S. Nagesh Kumar

Managing finances and balancing demands from various sections has put Rosaiah in a piquant situation

HYDERABAD: It is unusual for a debate on the financial health of Andhra Pradesh to create so much political brouhaha in May when the new fiscal is just half way into its second month.

The annual budget, approved in March, is expected to address concerns of revenue shortfall by making adjustments in expenditure, particularly non-plan, revising taxes and tariffs and providing outlays to bridge gaps.

Apparently, it has not fulfilled these expectations. Governor E.S.L. Narasimhan wrote a letter to Prime Minister Manmohan Singh expressing concern over slackened implementation of certain welfare schemes on account of the State's precarious financial position. The Telugu Desam Party picked it up from there and made a rather over the top demand for imposing financial emergency.

Dismissing this demand as a case of the pot calling the kettle black, Chief Minister K. Rosaiah said the Congress government, unlike its predecessor, never sought overdraft or not knocked on the doors of the Reserve Bank for help during the last six years. Yet, hardly a day passes without Mr. Rosaiah fending off allegations from within and from the Opposition that he is diluting welfare schemes initiated by his predecessor Y. S. Rajasekhara Reddy.

The slashing of seats in IIITs by half, the botched attempt to stop financial assistance to poor students studying intermediate in corporate colleges and the latest move to abolish the Rs. 25 subsidy on each LPG cylinder are some examples.

Mr. Rosaiah has to do a tightrope walk in managing the State's finances and balancing demands from various sections such as the 385 MLAs and MLCs to whom he sanctioned Rs. 1 crore each towards the Constituency Development Fund in the budget.

Revenue expenditure

While commending Mr. Rosaiah for keeping fiscal deficit in control, Planning Commission Deputy Chairman Montek Singh Ahluwalia advised him during discussions on the 2010-11 plan to reduce revenue expenditure. At the same time, he reposed confidence in Mr. Rosaiah's capacity to ensure fiscal prudence and enforce budget discipline by approving an outlay of Rs.36,800 crore, 9.86 per cent higher than last year.

Such magnanimity does little to end Mr. Rosaiah's headache – finding money to continue the countless welfare schemes initiated by YSR. In fact, this headache began when YSR was alive. Never given to overly worry about where the money will come from, Rajasekhara Reddy outdid NTR in profligacy. Sops to people ranged from Arogyasri (Rs. 925 crore in present budget) to scholarships for the economically backward and the ‘pavala vaddi' scheme for providing loans to poor at three per cent interest.

Unable to identify resources for these populist measures, Mr. Rosaiah is said to have asked YSR to relieve him from the Cabinet or at least shift him from Finance. At the helm now, Mr. Rosaiah cannot afford such indulgences. Not only does he hold the Finance subject but also has to shoulder YSR's political legacy. For instance, he is forced to pay off dues (Rs. 279 crore) accumulated under ‘pavala vaddi' since 2005 from the current year's budget, indicating that some welfare schemes were dogged by funding problems from the outset.

His situation is piquant. He cannot approve well-meaning proposals involving fresh expenditure as Chief Minister and put them on cold storage as Finance Minister. Nor can he afford to scrap YSR's schemes without paying a political price as his entire team consists of men and women handpicked by YSR.

All proposals have to be approved by the Cabinet and that is what Mr. Rosaiah meant when he declared in Kurnool on Saturday that “mine is not a one-man show and all Ministers have collective responsibility”. This statement was borne out of anguish by Ministers speaking out of turn on decisions they had endorsed at Cabinet meetings earlier. However, the bigger worry is the frequent censure of the government by Y. S. Jaganmohan Reddy, Congress MP, about dilution of schemes initiated by his father and the criticism by his newspaper, Saakshi.

It is quite likely the Congress high command gave Mr. Jagan the green signal to tour the State after extracting assurances against destabilising the government. Mr. Jagan accordingly promised not to speak politics during his ‘Odarpu (consoling) yatra'. But, to Mr. Rosaiah's chagrin, he has violated the vow provoking the Chief Minister to lash out at his Ministers for not rebutting the criticism. His lament at Kurnool that his eight-month-long tenure was a trying period in his life which, he wished, no other Chief Minister should experience has to be understood in this context.