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» Andhra Pradesh Budget Analysis 2019-2020

Andhra Pradesh Budget Analysis 2019-2020

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The Finance Minister, Mr. Buggana Rajendranath, presented the budget for Andhra
2019-2020)
Open PDF (http://prsindia.org/sites/default/files/budget_files/State%20Budget%20Analysis%20-
%20Andhra%20Pradesh.pdf )
Pradesh for financial year 2019-20 on July 12, 2019. Previously, the interim budget for
the year was presented in February 2019.

Budget Highlights

The Gross State Domestic Product (GSDP) of Andhra Pradesh for 2019-20 (at current
prices) is estimated to be Rs 10,80,657 crore[1]. This is 17.6% higher than the revised
estimate for 2018-19.

Total expenditure for 2019-20 is estimated to be Rs 2,27,975 crore, a 40.6% increase

over the revised estimate of 2018-19. In 2018-19, as per the revised figures, there is an
estimated decrease of Rs 28,929 crore (15.1%) of expenditure over the budgeted
estimate.

Total receipts (excluding borrowings) for 2019-20 are estimated to be Rs 1,79,297

crore, an increase of 56% as compared to the revised estimate of 2018-19. Borrowings
are estimated to be Rs 46,921 crore, an increase of 22.7% over the revised estimate of
2018-19.

Revenue deficit for 2019-20 is targeted at Rs 1,779 crore, or 0.16% of the Gross State
Domestic Product (GSDP). Fiscal deficit is targeted at Rs 35,261 crore (3.26% of GSDP).

Sectors such as energy (247%), welfare of SC, ST, OBC and minorities (157%), and
agriculture and allied activities (135%) saw the highest increase in allocations in 2019-
20.

Policy Highlights

YSR Rythu Bharosa: Farm investment support of Rs 12,500 per year will be provided
to farmers, including tenant farmers. Rs 8,750 crore has been allocated for the scheme
in 2019-20.

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 Jagananna Ammavodi: Rs 15,000 will be provided to every mother for sending her
children to school. The scheme will cover children from class I to XII. Rs 6,456 crore
has been allocated for the scheme.

Jagananna Vidya Deevena: 100% fee reimbursement will be provided to SC, ST, BC,
minorities, Kapu, EBC, and differently abled students, along with a maintenance
support of Rs 20,000 per year to each student. Rs 4,962 crore has been allocated for the
scheme in 2019-20.

Andhra Pradesh’s Economy

GSDP: The growth rate of
Andhra Pradesh’s GSDP (at Figure 1: Growth in GSDP and sectors in Andhra
current prices) has marginally Pradesh (year-on-year)
decreased from 15.4% in 2016-
17 to 15.3% in 2018-19.

Sectors: In 2018-19, the

sectors of agriculture,
manufacturing, and services
respectively contributed 34%,
23%, and 43% of the Gross
State Value Added by all
sectors. Between 2017-18 and
2018-19, these sectors grew by
12.4%, 18.1%, and 16.1%,
respectively.
Note: As per CSO, agriculture here includes mining
and quarrying. SRE: Second Revised Estimate. FRE:
Unemployment: According to
First Revised Estimate. AE: Advanced Estimate. All
the Periodic Labour Force
numbers are as per current prices.
Survey (2017-18), the
unemployment rate in Andhra Sources: Andhra Pradesh Socio Economic Survey
Pradesh in 2017-18 was 4.5%, 2018-19; PRS.
as compared to 6.1% in the
country.

Budget Estimates for 2019-20

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

1562019-20 - Key figures (in Rs crore)

Table 1: Budget
S H ARE S
 2017- 2018- 2018- 2019-
% change from % change from
18 19 19 20
Items BE 2018-19 to RE RE 2018-19 to BE
Actua Budge Revis Budge
of 2018-19 2019-20
ls ted ed ted
Total 1,46,9 1,91,0 1,62,1 2,27,9
-15.1% 40.6%
Expenditure 44 64 34 75
A. Receipts
1,05,1 1,56,00 1,14,9 1,79,29
(except -26.3% 56.0%
13 7 62 7
borrowings)
38,24
B. Borrowings 28,433 33,461 14.3% 46,921 22.7%
6
Total Receipts 1,33,5 1,89,4 1,53,2 2,26,2
-19.1% 47.7%
(A+B) 46 68 07 18
Revenue
-16,15 -11,65
Deficit (-)/ 5,235 -322.6% -1,779 -84.7%
2 5
Surplus (+)
-1.27
As % of GSDP -2.01% 0.60% -0.16%
%
Fiscal Deficit -32,37 -24,20 -33,61
38.9% -35,261 4.9%
(-)/ Surplus (+) 3 5 9
-3.66
As % of GSDP -4.03% -2.78% -3.26%
%
Primary Deficit -18,52 -19,31
-9,128 111.6% -18,017 -6.7%
(-)/ Surplus (+) 6 5
-2.10
As % of GSDP -2.30% -1.05% -1.67%
%

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

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

Expenditure in 2019-20

Capital expenditure for 2019-20 is proposed to be Rs 47,499 crore, which is an

increase of 32.7% over the revised estimate of 2018-19. Capital expenditure includes
expenditure affecting the assets and liabilities of the state, such as: (i) capital outlay, i.e.
expenditure which leads to creation of assets (such as bridges and hospitals), and (ii)
repayment and grant of loans by the state government.

