. The net addition to the Public Debt of the State, after providing for repayment of loans due, etc., thus amounted to Rs.20.11 crores.
Deposits and Advances:- Transactions under Unfunded Debt, Deposits, Remittance and Suspense heads in 1960-61, are expected to result in a net out-going of Rs.8.00 crores.
Cash Balance :- The year 1960-61 will close with a minus cash balance of Rs.7.61 crores as against minus Rs.9.08 crores anticipated in the Budget
Budget Estimates 1961-62.
I now turn to the Budget proposals for 1961-62.
The Budget Estimates for 1961-62 provide for a total revenue of Rs.85.13 crores as against Rs.87.80 crores, in the Revised Estimates 1960-61 - the fall of Rs.2.67 crores having occurred mainly under Income Tax (Rs.52 lakhs) and Central aid increase in dearness allowance to low paid Government Servants (Rs.2 crores). Increases and decreases under other heads have balanced each other.
These estimates have been framed on the basis of existing rates of taxes and other sources of income except that they take credit for a sum of Rs.6 crores towards Centre’s share of revenue expenditure in the Annual Plan for 1961-62.
Provision has been made for a total Revenue Expenditure of Rs.87.63 crores in 1961-62, which includes Rs.7.50 crores towards the cost of maintenance of schemes completed during the 2nd Plan period, such as schools, hospitals, roads etc, and Rs.12.51 crores on account of the revenue element of the State Plan outlay for 1961-62, broadly distributed as follows:-
Other Heads 6.90
Provision has also been made for certain essential demands of administrative departments, for which adequate provision could not be made in the Annual Plan. I shall mention only some of the important items.
1. Block Grants to Universities:- Under the existing arrangements the 3 Universities in the State receive regular Block Grants from the Government which were fixed some years back. In addition, they have been in receipt of grants from the University Grants Commission and certain ad hoc temporary grants from the State Government. All these development grants will cease at the end of March 1961. In order, therefore, to enable the Universities to maintain the existing departments and the development schemes undertaken during the 2nd Plan period and also to stabilise their finances, it has been decided to raise the Block Grants of the 3 Universities by a total sum of Rs.40 lakhs as follows:-
Osmania University 20
Andhra University 10
Sri Venkateswara University 10
Osmania University gets a larger grant because of its requirements for maintaining a number of colleges which, in the Andhra area, are being maintained by the Education Department.
The position of these grants will be reviewed after 5 years.
1. Grants to Local Bodies:- A grant of Rs.3 lakhs each is proposed to be given to the 9 Zilla Parishads of Telangana and the Zilla Parishads of Srikakulam and Guntur, to enable them to put up suitable office buildings. Out of this, Rs.1 lakh has been paid to each Zilla Parishad in the current year and the balance of Rs.2 lakhs will be made available next year for which Rs.22 lakhs have been provided in the Budget. The remaining 9 Zilla Parishads in Andhra area will also receive financial assistance of Rs.1 lakh each for the improvement of their existing office buildings.
A sum of Rs.10 lakhs has been provided as grant to the Hyderabad Municipal Corporation next year to be utilized on specific development schemes.
There is also a provision of Rs.9 lakhs under Loans and Advances for loan assistance to local bodies.
3. There are demands from several quarters for abolishing the municipal toll taxes in Telangana which tend to obstruct communications, besides causing inconvenience to the travelling public. It has , therefore, been decided to abolish the municipal toll taxes and a sum of Rs.16 lakhs has been provided in the budget for payment of compensation to the Municipalities for loss of income on this account.
1. Besides the normal budget provision for uplift of Harijans, Backward Classes, etc., a special allotment of Rs.20 lakhs was made in the current year’s budget for housing schemes for Harijans and educational facilities for Backward Classes and economically backward students. This amount has been repeated in the next year’s budget. In addition, it has been decided to exempt the students belonging to Scheduled Castes, Backward Classes, etc., who enjoy full fee concession, from payment of special fees levied by the schools for games, libraries, etc. This will take effect from June 1961, and Rs.5 lakhs have been provided in the Budget for this purpose.
