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AP Finance Budget 2016-2017 | Andhra Pradesh State Annual Budget

AP Finance Budget 2016-2017

The Finance Minister of Andhra Pradesh, Mr. Yanamala Ramakrishnudu, presented the Budget for Andhra Pradesh for the financial year 2016-17 on March 10, 2016. This volume of Budget 2016-17, “Andhra Pradesh Budget in Brief” provides an overview of the budget proposals of the Government for the year. It provides an analysis of the trends in the receipts and expenditure for the last few years, sectoral composition of expenditure under Plan and Non-Plan, as well as outstanding public debt and guarantees.

AP Finance Budget 2016-2017

Highlights Of Budget

  • The Gross State Domestic Product of Andhra Pradesh for 2016-17 is estimated to be Rs 6,83,233 crore. This is 13.2% higher than the estimates for 2015-16.
  • Total expenditure for 2016-17 is estimated to be Rs 1,35,689 crore, a 20.9% increase over the revised estimate of 2015-16. In 2015-16, there was a decrease of Rs 833 crore (0.8%) in the revised estimate over the budget estimate.
  • Total receipts (excluding borrowings) for 2016-17 are estimated to be Rs 1,10,578 crore, an increase of 22.4% over the revised estimates of 2015-16. In 2015-16, total receipts fell short of the budgeted target by Rs 745 crore.
  • Revenue deficit for the next financial year is targeted at Rs 4,868 crore or 0.7% of the Gross State Domestic Product (GSDP). The fiscal deficit is targeted at Rs 20,497 crore (3% of GSDP). Primary deficit is targeted at Rs 8,239 crore (1.2% of GSDP).
  • Departments of School Education, Rural Development, Major and Medium Irrigation, and Medicine and Health Medicine saw increases in allocations for the year 2016-17. On the other hand, the Department of Agriculture witnessed an 8.8% decrease in allocation in 2016-17.

Policy Highlights

  • Agricultural debt redemption: Rs 3,512 crore is proposed to be allocated in 2016-17 for
    repayment of farmers’ debt.
  • Irrigation: Allocation to the Department of Major and Minor Irrigation has increased by 57.6% in 2016-17, over the budgeted estimate of 2015-16. The Polavaram Right Main Canal is proposed to be completed in 2016-17. The Left Main Canal is proposed to be completed in 2017-18.
  • Investments and job creation: The government is targeting industrial and job growth through investments worth Rs 11,500 crore, in 2016-17. Further, in the food processing sector, it is targeting an investment of Rs 1,552 crore and the creation of 15,000 new jobs in 2016-17. The government also plans to develop the Machilipatnam and Bhavanapadu Ports from investments through public-private participation in 2016-17.
  • Ease of doing business The approval time for businesses is proposed to be brought to an average of 14 days in 2016-17, as compared to an average of 21 days in 2015-16.

Budget Estimates For 2016-17

  • The total expenditure in 2016-17 is targeted at Rs 1,35,689 crore. The revised estimate for the total expenditure in 2015-16 was Rs 1,12,216 crore, which is Rs 833 crore lower than the budgeted target of 2015-16.
  • The expenditure in 2016-17 is proposed to be met through receipts (other than borrowings) of Rs 1,10,578 crore and borrowings of Rs 25,012 crore. Total receipts for 2016-17 (other than borrowings) are expected to be Rs 745 crore lower than the revised estimates of 2015-16.

Expenditure In 2016-17

  • Government expenditures can be divided into (a) capital expenditure, which affects the assets and liabilities of the state, and (b) revenue expenditure, which includes the rest of the expenses.
  • Total capital expenditure is proposed to be Rs 21,521 crore, which is an increase of 15% over the revised estimates of 2015-16. This includes expenditure which leads to the creation of assets, and repayment of loans, among others.
  • Total revenue expenditure for 2016-17 is proposed to be Rs 1,14,168 crore, which is an increase of 22% over revised estimates of 2015-16. This expenditure includes payment of salaries, administration of government programs, etc.

Other Announcements

  • Energy, Infrastructure, and Investments: The energy, infrastructure and investments department has been given an allocation of Rs 4,020 crore in 2016-17. The state government aims to complete the electrification of 4.6 lakh households by June 2016 and to replace one lakh agricultural pumps with energy efficient pumps in 2016-17.
  • Industry: The National Investment Manufacturing Zone (NIMZ) is proposed to be set up in Prakasam district. The NIMZ will be an integrated township with industrial and social infrastructures. It is estimated to bring in Rs 30,000 crore of investment and create about three lakh jobs over the next decade.
  • Rural Water Supply: A drinking water grid is proposed to be set up to ensure sustainable delivery of potable water to clusters of villages. Rural water supply has been allocated Rs 1,196 crore in 2016-17.

Receipts in 2016-17

  • The total revenue receipts for 2016-17 are estimated to be Rs 1,09,300 crore, an increase of 22.2% over the revised estimates of 2015-16. The tax to GSDP ratio is targeted at 7.6% in 2016-17, which is an increase of 7.3% from the revised estimates in 2015-16. This implies that growth in collection of taxes has been higher than the growth in the economy.
  • State’s own tax revenue is expected to increase by 17.8% (Rs 7,895 crore) in 2016-17 over the revised estimates of 2015-16. Non-tax revenue is estimated to increase by 2.8% (Rs 154 crore).
  • Grants from the center are set to increase by 51.5%, from Rs 17,722 crore in 2015-16 (RE) to Rs 26,849 crore in 2016-17. The other component of transfers from the center, which is the state’s share in central taxes, is estimated to increase by 12.5%, to Rs 24,637 crore in 2016-17.

Deficits, Debts And FRBM Targets For 2016-17

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

  • Revenue deficit: It is the excess of revenue expenditure over revenue receipts. A revenue deficit implies that the government needs to borrow to finance its expenses which do not create capital assets. The Budget estimates a revenue deficit of Rs 4,868 crore (or 0.71% of state GDP) in 2016-17. This estimate does not meet the target of eliminating revenue deficit, prescribed by the state’s FRBM Act and by the 14th Finance Commission.
  • Fiscal deficit: It 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 of the government. In 2016-17, the fiscal deficit is estimated to be Rs 20,497crore, which is 3% of the state GDP. The estimate meets the 3% limit set under the state’s FRBM Act and by the 14th Finance Commission.
  • Outstanding Liabilities: It is the accumulation of borrowings over the years. In 2016-17, the outstanding liabilities are expected at 27.9% of state GDP.


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