GOVERNMENT OF ANDHRA PRADESH

BUDGET SPEECH
1960 - 61

K. Brahmananda Reddy
MINISTER FOR FINANCE

Speech of Sri K. Brahmananda Reddy, Finance Minister
presenting the Budget for 1960-61
to the Andhra Pradesh Legislative Assembly
on the 20th February 1960.

Introduction

Sir,

I rise to present to this House the Annual Financial Statement, namely, the Budget of the State of Andhra Pradesh for the year 1960-61.

At the outset, I wish to express our appreciation of Dr. Sanjeeva Reddy, our former Chief Minister, who has handled the difficult affairs of the State with dynamism and statesmanship. I take this opportunity also to congratulate our young and amiable Chief Minister Sri Sanjeevayya and hope that under his stewardship the State will further progress in all directions. It is also a matter for gratification that the President of the Indian Republic was pleased to confer Padma Bhushan on our revered Speaker who richly deserves the honour.

Before proceeding to explain my budget proposals I shall briefly review the economic and monetary conditions that prevailed in the State during the year 1959.

Review of economic trends in 1959

The country had to pass through an inflationary situation during the year 1959. The exceptionally good harvest of 1958-59 had a restraining influence on the rising prices but could not succeed in reversing the trend. The forecasts of agricultural production for the current year also do not give much hope of any immediate relief. The industrial production, however, expanded steadily both in the country and in our State. The employment situation, on the other hand, did not register any significant improvement. The most significant feature, however, has been the progress in the execution of the Plan schemes.

In contrast to the anxiety evident during the preceding year when ravages of floods, drought and pests caused large-scale damage to standing crops with consequential rise in prices of essential commodities, the year 1959 witnessed substantial increase in agricultural output not only in Andhra Pradesh but also in the country as a whole. The production of foodgrains was the highest ever reached since the inception of the First Plan. While there is no doubt that favourable weather conditions throughout the country were mainly responsible for larger output of foodgrains, the measures taken by the Central and State Governments and the efforts of the farming classes as regards improved method of production also helped the process considerably.

Food situation: -The marked improvement in the output of foodgrains had only a limited effect on the overall food situation of the country in 1958-59 and, therefore, both the Central and the State Governments had to continue their efforts to conserve stocks and regulate the prices of foodgrains. In spite of our persistent efforts to convince the Centre of the desirability of constituting a separate zone for our State, the Union Government decided to continue the Southern Food Zone and the State Government maintained its" limited procurement'' policy to conserve and augment the stocks of rice within the State.

I may mention here that the Union Minister for Food and Agriculture, who was in Hyderabad recently, was kind enough to assure us that he would be able to supply us, during the course of the year, one to two lakhs tons of rice depending on our requirements to feed our deficit pockets and also to keep a reasonable check on the abnormal growth of prices. He also appreciated our special requirements for fertilizers and indicated his willingness to supply all that we need and, I hope, this supply of the required quantity of fertilizers would greatly help in further improving the output of foodgrains in the State. The Central Government also amended, in May 1959, the Inter-Zonal Wheat Movement Control Order, 1957, to facilitate the free movement of wheat and wheat products to the Southern States.

Prices: -Wholesale prices of most of the commodities which were showing a downward trend in the early months of the year firmed up again from May, 1959, which trend is still continuing. The prices of some non-food articles, notably oil seeds and cotton manufacturers, however, relaxed to some extent during the year. Consumer prices which had eased in the early months of 1959 also firmed up during the subsequent months in most centres in Andhra Pradesh mainly as a result of rise in the prices of food articles.

Industry: -Industrial production in the State was comparatively better in 1959 than in the previous year. The monthly average production indicated a rise in cotton, yarn, liquor, fertilizers, glass, cement, coal, paper and cigarettes, but declined in the case of cotton piece-goods, jute, asbestos and sugar from the levels that obtained in 1958.

Labour: -The labour situation during the year under review was characterised by greater restlessness on the part of workers, as compared to the position in the preceding year. The main issue of controversy revolved around retrenchment of workers, higher wages and dearness allowance. The efforts of the Union Government to revise and fix wage rates of the different catagories of workers coming under the purview of the Minimum Wages Act would, it is hoped, pave the way for better employer-employee relations in future.

Employment: -Despite the implementation of numerous Plan schemes, unemployment in the State, as in the rest of India, still continues to present a major problem. The Union and the State Governments are trying hard to increase the employment opportunities but it should be said here that rapid industrialisation-whether of the medium or small-scale variety-will alone ease the situation in the long run.