5. Provision has also been made for increasing the grants to the 3 Government sponsored literary and cultural Akademies as follows:
Sahitya Akademi:- From Rs.50,000 to Rs.1,00,000.
Sangeet Nataka From Rs.35,000 to Rs.1,00,000.
Lalit Kala Akademi From Rs.15,000 to Rs. 25,000.
A sum of Rs.2.25 lakhs has been provided for extending financial assistance to Telugu Associations both within and outside the State to enable them to maintain their activities.
There is also demand for theatre buildings in the districts. A provision of Rs.1 lakh is being made for making grants for this purpose.
6. Rs.3 lakhs have been provided for putting up additional blocks, hostels, etc., at Government Colleges, at Cuddapah, Kurnool, and Ananthapur.
1. It is proposed to open a few more Fire Stations in 1961-62. The vehicles attached to the Fire Stations, particularly in Telangana, also need replacement. The Budget provides a sum of Rs.5 lakhs for these items.
2. The budget allotment for maintenance of roads has been increased by Rs.30 lakhs, out of which Rs.5 lakhs are intended for District Board Roads.
3. Provision for construction of roads in sugar-cane areas has also been raised from Rs.20 lakhs to Rs.30 lakhs in 1961-62.
10. It will be recalled that a special allotment of Rs.10 lakhs was made in the current year’s budget for undertaking schemes for relieving unemployment in the twin cities of Hyderabad and Secunderabad. A number of schemes have already been sanctioned and are under execution. It is proposed to continue this useful work and the provision of Rs.10 lakhs has been repeated in the Budget for 1961-62.
1. A special provision of Rs.2 lakhs was included in the current year’s Budget for the grant of educational loans to students of technical and professional colleges, which has proved very useful for bright young men, who could not prosecute their studies for want of financial help. This has been raised to Rs.4 lakhs in the next year’s Budget.
12. A sum of Rs.3 lakhs has been included for granting old age pensions to destitute persons aged 70 years and above who no other means of livelihood. It is hoped that this will relieve distress in a large number of cases.
Details of other Part-II Schemes, for which provision has been made in the next year’s Budget, have been given in the Finance Secretary’s Explanatory Memorandum.
Revenue Deficit -- The Revenue estimates for 1961-62 , reveal a deficit of Rs.2.50 crores and steps will have to be taken in due course, to fill this gap. These estimates, however, take into account only the income and revenue expenditure chargeable to the Consolidated Fund and do not include the income and expenditure of the Road Transport Corporation and the Electricity Board, which were, till recently, being managed as Government departments and have been converted into autonomous statutory bodies for the sake of administrative convenience. If their income is also taken into consideration, the total revenue of Andhra Pradesh for 1961-62 would shoot up to Rs.100 crores as follows:-
1. General Revenues 85.13
2. Road Transport Corporation 7.50
3. Electricity Board 7.38
The programme of Capital Outlay for 1961-62 provides for a total expenditure of Rs.34.55 crores, of which Rs.27.44 crores relate to Plan schemes and the balance of Rs.7.11 crores is for non-Plan items like Zamindari Compensation, Fertilizer Factory, administrative buildings, etc. There is a strong possibility of the Fertilizer Factaory at Kothagudem being made over to Private Sector, which will enable the Government to use the securities earmarked for this Project for other development schemes in Telangana. In the meanwhile, a provision of Rs.2.50 crores has been included in the Budget with a corresponding credit by encashment of securities if the circumstances so warrant.
The breakdown of the figure of Rs.34.55 crores is as follows:-
Power (excluding the Capital expenditure to be incurred through Electricity Board)
A provision of Rs.13.13 crores has been made under loans and advances for extending credit facilities to local bodies, Agriculturists, Small-Scale and Cottage industries etc., in addition to what they can get from Cooperative Credit Institutions, Life Insurance Corporation, Reserve Bank of India and other sources. Principal items of Loans and Advances are :-
Loans to Municipalities for Water Supply, Drainage, Roads, etc. Works
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
Advances for Small Scale and Cottage Industries
Loans Under the Community Projects and National Extension Service Schemes
Loans for Industrial and Low-Income Group Housing Schemes
Short-term loans to Co-operative Land Mortgage Banks
Loans to Co-operatives under the Scheme for Development of Co-operative Marketing
The resources estimates for 1961-62 assume a fresh public loan of Rs. 12 crores besides Small Savings, which might yield about Rs. 2.50 crores. The figure of Rs. 12 crores includes public borrowings, if any, which may have to be undertaken by the Electricity Board and the Road Transport Corporation for financing their Plans for next year.