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 Andhra Pradesh’s capital outlay for 2019-20 is estimated to be Rs 32,293 crore, which is
58.3% higher than the revised estimate of 2018-19. The revised figure for 2018-19 is
estimated to be 28.9% lower than the budgeted estimate made for that year.

Revenue expenditure for 2019-20 is proposed to be Rs 1,80,476 crore, which is an

increase of 42.9% over the revised estimate of 2018-19. This expenditure includes
payment of salaries, pensions, and interest, among others. Revenue expenditure
accounts for 79% of the total expenditure proposed for 2019-20.

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

% change % change
2018-19 2019-20
2017-18 2018-19 from BE from RE
Item Budget Budget
Actuals Revised 2018-19 to RE 2018-19 to BE
ed ed
2018-19 2019-20
Capital
25,730 40,792 35,795 -12.2% 47,499 32.7%
Expenditure
of which Capital
13,491 28,678 20,398 -28.9% 32,293 58.3%
Outlay
Revenue
1,21,214 1,50,272 1,26,339 -15.9% 1,80,476 42.9%
Expenditure
Total
1,46,944 1,91,064 1,62,134 -15.1% 2,27,975 40.6%
Expenditure
A. Debt
9,451 10,851 13,539 24.8% 13,417 -0.9%
Repayment
B. Interest
13,847 15,077 14,304 -5.1% 17,244 20.6%
Payments
Debt Servicing
23,298 25,928 27,842 7.4% 30,661 10.1%
(A+B)

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

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

Sector expenditure in 2019-20

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

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Table 3: Sector-wise expenditure for Andhra Pradesh Budget 2019-20 (Rs crore)
S H ARE S
 2017- 2018- 2018- 2019- % change
18 19 19 20 from RE
Budget provisions for 2019-
Sector 2018-19 to
Actu Budge Revi Budge BE 2019- 20
als ted sed ted 20
Rs 6,456 crore has been
allocated to the Jagananna
Ammavodi programme.

Rs 1,500 crore has been

20,01 19,58 allocated for modernisation
Education 26,510 33,410 71%
7 7 of infrastructure in schools.

Rs 1,158 crore has been

allocated to Samagra
Shiksha scheme.

Rs 15,747 crore has been

allocated to YSR Pension
Kanuka programme.

Social Rs 3,000 crore has been

Welfare 15,46 22,77 allocated for providing
19,969 27,461 21%
and 9 9 subsidy on rice.
Nutrition
Rs 1,430 crore has been
allocated to Integrated Child
Development Services.

Rs 8,750 crore has been

allocated to YSR Rythu
Bharosa programme.

Rs 1,163 crore has been

Agriculture allocated to YSR PM Fasal
and allied 7,569 8,420 8,766 20,558 135% Bima Yojana.
activities
Rs 3,000 crore has been
allocated to Price
Stabilisation Fund for farm
risk mitigation.

Welfare of Rs 4,962 crore has been

SC, ST, OBC 10,42 allocated to Jagananna
13,688 5,479 14,088 157%
and 3 Vidya Deevena scheme.
minorities
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 Rs 210 crore has been
allocated to lift irrigation
works.
Irrigation
13,99
and flood 8,877 16,594 12,712 -9% Rs 161 crore has been
1
control allocated to Neeru Chettu,
an interdepartmental
coordinating portal.

Rs 2,105 crore has been

allocated to PM Awas
Yojana, Rs 1,356 crore to
weaker section housing
programmes, and Rs 1,000
Water crore to YSR Urban Housing
Supply, programme.
Sanitation,
10,45 Rs 500 crore has been
Housing, 8,781 13,390 12,296 18%
1 allocated for creation of
and Urban
Developme essential infrastructure for
nt new capital.

Rs 648 crore has been

allocated to YSR interest
free loans to urban self-help
groups.

Rs 1,732 crore has been

allocated to National Health
Mission.

Health and Rs 1,740 crore has been

Family 6,389 8,758 7,398 11,610 57% allocated to Arogyasri.
Welfare
Rs 1,500 has been allocated
for infrastructure facilities
at hospitals.

Rural Rs 3,626 crore has been

Developme 8,859 12,068 7,640 10,672 40% allocated to MGNREGA
nt programme.

Rs 4,525 crore has been

allocated to YSR nine hours
Energy 3,440 3,255 1,910 6,623 247% free power supply
programme.
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 Rs 575 crore has been
Police 4,696 5,738 5,243 5,798 11% allocated to Andhra Pradesh
special police units.