Government Finances

As we are now in the fourth year of the formation of the new State which is also the fourth year of the Second Five-Year Plan, and preparations for the formulation of the Third Five-Year Plan are already under way, it seems appropriate that I should take this opportunity of reviewing the progress made since 1956 in be stabilising the financial position of the State.

When the new State of Andhra Pradesh was formed in 1956, it started with an opening cash balance of Rs. 1.59 crores with the prospects of Revenue Receipts and Revenue Expenditure of the order of Rs. 47.25 crores and Rs.51.94 crores, respectively, for the year 1956-57. Capital expenditure for the year was estimated at Rs. 24.16 crores. In addition to the outstanding Public Debt, we were running almost continuous overdrafts on the Government of India and the Reserve Bank of India. We had an ambitious Plan of Rs. 175 crores to be executed during the period of the Second Five-Year Plan, in spite of the initial handicaps, unpreparedness and a certain amount of dislocation in the administrative set up resulting from the Reorganisation of States. Thanks, however, to the untiring efforts of the Government and the co-operation of our people, we were not only able to make up for the deficiencies of the administrative machinery but have also stabilised the financial structure of the new State.

The position now is that the Revised Estimates for 1959-60 reveal a Revenue of Rs. 78.08 crores while Revenue Expenditure has been placed at Rs. 76.13 crores, thus resulting in a Revenue Surplus of Rs. 1.95 crores. Capital Outlay has risen to Rs. 30.19 crores. The Budget figures for 1960-61 are expected to record a further improvement and Revenue Receipts are estimated at Rs. 82.18 crores while budgeted Expenditure on Revenue account is likely to be Rs. 81.98 crores which again results in a surplus of Rs. 20 lakhs. Capital expenditure next year amounts to Rs. 32.44 crores.

The following figures will give an idea of the growth of expenditure under important development heads in the revenue budget:-

At times, we had to face serious difficulties and run huge Overdrafts on the Reserve Bank of India as the collection of revenue, which is seasonal in some cases, could not keep pace with the rapid growth of expenditure. The situation, however, has now improved to a very large extent as a result of certain changes in the procedure for release of Central assistance for Plan Schemes, coupled with our own efforts in the field of taxation and public borrowing and collection of arrears of revenue.

I shall now indicate briefly the position of Accounts for 1958-59 and Revised Estimates for 1959-60 and shall then explain the salient features of the Budget proposals for the year 1960-61, the details of which have been furnished in the Explanatory Memorandum of the Finance Secretary and other uploads circulated along with the Budget. In order to facilitate the study of the budget proposals, the Explanatory Memorandum has also been prepared in Telugu for the first time and, I am sure, the Hon'ble Members will welcome this step.

Accounts 1958-59

The year 1958-59 opened with a cash balance of Rs. 3.00 crores. Revenue Receipts and Revenue Expenditure during the year amounted to Rs. 67.52 crores and Rs. 63.42 crores, respectively, which resulted in a Revenue Surplus of Rs. 4.10 crores. The expenditure on Capital Account was Rs. 24.71 crores while Public Debt rose by Rs. 18.56 crores. Deposits and advances and other debt head transactions revealed a net incoming of Rs. 5.00 crores. The year closed with a balance of Rs. 5.95 crores.

Revised Estimates 1959-60

The Budget Estimates for 1959-60 provided for a total revenue of Rs. 72.04 crores, composed of:-

In the Revised Estimates, the revenue from existing taxation measures, commercial undertakings, etc., has been placed at Rs. 68.21 crores, while Central grants are now expected to be of the order of Rs. 7.82 crores. The income from the tax on passengers and goods introduced in March, 1959 is now estimated at Rs. 1.10 crores. The rise of Rs. 1.92 crores under Order Revenue has been be contributed chiefly by State Excise Duties, Sales Tax and Electricity Schemes. The increase of Rs. 2.82 crores under Central grants is due to exhibition of Central assistance from Centrally-sponsored schemes as receipts instead of reduction of expenditure. The variations under other heads have been explained in the Finance Secretary's Explanatory Memorandum.

Revenue Expenditure which was placed at Rs. 71.66 crores in the Budget Estimates for 1959-60 is now expected to rise to Rs. 76.13 crores in the Revised Estimates as follows:

Capital Expenditure: -The Budget provided for a total Capital Outlay of Rs. 28.30 crores, of which Rs. 24.75 crores were for Plan schemes as the balance of Rs. 3.55 crores was for other essential items outside the Plan, against which the Revised Estimates amount to Rs. 24.84 crores and Rs. 5.26 crores, respectively. The increase of Rs. 1.71 crores in the Capital expenditure on non-Plan Schemes has occurred mainly under investments in industrial concerns and the provision for the Fertilizer Factory.