Central Government is expected to provide Rs. 23 crores as loan assistance for Plan schemes, besides the usual short term loans for purchase and distribution of fertilizers and other specific loans outside the Plan.
Credit has also been taken for loan assistance from the Reserve Bank of India, Life Insurance Corporation, etc.
The expenditure estimates provide a sum of Rs. 45.57 crores for repayment of the various loans falling due next year.
It is expected that the total public debt liability of the State will stand at Rs. 230.39 crores by the end of March 1962.
This huge liability is adequately covered by tangible assets in the shape of irrigation projects, hydro and thermal power installations, buildings and factories, besides recoverable loans and advances and liquid assets like gilt-edged securities, shares, etc. What is, however, causing us grave concern is the mounting cost of servicing of these debts. Interest liability alone now comes to nearly Rs. 8.14 crores.
While electricity and transport schemes start earning sizable revenues from the very start, the irrigation schemes by their very nature take a very long time even decades before they can be expected to start paying even a portion of interest on capital at charge. Our investment in the Nagarjunasagar Project alone now stands at about Rs. 39 crores involving an interest liability of nearly Rs. 1.56 crores per annum. Which will never be covered by direct returns from the Project.
Even the Electricity Schemes which, at one time, were able to produce sufficient net earnings for meeting the interest charges, after an initial development period of 7 or 8 years, are no longer in a position to meet even fifty percent of the interest liability. This is mainly due to the high cost of plant and machinery and the rising prices of materials.
The whole question needs careful consideration.
Ways and Means
Our Ways and Means position in 1960-61 has not been particularly happy, and we had to depend, almost continuously, on short-term Ways and Means advances provided by the Reserve Bank of India. We had originally budgeted for a minus closing balance of Rs. 9.08 crores at the end of March 1961, and it was expected as against the budget provision of Rs. 44.04 crores, ultimate debit balance would be reduced to nearly half of its original size. Despite, however, the fact that expenditure could not be incurred on a number of items, such as such Pochampad Project, the Secretariat Buildings, the Fertilizer Project, etc., the pace of expenditure which has been steadily developing over a period of years, was so fast that there was always a sizable gap between the receipts and disbursement. For various reasons, including the need for fulfilling the Second Plan objectives, it has not been possible to restrict the Plan outlay in 1960-61 to Rs. 40 crores as originally contemplated. On the other hand, the tempo of expenditure had to be stepped up for a total outlay of Rs. 47 crores. This has no doubt caused some concern to us and some inconvenience to the Reserve Bank of India and our friends at Delhi, but it has also secured for us a fairly high place among the States who successfully implemented their Second Five-Year Plan and we are proud of it. The year 1960-61 is expected to close with a minus cash balance of Rs. 7.61 crores while the Budget Estimates for 1961-62 disclose an overall deficit of Rs. 3.94 crores. This will reduce the closing balance at the end of March 1962 to minus Rs. 11.15 crores which is practically covered by the various reserves. The situation no doubt is unsatisfactory but there is no cause for alarm. Our tax revenue is steadily improving while public loan collections during the last few years have also risen according to expectations. It is also proposed to take up with the Reserve Bank of India the question of liberalisation of Ways and Means and Overdraft facilities which they usually allow to the State Governments, since the existing arrangements are based on the decisions taken at the Finance Ministers’ Conference in 1952 when the execution of the first Five-Year Plan had just commenced and nobody could correctly foresee the nature of problems to be faced during the implementation of the Second Plan and the stupendous efforts required for successfully overcoming these difficulties.