Rs 500 crore has been

allocated for
Transport 1,928 4,100 1,979 4,267 116% reimbursement of
concessions provided by
APSRTC to citizens.

% of total
expenditur 66% 69% 65% 70%
e

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

Receipts in 2019-20

In 2019-20, Andhra Pradesh is expected to borrow Rs 46,921 crore to meet its

expenditure requirements, which is 22.7% higher than the revised estimates of 2018-
19. In 2018-19, the borrowings of the state are expected to be 14.3% higher than the
amount budgeted for the year.

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

Non-tax revenue: Andhra Pradesh is estimated to generate Rs 7,355 crore through

non-tax sources in 2019-20. This is an increase of 67.5% (Rs 2,963 crore) over the
revised estimate of 2018-19.

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

% change
2018- % change
2018-19 from BE
2017-18 19 2019-20 from RE
Items Budgete 2018-19 to
Actuals Revise Budgeted 2018-19 to
d RE of
d BE 2019-20
2018-19
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State's Own Tax 49,813 65,535 58,125 -11.3% 75,438 29.8%
State's Own Non-Tax 3,814 5,347 4,391 -17.9% 7,355 67.5%
Share in Central
28,675 33,930 32,711 -3.6% 34,833 6.5%
Taxes
Grants-in-aid from
22,761 50,696 19,457 -61.6% 61,072 213.9%
Centre
Total Revenue 1,14,6
1,05,062 1,55,507 -26.3% 1,78,697 55.8%
Receipts 84
Borrowings 28,433 33,461 38,246 14.3% 46,921 22.7%
Other receipts 51 500 277 -44.5% 600 116.3%
Total Capital
28,484 33,961 38,523 13.4% 47,521 23.4%
Receipts
1,53,2
Total Receipts 1,33,546 1,89,468 -19.1% 2,26,218 47.7%
07

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

Tax Revenue: Total own tax revenue of Andhra Pradesh is estimated to be Rs 75,438
crore in 2019-20 (42% of the revenue receipts). This is 29.8%% higher than the revised
estimate of 2018-19. In 2018-19, own tax revenue is expected to be Rs 58,125 crore,
which is 11.3% lower than the budgeted estimate.

The own tax to GSDP ratio is targeted at 7% in 2019-20, which is significantly higher
than the revised estimate of 6.3% in 2018-19. This implies that growth in collection of
taxes is expected to be higher than the growth in the economy.

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 Sales Tax and VAT (on items such as
petroleum products) is the largest
component of tax revenue of the
Figure 2: Composition of the state’s tax state. It is expected to generate Rs
revenue in 2019-20 (Budget Estimates) 28,000 crore in 2019-20. This is an
increase of 27.8% from the revised
estimate of 2018-19.

State Goods and Services Tax (SGST)

is expected to generate Rs 27,000
crore. This is an increase of 31% over
the revised estimate of 2018-19. In
most of the other states, SGST is the
largest component of tax revenue of
the state.

In 2019-20, the state is expected to

generate Rs 8,518 crore from the levy
of state excise. This an increase of
36.9% over the revised estimate of
2018-19. Further, in 2019-20, the
Sources: Andhra Pradesh Budget in Brief
state is expected to generate Rs 6,600
2019-20; PRS.
crore from stamp duty and
registration fees and Rs 4,000 crore
from taxes on vehicles.

Deficits, Debts and FRBM Targets for 2019-20

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

Debt Servicing
In 2019-20, Andhra Pradesh is expected to spend Rs 30,661 crore on servicing its debt,
which is 13% of its estimated expenditure. This expenditure includes Rs 13,417 crore
towards repayment of loans, and Rs 17,244 crore towards interest payments.
In 2019-20, the expenditure on repayment of loans is expected to decrease by 0.9% over
the revised estimate of 2018-19.

Revenue deficit: This is the excess of revenue expenditure over revenue receipts. A
revenue deficit implies that the government needs to borrow in order to finance its
expenses which do not create capital assets.

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

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

Outstanding liabilities: This is the accumulation of borrowings taken by the state

government over the years. In 2019-20, Andhra Pradesh’s outstanding liabilities are
expected to be at 27% of the GSDP.

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

Revenue Fiscal Outstanding

Year
Deficit (-)/Surplus (+) Deficit (-)/Surplus (+) Liabilities

2017-18 -2.0% -4.0% 27.8%

2018-19 (RE) -1.3% -3.7% 28.2%
2019-20 (BE) -0.2% -3.3% 27.0%

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

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

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Figure 3: Revenue and Fiscal Deficit Figure 4: Outstanding liabilities (as % of
(as % of GSDP) GSDP)

Sources: Andhra Pradesh Budget Sources: Andhra Pradesh Budget

Documents; PRS. Documents; PRS.

Annexure

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

Education: Andhra Pradesh has allocated 15.7% of its expenditure on education in

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

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

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

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

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

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S H ARE S
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