Public Debt: -The original estimates provided for the floatation of a Public Loan of Rs. 6.00 crores. Actual collections amounted to over Rs. 12.00 crores but, in terms of the notification, the Government could retain only Rs. 4.54 crores. The loan assistance from the Centre and certain autonomous bodies like the Life Insurance Corporation and National Agricultural Credit Corporation, Reserve Bank, for Plan Schemes, etc., is estimated at Rs. 27.24 crores. During the year Government had to find Rs. 4.35 crores for the repayment of its share of the 2 1/2% 1954-59 Loan of Hyderabad Government and Rs. 45 lakhs for the repayment of the 3% loan, 1959 of the Composite Madras State. After meeting the above liabilities and providing for the payment of installments due on Central loans, the net addition to the Public Debt of the State during the year 1959-60 is estimated to be Rs. 17.05 crores.

Deposits and Advances: -The debt, deposits, etc., transactions in 1959-60 resulted in a net receipt of Rs. 26 lakhs.

Cash balance: -The year 1959-60 is expected to close with a minus balance of Rs. 4.89 crores as against minus Rs. 1.44 crores anticipated in the Budget. This is chiefly due to the fact that the Plan Outlay for the current year, as reflected in the Revised Estimates, is of the order of Rs. 44.21 crores as against Rs. 42.03 crores for which provision was made in the Budget.

Budget Estimates for 1960-61

I shall now explain my Budget proposals for 1960-61.

Revenue

The Revenue from existing sources of taxation and commercial undertakings, State's share in the Central taxes and Central grants for various purposes, including the Plan schemes, in 1960-61, is estimated at Rs. 82.18 crores as against Rs. 78.08 crores in the Revised Estimates 1959-60. This improvement of Rs. 4.10 crores has occurred chiefly under Land Revenue ( Rs. 50 lakhs), State Excise Duties ( Rs. 42 lakhs), Sales Tax ( Rs. 52 lakhs), other taxes and duties ( Rs. 29 lakhs), Industries and Supplies ( Rs. 27 lakhs), Central taxes and Grants ( Rs. 164 lakhs) and Miscellaneous ( Rs. 46 lakhs).

The Estimated Revenue of Rs. 82.18 crores for 1960-61 is exclusive of the earnings of the Electricity Board and the Road Transport Corporation which have been set up by conversion of the former Electricity Department and the Road Transport Department of the State Government into autonomous bodies. Had these two Departments continued with the State Government, the Revenue today would have exceeded Rs. 90 crores.

Revenue Expenditure

The Budget Estimates for 1960-61 envisage a total Revenue Expenditure of Rs. 81.98 crores out of which the revenue element of Plan Outlay is of the order of Rs. 19.47 crores, while the balance represents expenditure on the maintenance of existing services, etc., as indicated below: -

The increase in Revenue Expenditure next year is chiefly due to the normal growth of expenditure on account of grade increments and the provision made for Part II Schemes, a list of which is given in the Finance Secretary's Explanatory Memorandum. Some of these form part of the State Plan, while others represent essential demands of administrative Departments for which adequate provision could not be included in the Plan. I shall mention only some of the important items of fresh expenditure for which provision has been made in the expenditure programme for 1960-61.

( 1) A sum of Rs. 9 lakhs ( Rs. 4 lakhs as grant and Rs. 5 lakhs as loan) has been provided for improvements to the Visakhapatnam beach.

( 2) A large number of vehicles in the Police Department have completed their normal life and it is no longer economical to run them. The replacement of all such over aged and uneconomical vehicles will require about Rs. 45 lakhs. It is proposed to spread this expenditure over a period of five years and a sum of Rs. 9 lakhs has been provided in the Budget.

(3) Revenue Department has also been pressing for provision of jeeps for the Revenue Officials, particularly in the Telangana area. Rs. 10 lakhs have been included for this purpose.

( 4) A sum Rs. 4.71 lakhs has been provided for opening of Fire Stations at Karimnagar, Mahabubnagar, Tadepalligudem, Tadipatri, Narsaraopet and Madanapalli, construction of water tanks and other requirements of the Fire Service Department.

( 5) Rs. 8 lakhs have been provided for grants to Panchayats for improvement of village communications.