Government are fully conscious of the industrial backwardness of Andhra Pradesh and have been exploring ways by which the State can be placed on the path to industrialisation, which its geographical position and natural resources call for . It was not, however, possible for the Government to embark on any large project or to start numerous small projects in the public sector since the limited resources of Government have had to be mostly earmarked for the river valley projects, generation of power, community development, etc. During the Third Plan period, therefore, the State will have to rely, so far as industries are concerned , largely on the private sector.
Government nevertheless are going ahead with the expansion scheme of the Government-owned Andhra Pradesh Paper Mills and will be investing about Rs. 5 crores on this programme. The expansion will result in taking the production of the Mills form eight to ten tons per day, at present, to sixty to seventy tons per day when the programme is completed. It is proposed to change the management of the Paper Mills to the pattern of a Joint Stock Company. Similarly, the Ceramic Factory and Block Glass Plant at Gudur are also going to be run as a combined Joint Stock Company.
Government have had in view the establishment of three Government Corporations, viz., (1) Andhra Pradesh Industrial Development Corporation (for large and medium industries), (2) Small-Scale Industrial Development Corporation and (3) Andhra Pradesh Mineral Development Corporation. The first of these has already come into initial capital of Rs. One crore, which will eventually be raised to Rs. 3 crores . The objective of the Corporation is, broadly speaking, to establish the necessary industrial climate. To achieve this aim, it will draw up schemes and projects of viable industrial units, help any projects brought to the Corporation by industrialists, through participation in the share capital or loans, and it may also run and manage any industrial ventures.
The Small- Scale Industrial Development Corporation which is expected to be expected to be registered shortly wi8ll have an initial capital of Rs. 50 lakhs. Its objects are to plan, organise, promote and operate small-scale industrial units.
The Andhra Pradesh Mineral Development Corporation, which is expected to be registered shortly, will have an initial capital of Rs. 50 lakhs. The need for such a Corporation arises out of the existence of a number of minerals in the State on the hand, and the absence of adequate exploitation and development of them so far on the other. The Board of Directors will include some eminent Geologists.
After examining the factors which; ;have prevented private industry from developing in the State to the extent to which one may reasonably expect it on the score of the State’s potentialities, Government have decided in principle that certain incentives should be given to industry, such as concessional rates of electric supply, suitable adjustment of sales tax and availability of land to industrialists at reasonable prices. The details of these are being worked out.
It is common knowledge that Andhra Pradesh has not been the location of Central projects on any adequate scale. In fact, outlay on Central projects in the State is among the lowest in India. This has given rise to a feeling of frustration. It is hoped that this imbalance will be corrected during the Third Plan period and that the Government of India will favourably consider our claims for location of some important Central projects, like Heavy Electricals, Small Steel Plant, etc., in our State.
State Financial Corporation
The Andhra Pradesh State Financial Corporation which came into being on 1st November 1956 as a result of the amalgamation of the former Financial Corporations of the States of Andhra and Hyderabad, has so far sanctioned loans aggregating Rs. 1.59 crores to 161 industrial concerns in the State broadly divided as follows;-
Type of Industry No, of units Amounts
1. Food manufacturing industries 51 60.60
2. Manufacture of metal products and machinery 45 19.64
3. Printing and allied industries 13 6.91
4. Textiles 7 28.38
5. Chemical and non-metal mineral products 20 26.18
6. Furniture and fixtures 10 3.56
7. Tobacco 7 10.36
8. Other miscellaneous industries 8 3.67
Total - 161 159.30
The amount of guaranteed dividend payable on share capital of the Corporation for the financial year 1960-61 comes to Rs. 5.25 lakhs while the approximate profit for the same period, after providing for working expenses, income-tax, etc. comes to Rs. 2.90 lakhs. There is thus a shortfall of about Rs. 2.35 lakhs which will have to be made good by Government which has guaranteed a minimum return of 3 ½ on these shares. Necessary provision has been made in the Budget for this purpose . The dividend on these shares has been declared to be tax-free and the Income-tax authorities are asking the State Government to pay the income-tax as required under the Income-tax Act. There is, however, some doubt whether Government revenues which are otherwise free of Union taxation under the Constitution can be made to bear a charge of this nature. The matter is being examined.
