The Hindu : Andhra Pradesh / Hyderabad News : State banks on greater market borrowings

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Friday, Jan 29, 2010
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Andhra Pradesh

Andhra Pradesh - Hyderabad

State banks on greater market borrowings

M.L.Melly Maitreyi

There could be drop in receipts from sectors like sale of lands even in the coming fiscal
There may not be any change in allocation to Jalayagnam or other priority sectors

HYDERABAD: Notwithstanding a shortfall of Rs.15,000- Rs.20,000 crore in revenue in the current fiscal, the State government which is engaged in preparing a budget of Rs. One lakh crore-plus for 2010-11, has pinned its hopes on the leeway it might get for higher market borrowings based on its actual revenue.

The government has requested the 13th Finance Commission to take into account the actual revenue of the State instead of fixing Financial Responsibility and Budget Management (FRBM) norms for capping the market borrowings at 3.5 per cent of Gross State Domestic Product (GSDP). Though the State has the same GSDP as that of West Bengal, its revenues are far higher at Rs.60,000 crore compared to Rs.35,000 crore in the Eastern State.

“It is the debt servicing capacity that should determine the cap on market borrowings than merely on GSDP ratio. We hope the 13th Finance Commission to submit its recommendations for Centre’s approval in February during Parliament session, will consider our request,” said a senior official.

The Finance Department is aware that there could be drop in receipts from sectors like sale of lands even in the coming fiscal. During 2009-10, Rs.3,000 crore revenue was expected from land sales, it did not materialise due to slow down which adversely affected the real estate transactions. “But with indications for better economic growth, tax revenue including State’s share in Central taxes, increase in Central grants and hike in taxes proposed in the State, we are optimistic that things are likely to improve in the next plan year,” they said.

Allocations

However, the Finance and Planning Departments are not earmarking higher allocation to Jalayagnam or other priority sectors than that of current budget, officials said. State suffered substantial drop in revenue in the last 16 months and could not increase allocations to various sectors. “Irrigation projects which are in advanced stage would be identified and funds allotted on a priority basis,” they said.

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