( 6) The responsibilities of the Local Fund Audit Department have increased as a result of transfer of works relating to Class II Panchayats. It has, therefore, become necessary to expand and strengthen the organisation and Rs. 4.48 lakhs have been included in the budget for this purpose.

( 7) In the Composite Madras State and also for some time in the Andhra State, the Municipalities were entitled to receive from Government Compensation for loss of income from toll tax and licence fees on motor vehicles and the Government was incurring an expenditure of nearly Rs. 5.00 lakhs on this account. Later, however, the Government decided to withdraw this grant along with similar grants to the Local Bodies as the Government wanted money for financing the programme of compulsory Primary Education. It is proposed that this grant to the Municipalities should be restored from the Budget year 1960-61.

(8) The Municipalities are at present entitled to receive 80% of the income from Entertainment Tax, the balance being retained by Government towards collection, etc., charges. In the past representations were received on several occasions that this deduction of 20% towards collection charges is very much on the high side. It is, therefore, proposed that the share of the Municipalities should be raised from 80% to 90% which will involve a further payment of about Rs. 7.60 lakhs to the Municipalities.

(9) In the Budget Estimates for 1959-60 a special provision of Rs. 10 lakhs has been made for Housing Schemes for Harijans and educational facilities for Backward Classes, etc. It is proposed that from next year this provision should be raised to Rs. 20 lakhs and distributed as follows:-

(10) The Government had some time back set up a Committee for making proposals for undertaking small-scale and cottage industries schemes in the twin cities of Hyderabad and Secunderabad for relieving acute unemployment in this area. The proposals made by the Committee are still under examination. In the mean while, a sum of Rs. 10.00 lakhs has been included in the Budget for 1960-61 for starting these schemes after they are finally sanctioned by Government. Out of this a sum of Rs. 1.00 lakh has been provided in the Revenue Estimates and the balance has been provided in the Capital Budget. If necessary, this provision will be supplemented during the course of the year by appropriation from the income of Industrial Fund.

( 11) The Medical Department has been complaining about the inadequate provisions for the purchase of equipment and medicines and for the dietary charges of patients in the various hospitals. The position has been examined and it is found that the situation particularly in Telangana hospitals, needs immediate attention. A special grant of Rs. 24.00 lakhs has been included in the next year's Budget.

( 12) The Chief Engineer, Highways, has represented that the existing grants for maintenance of State Highways and major District Roads are inadequate for proper maintenance of these roads. It is, therefore, proposed to allot an extra amount of Rs. 35.00 lakhs in 1960-61.

( 13) It is also proposed to make an ad hoc non-recurring grant of Rs. 4.00 lakhs to the Osmania University and of Rs. 2.00 lakhs to each of the other two universities, to enable them to meet their normal budgetary requirements in 1960-61.

Revenue Surplus

After making provision for the Part II schemes to which I have just referred, the Revenue Estimates for 1960-61 reveal an overall surplus of Rs. 20 lakhs.

The programme of Capital Outlay for 1960-61 envisages a total expenditure of Rs. 32.44 crores under the following heads: -

The figure for Civil Works also includes the following items: -

( 1) Rs. 6 lakhs have been provided for the expansion of the existing hostels for M.L.As. For accommodating M.L.As who are now residing in the M.L.As quarters which, when vacated, can be allotted to Junior Officers and N.G.Os from whom there is a great demand for housing facilities.

(2) A provision of Rs. 6 lakhs has been made for the construction of a suitable building for the City Civil Court at Hyderabad.

(3) There is also a provision of Rs. 10 lakhs for putting up a building for the National Theatre, Part of this expenditure will be shared by the Government of India.

( 4) Another Rs. 5 lakhs have been provided for starting the work on proposed Stadium at Fateh Maidan, to begin with, and further funds will be made available during the year depending on the progress of expenditure.

( 5) There is also need for constructing a few residential buildings for Ministers and quarters for Secretaries, Deputy Secretaries and other Senior Officers. To begin with, it is proposed that six residential buildings for Ministers and six for Secretaries and about 12 quarters for Deputy Secretaries may be constructed in 1960-61 at a total cost of Rs. 16 lakhs including the cost of land and other incidental charges.

Charges

( 6) The programme for improvement of Public Health includes Rs. 78.00 lakhs for the Manjira Water Supply Scheme which is calculated to augment the supplies of water to the twin cities of Hyderabad and Secunderabad. The scheme is expected to cost Rs. 2.75 crores.

( 7) A sum of Rs. 15 lakhs has been provided for the completion of famine roads in the five districts of Nellore, Ananthapur, Srikakulam, Visakhapatnam and Cuddapah.