As the Hon’ble Members are aware, the Government have decided to set up a Fertilizer Factory at Kothagudem based on the gasification of coal. Some months ago, the Government of India decided to license another Fertilizer Factory at Visakhapatnam based on the utililsation of Refinery naphtha; this project will be in the private sector. So far as the Kothagudem project is concerned, the Government have received a number of tenders for the plant and equipment and these are now under scrutiny. Some private parties have also shown some interest in building the Kothagudem factory. While action is now being taken on the basis that the factory will be set up in the public sector, it is Government’s intention, subject to a suitable party being found, to entrust the Kothagudem project also to the private sector. In that event, it will not be necessary for the Government to cash the Telangana Securities for financing the project.
Road Transport Corporation
The Andhra Pradesh State Road Transport Corporation has just completed three years of its life and during this period it has undertaken a number of schemes of nationalisation of passenger transport particularly in the Andhra area in addition to improving the services in Telangana area. City Services are also receiving adequate attention and 15 double-deck buses were added to the fleet earmarked for City Services. It is proposed to add further 15 single-deck and some single-deck buses during the next financial year. This may not be sufficient to overcome the overcrowding in the buses during the peak hours in the city but it is felt, the present inconvenience to the passengers would be reduced to a large extent.
The Corporation added in the Telanganga area 100 buses as replacements and 115 for augmenting the present services during 1960-61. They propose to add another 100 buses during 1961-62 as replacements in Telangana area.
The nationalisation of Transport in West Godavari has been completed during the year 1960-61 and services have also been started in Guntur District. It is expected to complete nationalisation of the Guntur District by 1st October 1961 by putting on road 317 buses. The introduction of Deluxe buses and luxury coaches has attracted public attention and they propose to add during 1961-62 another 8 Deluxe buses and one more luxury coach.
The Corporation’s revised budget indicates gross earnings of Rs.505 lakhs and the working expenses including Rs.90 lakhs for depreciation are Rs.464.17 lakhs, thus resulting in a net profit of Rs.40.83 lakhs. It may be added here that during the year 1960-61, the cost of fuel, oil and tyres had gone up considerably, due to additional duty imposed by the Central Government. The estimated gross earnings for 1961-62 are Rs.750 lakhs and working expenses including Rs.120 lakhs for depreciation are Rs.683.57 lakhs, leaving a net profit of Rs.66.43 lakhs.
The Committee set up under the Chairmanship of Sri Anantharamakrishnan, for the study and report on the working of the Road Transport Corporation has submitted its report which is under consideration.
The State Electricity Board which was constituted on the 1st April 1959 by transfering from the Electricity Department certain functions relating to the construction, operation and maintenance of distribution lines, will be completing two years of its existence on the 31st March 1961. During the last two years, the Government has advanced about Rs.6.8 crores to the Board for meeting its capital expenditure. This was supplemented by the proceeds of an open market loan floated by the Board in the current year which yielded about Rs.3.10 crores. The Board has also drawn upon its current contributions to the depreciation fund for meeting capital expenditure.
As regards 1961-62, the Board is expected to have a capital programme of Rs.4.10 crores (gross) broadly distributed as follows:-
Distribution of Power
Extensions costing over Rs.2 lakhs
The gross earnings of the Board on Revenue Account are estimated to be Rs.6.48 crores in 1960-61 and Rs.7.38 crores in 1961-62 with corresponding figures for working expenses including interest on capital at charge and contributions to the Depreciation and Reserve Funds.
Famine Relief Measures
Conditions of near drought and famine prevailed in parts of the State during the year due to failure of rains. Speedy and effective measures were taken by Government to afford relief, and to commence works to give employment to the local population. More than a crore of rupees have been sanctioned for relief works, such as road works, depending of drinking water wells, repairs to tanks etc. The Government of India were also good enough to realise the gravity of the situation and extended considerable assistance to the State by way of additional allotment for minor irrigation programmes and for grant of loans under the new well subsidy scheme.
While sanctioning these amounts, the Government have issued instructions that the relief works should be selected in consultation with the Zilla Parishads and Panchayat Samithis and that the assistance of these local bodies should also be taken in executing the works.
