Post-bifurcation, financial worries for two States

The process of reorganisation of Andhra Pradesh has come to an end with two successor States — Telangana and Andhra Pradesh — coming into existence. But what is going to be more challenging than the bifurcation process itself is tackling the worrisome financial situation of both the States — more so for the residuary Andhra Pradesh which is facing a whopping revenue deficit of Rs.15,000 crore. Figures churned out by the Finance department and validated by the Accountant-General make it clear that the situation demands lot of financial prudence and judicious revenue expenditure to keep the two States on path of economic development.

As things stand, with all the balance of accounts bifurcated, residuary Andhra Pradesh faces a revenue deficit of Rs.15,691 crore, while Telangana has a revenue surplus of Rs. 3,555 crore for the fiscal 2014-15. Ironically, the united State last year showed a surplus of Rs. 18,651 crore.

Post division, when the successor Andhra Pradesh State has to rebuild its infrastructure right from the new capital city, it just has a resource plan outlay of Rs. 5,791 crore for 2014-15 and it is Rs.18,600 crore plan outlay for Telangana. For the united State the projected plan outlay approved earlier was Rs. 67,000 crore.

But with a staggering internal debt burden of Rs. 1,45,660 crore of the united A.P. to be apportioned between the two States on the basis of population ratio, residuary Andhra Pradesh will be left with a loan burden of Rs. 85,000 crore and Telangana, with about Rs. 61,000 crore. This, after a request to the Centre to waive Rs.18,000 crore out of the total debt burden of Rs. 1,63,169 crore of the united State.

Though the Centre promised to help both the States to rebuild their economies through special category status and tax incentives to the more economically and financially hit residuary Andhra Pradesh, special status for backward districts in both the States, sources admit, it may not be an easy task given the Union government’s commitments to other States.

The promised execution of Polavaram multipurpose project, a national project, to harness thousands of tmcft of Godavari water going waste into the sea every year to help the predominantly agrarian economy of Andhra Pradesh too may not be easy given the protests against merger of submergence villages of Telangana into Andhra Pradesh.

All the above things apart, the singularly worrying factor for both the States is mobilising resources to fulfil populist promises included in the manifesto. The waiver of crop loans, loans availed by self-help groups, particularly in residuary A.P., will be a daunting task given its precarious revenue deficit. No wonder people of Andhra Pradesh keep their fingers crossed, while those of Telangana, on a better financial footing, have reason to be optimistic.