The Andhra Paper Mills have got an expansion programme will ensure greater production and, therefore, a sum of Rs. 70.00 lakhs has been provided in the next year's Budget for the purchase of essential equipment and other capital expenditure. The Revenue Estimates also provide larger amounts than in the previous years for purchase of raw materials, wages etc.

There is also a provision of Rs. 50 lakhs for making advances to Local Bodies to enable them to carry out the purposes of the Andhra Pradesh Panchayat Samithis and Zilla Parishads Act.

A special provision of Rs. 2 lakhs has been included in the Budget for the grant of educational loans to students of technical and professional colleges which, it is hoped, will go a long way in providing necessary help to bright young men and women who need financial assistance.

Grants to Local Bodies

As the financial responsibilities of the Local Bodies have now increased as a consequence of the democratic decentralisation of powers and functions and the establishment of Zilla Parishads and Panchayat Samithis, it has become necessary to provide sufficient finances to the Panchayat Samithis and Panchayats so that they may function effectively and may be able to discharge the responsibilities entrusted to them. It has, therefore, been decided to make the following annual grants to the Panchayats and Panchayat Samithis: -.

( 1) 25 nP per head of population to each Panchayat Samithi. This will cost about Rs. 65 lakhs per annum after all the Panchayat Samithis are established. Having regard, however, to the area and population actually covered by the Panchayat Samithis which have already been established and which will be established next year, a sum of Rs. 40 lakhs has been included in the next year's Budget.

( 2) 25 nP per head of population to each Panchayat. This is estimated to cost Rs. 65 lakhs per annum and full amount has been included in the next year's Budget.

( 3) 25 nP per head of population to each Panchayat to be credited to an Equalisation Fund which has been constituted for providing assistance to Panchayats which are backward and need special help. This is also estimated to cost Rs. 65 lakhs per annum and full amount has been provided in the next year's Budget. Out of this amount of Rs. 65 lakhs, a sum of Rs. 30 lakhs is proposed to be earmarked for protected water supply schemes in rural areas.

( 4) It has also been decided to give an annual grant at the rate of 30 nP per head of population to each Panchayat Samithi for the improvement of communications. This will be in lieu of the estimated loss of income from tolls and licence fees. This is estimated to cost Rs. 78 lakhs per annum.

In addition to the above grants, a sum of Rs. 50 lakhs has been provided for giving loans to Local Bodies to enable them to discharge their responsibilities.

I wish to congratulate the members of this Legislature who have been elected as Chairmen of Zilla Parishads. I am sure they will try their best to make the scheme of decentralisation a success and thereby confer lasting benefits on rural population.

Ways and Means

Against the anticipated closing balance of minus Rs. 1.44 crores, the year 1959-60 is now expected to close with a minus balance of Rs. 4.89 crores which, will form the opening balance for 1960-61. The Revenue estimates are expected to yield a surplus of Rs. 20 lakhs while loans from the Central Government, Reserve Bank of India and other institutions, small savings and open market loans, are likely to fetch Rs. 35.22 crores. Capital Expenditure will consume Rs. 32.44 crores, while Rs. 9.21 crores will be required as necessary disbursements on account of loans and advances and repayment of loans after taking necessary credit for receipts from deposits. It is proposed to encash securities to the extent of Rs. 2.5 crores in order to find the funds required for investments on the Fertilizer Factory in 1959-60 and 1960-61. The transactions of the year are thus expected to result in an overall deficit of Rs. 3.73 crores which will further reduce the cash balance to minus Rs. 8.62 crores.

Public Debt

At the end of March 1959, the Public Debt liability stood at Rs. 168.85 crores. During the current year, the Government raised a fresh Public Loan of Rs. 6.54 crores while Central Loans for Plan schemes and other purposes amounted to Rs. 27.24 crores. After providing for the repayment of the States share of Public Loans of the erstwhile Hyderabad State and the Composite Madras State which fell due for repayment during the course of the year, the total Public Debt liability at the end of March, 1960 is expected to be Rs. 185.90 crores. The Budget Estimates 1960-61 have been framed on the assumption that the Central Loan assistance for Plan schemes and other purposes next year will be about Rs. 22.22 crores and it will be possible to raise about Rs. 13.00 crores through an open market loan and small savings. The provision for the repayment of the various loans from the Central Government and the public which will become due next year amounts to Rs. 11.25 crores as a result of which the Public Debt liability at the end of 1960-61 is expected to be Rs. 209.87 crores which means a net increase of Rs. 23.97 crores over the position as on 31-3-1960.