The Government have also granted remission in the districts affected by drought conditions, on a liberal scale. Some more proposals for affording relief by way of remission are also under consideration of the Government and orders will issue in this regard expeditiously.
The report of the Administrative Reforms Committee has already been placed before the House. It has recommended a number of far-reaching measures which are calculated to ensure speedy and more efficient despatch of Government business. Its recommendations include merger of the Secratariat and the offices of the Heads of Departments in a phased manner, delegation of financial powers and simplification of financial procedures, reconstitution of certain departments, etc. These proposals are under the active consideration of the Cabinet Sub-Committee headed by the Deputy Chief Minister and it is hoped that it will not take long for the Government to announce final decisions on these recommendations.
In view of the president demand from the public and particularly from the Hon’ble Members of this House for strengthening anti-corruption measures, the Government has set up a separate Anti-Corruption Bureau with necessary staff both at the headquarters and in the districts. A sum of Rs.9.36 lakhs has been provided in the next year’s Budget for meeting the expenditure on this new organisation.
Excise and Prohibition
It has also been decided to set up a new organisation for administering Prohibition Laws in the Andhra area. The Department has been placed under the over-all administrative control of the Board of Revenue which is also in charge of Excise work in Telangana area. The new organisation is expected to cost Rs.32 lakhs per annum.
Third Planning Commission
The Government of India have set up the Third Finance Commission under Article 280 of the Constitution, which will make recommendations in regard to :-
(1)the distribution of the net proceeds of income-tax between the Union and the States and the allocation of the States’ share among the States;
(2)the allocation of other divisible Central taxes, like Union excise duties on specific commodities and the distribution of the net proceeds of additional excise duties on certain commodities levied in lieu of sales tax;
(3)the principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India; and
(4)the principles which should govern the distribution of -
(a)the net proceeds of Estate Duty in respect of property other than agricultural land, and
(b)the net proceeds of the tax on railway passenger fares.
Finance Department is engaged on preparing the State’s case on all these issues and it is hoped that the Commission, while making its recommendations will take into consideration the needs of our State for further devolution of revenues and substantial increase in Central assistance by way of grants. It is also proposed to take up with the Third Finance Commission the question of Central assistance for increase in the dearness allowance to low-paid Government servants, which was sanctioned in 1957, initially for the period ending 31st March 1961 and is likely to be stopped by the Government of India from next year. Another important question which is proposed to be brought to the notice of the Third Finance Commission is the rate of interest chargeable on Central loans, particularly for irrigation projects like Nagarjunasagar, and their terms of repayment.
I have tried to give to my Hon’ble friends a brief account of the difficulties which we had to face and our achievements in connection with the implementation of the Second Five-Year Plan. We had to struggle against heavy odds and it is a matter of great pride and satisfaction to all of us that in spite of the initial difficulties and also the various problems which we had to tackle from time to time, we have been able to achieve all the essential objectives of the Second Five-Year Plan and have thus laid firm foundation for building up ambitious superstructures in the future. We are confident that we shall be equally successful in implementing the Third Five-Year Plan which envisages a total outlay of Rs.305 crores and that the people of Andhra Pradesh will, as in the past, always rise to the occasion and extend their fullest co-operation through all possible means including payment of arrears of taxes and loans, subscriptions to the public loans and, above all, acceptance of new imposts which may have to be introduced for the purpose of raising financial resources.
The administrative machinery is being constantly reorganised and geared up to meet the growing demands. There are, a few weak links which have yet to be mended or replaced. These are receiving due attention and all I can say is that financial considerations will notcome in the way of introducing measures for administrative efficiency which may be found necessary from time to time.
In conclusion, I should like to express my appreciation of the work of the officers and staff of the Finance Department not only in connection with the preparation of this Budget but also in the performance of their normal duties during the course of the year which are not always quite pleasant. I should also like to place on record my appreciation of the officers and staff of the Government Press and Text-Books Press who, as usual, have extended their fullest co-operation in the matter of printing the Budget documents.
I thank the Hon’ble Members for the attention with which they have listened to the speech.
For any Technical Queries Please Contact Chief Technology Officer, Finance Department. Tel: 0863 - 2442550.