From the above analysis it will be observed that as against the public borrowings of Rs. 13.00 crores next year, the funds required for meeting the liability towards installments of loans due for repayment in 1960-61 are of the order of Rs. 11.25 crores with the result that there is hardly any amount left for supplementing the resources available for financing the Plan schemes. This is causing a certain amount of concern, particularly in the context of our needs for financing the Third Plan and, I hope, the next Finance Commission will take this factor into consideration in assessing our requirements.

Progress of the Second Five-Year Plan

The Second Five-Year Plan of Andhra Pradesh envisages a total outlay of Rs. 175.74 crores, and according to the latest Progress Reports the actual expenditure incurred during the first three years of the Plan i.e., 1956-57 to 1958-59 was Rs. 91.59 crores as follows:-

Rupees Crores

In the Budget Estimates for 1959-60, a provision of Rs. 42.03 crores was made for expenditure on the Plan schemes. Out of this Rs. 26.01 crores were allotted for Andhra area and the balance of Rs. 16.01 crores was intended for the Telangana area. It was, however, expected that the actual expenditure would be of the order of Rs. 40 crores. The Revised Estimates furnished by the Heads of Departments place the overall target at Rs. 44.21 crores composed of Rs. 26.80 crores for the Andhra area and Rs. 17.41 crores for the Telangana area. The increase in the Revised Estimates is accounted for mainly by increased provisions for the Nagarjunasagar Project ( Rs. 1.50 crores) and Power projects ( Rs. 1.00 crores).

As regards 1960-61, the Budget Estimates include a provision of Rs. 44.04 crores for Plan schemes divided as follows: -

The above figures do not include the Centre's share of expenditure on Centrally sponsored schemes which appear only in the plans of the Central Government, the State Plan exhibiting only the State's share. This amounts to Rs. 6.80 crores.

The distribution of the Plan provision of Rs. 44.04 crores for 1960-61 among the various sectors of development will be broadly as follows: -

The statement below analyses the position of financial resources for the Plan schemes in 1959-60 and 1960-61.

Third Five-Year Plan

The arrangements for formulating the Third Five-Year Plan of Andhra Pradesh are proceeding satisfactorily and considerable work has been done in the field of collection of basic data required for the purpose, preparation of schemes in broad details, determination of targets in the various sectors, fixation of priorities and estimates of financial resources which are likely to be available for financing the Third Five-Year Plan. Following the instructions received from the Planning Commission a number of Working Groups were set up by the State Government for the above purpose and the reports of these Working Groups were placed before the State Advisory Committee on planning which decided to divide itself into the following four Sub-Committees in order to study the problems and the Draft Plans more intensively and to advise the Government on the preparation of the Third Five-Year Plan: -

( 1) Sub-Committee on Industries and Power.

( 2) Sub-Committee on Resources.

( 3) Sub-Committee on Agriculture and Irrigation

( 4) Sub-Committee on Social Services.

The Sub-Committees were requested to express their views with particular reference to—

( A) The ceiling for each development head assigned to the Sub-Committee.

(B) The schemes to be included on priority basis and the allotments to be made for them from out of the ceiling proposed in ( A); and.

( C) Schemes if any to be considered in case more funds are available.

These Sub-Committees are now at work and are expected to finalise their recommendations soon. A draft plan based on the recommendations of the Sub-Committees will be prepared and placed before the State Advisory committee for its consideration.

An important factor which is likely to effect very much the structure of the Third Five-Year Plan of the State is the large amount of funds required for the completion of works which were started during the Second Plan period. These schemes which are commonly known as" spill-over schemes'', are spread over different sectors and would involve an expenditure of something like Rs. 140 crores during the Third Plan Period. The broad distribution of this amount under the various heads will be as follows: -.

I am happy to be able to report progress on our Fertilizer Project. A Technical Committee set up by the Government of India visited the State in April last and recommended that a Fertilizer Factory with a capacity to produce 80,000 tons of Nitrogen per annum be set up near Kothagudem based on the gasification of the coals of the Singareni Collieries. We have decided to accept this recommendation. The production of the Factory will consist partly of Urea ( which is a Nitrogenous fertilizer) and partly of a complex fertilizer, Nitrophosphate. As our soils are deficient in Phosphorous as well as in nitrogen the decision to produce Nitrophosphate is of, considerable significance for the expansion of our agricultural production.

The Government of India have assured us of their support and assistance in the planning and execution of the Project. They have also told us that the necessary foreign exchange will be made available by them in the shape of suitable long-term credits; thus, an important obstacle has been removed out of the way. A portion of the rupee resources are proposed to be found from a loan to be obtained from the Industrial Finance Corporation of India who have expressed their willingness to help in this matter. We would also very much welcome the participation of the Government of India in the capital structure of the project and a request to this effect has also been made to them.

Tender specifications for the plant and equipment are now being prepared. We hope that it will be possible to award contracts in a few months time and that the Factory will be completed and commissioned early in 1963. The ownership and management of the project will be transferred to a Limited Company which we expected to register shortly. This will be a Government company in the sense that our Government will hold not less than 51% of the shares; but there will be room for substantial participation of private capital also. I am confident that when we issue capital for subscription there will be an adequate measure of response from the agriculturists and other investors, both in and outside the State.

Secretariat Building

At present a number of Government offices at the headquarters are housed in private buildings which, apart from causing delays in the despatch of Government business and inconveniences to the Government servants as well as the public, also involves a recurring liability of about Rs. 4 lakhs per annum towards the rent payable to the owners of these buildings. There is also a certain amount of congestion in the existing Secretariat building which was never designed to meet the requirements of a State of the size of Andhra Pradesh. It is, therefore, proposed to undertake the construction of a new building for the Secretariat and the existing temporary Secretariat building will then be made available to the heads of Departments and other important offices which are at present spread all over the town. The entire project is likely to cost about Rs. 1.00 crore. The question of selecting a suitable site for the proposed building is under consideration of Government and a provision of Rs. 20.00 lakhs has been included in the Plan estimates for 1960-61 to start the work as soon as possible.

Sale of Bombay Property

A sum of Rs. 72.00 lakhs was realised during the course of the current financial year by the sale of the property of the erstwhile Hyderabad State situated at Nepean Sea Road, Bombay, to the Government of India. The sale proceeds will be distributed among the three successor States on population basis as required under the States Registration Act and our share will be about Rs. 40 lakhs. The question of disposing off the Palace at New Delhi is also engaging the attention of Government.

Eapansion of Banking Facilities

Banking facilities, in spite of their expansion in recent years, are still limited mostly to the urban areas and it will take some time before adequate banking arrangements can be made available to the rural areas. The situation, however, has considerably improved as a result of the expansion programmes undertaken by a number of Banks, particularly the State Bank of India which was set up by reconstituting the former Imperial Bank of India in 1955 and is required to open not less than 400 additional branches all over the country within five years. So far as our State is concerned, the State Bank of India has opened 32 branches during the last five years and will be shortly opening another three branches in the Andhra area. The Telengana area is primarily served by the State Bank of Hyderabad which has lately become a subsidiary of the State Bank of India. The former bank has also launched upon an expansion programme and has already opened, in the current year, branches at Vikarabad and Mahabubnagar and also proposes to open five more branches during the course of the year. It is expected that these branches will serve the longfelt needs of the Telangana districts.

Electricity Board

The Andhra Pradesh State Electricity Board which was formed with effect from 1-4-1959 is entrusted with the construction, operation and maintenance of work relating to distribution and supply of power. The setting up, operation and maintenance of diesel stations other than those forming part of the main generating stations are also under the control of the Board. The investigation of power projects, construction of power projects, generation and main transmission have been retained under the Government. The entire staff excepting those of the Board Secretariat, continue to be under the Government though they serve either the Government or the Board or both, the Board contributing towards the cost of establishment on a notional basis.

The Government has also constituted a State Electricity Consultative Council whose functions are to advise the Board on major questions of policy and major schemes, to review the progress and the work of the Board from time to time and to consider and advise on such other matters as may be referred to it by the Board or the State Government. The Council consists of members representing various concerned interests such as, Electric Supply Industry, Commerce, Industry, Transport, Agriculture, Labour and the Consumers.

The entire capital required by the Board is provided by the State Government. Since its inception, the Board has sanctioned 164 schemes for expansion of supply which are estimated to cost about Rs. 5.97 crores. These schemes also include rural electrification and it is proposed to electrify about 400 villages before the close of the year. The following figures will give some idea of the income and expenditure of the Board: -

The Corporation has already completed its programme of Nationalisation of Road Services in the Krishna district and is now running 230 vehicles in that area. Its programme for 1960-61 envisages expansion of services in the West Godavari district from April, 1960 and in Guntur district from December, 1960 in order to complete the programme of nationalisation of road services in these two districts by the end of March, 1961. For this purpose, the Corporation will require 300 new vehicles next year and another 100 new vehicles are required for replacing the old vehicles in Telangana. The capital programme of the Corporation for 1960-61 also includes construction of garages and buildings in West Godavari and Guntur districts. The estimated Capital Expenditure of the Corporation in 1960-61 is of the order of Rs. 185 lakhs. The State Government is not contributing anything to the capital of the Corporation next year as the entire amount provided in the Second Plan has already been invested in the Corporation. For financing the Capital Expenditure, therefore, Corporation will have to depend partly on its own resources and partly on borrowings. The gross earnings of the Corporation for the years 1959-60 and 1960-61 are estimated at Rs. 362 lakhs and Rs. 476 lakhs, respectively, while the working expenses are expected to be Rs. 285 lakhs in 1959-60 and Rs. 365 lakhs next year. The net earnings are thus expected to improve from Rs. 77 lakhs to Rs. 111 lakhs.

Industrial Finance Corporation

The Andhra Pradesh State Financial Corporation which was set up on the 1st November 1956 by amalgamating the former Financial Corporation established in the States of Andhra and Hyderabad, has been doing useful work within its limited sphere. For 1959-60 the Corporation estimates a gross earning of Rs. 7.75 lakhs and a net earning of Rs. 2.75 lakhs after providing for the working expenses, taxation, reserves, etc. As this will not be sufficient for paying the minimum guaranteed dividend, Government will have to subsidise the Corporation to the extent of about Rs. 2.50 lakhs.

The business handled by the Corporation is gradually increasing and during the current year the Corporation has already sanctioned loans to 27 units amounting to approximately Rs. 30 lakhs.

Industrial Development Corporation

In order to give a fillip to industrial development in the State, Government have decided to set up an Industrial Development Corporation with an initial capital of Rs. One crores which can later be increased to Rs three crores, if necessary. This will be registered under the Indian Companies Act and the composition of the Board of Directors will include prominent citizens interested in the industrial advancement of the State. The Corporation will Plan, promote and set up industries either by itself or in association with private enterprise. Government hope that the setting up of such a Corporation will create a climate of confidence among investors and lead to the wider growth of industries in the private sector as well.

Conclusion

I have given an account of what has been done during the last three years and what is proposed to be done in 1960-61 is in so far as it affects the economy of the State in general and Government finances in particular. It is needless for me to say that whatever has been achieved is not enough to satisfy the needs and urges of the people and that we have yet to travel a long distance before we can claim to have established a truly Welfare State. All the same, we are on the right path and will be reaching the goal very soon. In the years to come this will demand all our energies and resources.

The Budget for next year discloses an anticipated closing balance of minus Rs. 8.62 crores which could have been avoided by pruning the expenditure programme. We are, however, keen on reaching the Plan targets at all costs, which will give us sufficient courage and confidence to face the responsibilities and depends which are likely to arise in connection with the launching of the Third Plan.

The administrative machinery is also being geared up suitably. In the Finance Department also we have recently introduced the system of attaching Financial Advisers to certain major Departments such as Education, Health, Agriculture and the P W D. Reports indicate that the new arrangement has resulted in quicker despatch of business of these Departments. It is also calculated to ensure more effective control over the departmental finances.

Before concluding, I should like to announce certain measures which are intended to provide relief to agriculture and industry. These are: -

( 1) Suspension of special assessment on ground nuts for the next three years.

( 2) Suspension of special assessment on cotton for the next three years.

( 3) Exemption from tax of the sales of cotton yarn consumed by the Handloom Industry.

( 4) Exemption from tax of the purchase of oilseeds by Ghana owners if they are eligible for exemption on the sales of the produce of their Ghanies; and.

( 5) Reduction in the rate of tax on the sales of oil cake from 3% to 2%.

The annual loss of revenue on account of these concessions is estimated to be Rs. 30 lakhs in the case of item ( 1), Rs. 9.7 lakhs in the case of item ( 2), and about Rs. 6 lakhs in the case of the last three items.

As a result of these concessions, therefore, the estimated revenue surplus of Rs. 20 lakhs will be converted into a deficit of Rs. 26 lakhs. I do not propose introducing any fresh measures of taxation in the current session for meeting this deficit. This question will, however be examined separately and if necessary, proposals will be brought up before the House in due course.

Before concluding I should like to record my appreciation of the good work done by the officers and staff of the Finance Department and I am confident that they will continue to play their vital and effective role in the administrative set up.

I thank the Hon'ble Members of the House for the attention which they have listened to the speech.