GOVERNMENT OF ANDHRA PRADESH

BUDGET SPEECH
1963 - 64

K. Brahmananda Reddy
MINISTER FOR FINANCE

Speech of Sri K. Brahmananda Reddi, Finance Minister
presenting the Budget for 1963-64
to the Andhra Pradesh Legislature
on the 20th February, 1963.

Introduction

Sir,

I beg leave to present the Budget of the State of Andhra Pradesh for the year 1963-64.

As the Hon’ble Members are aware , the Budget every year has to be prepared against the economic background of the country as well as of the State. The economic conditions in the country, which were already difficult since the beginning of the Third Five-Year Plan, have been rendered more acute due to the declaration of national Emergency consequent upon the wanton and perfidious attack on our sacred soil by a treacherous neighbour. Already the Nation was faced with difficulties about foreign exchange and other bottlenecks in the three main spheres of activities, viz., power, irrigation and transport, in fulfilling the targets laid out for the Third Five-Year Plan. With the declaration of Emergency, the entire national economy besides fulfilling the targets prescribed under the Third Five-Year Plan, has to be geared up to war footing and the country has to take up the challenge of further sacrifices and efforts for meeting the defence requirements. The Central and the State Plans have accordingly been reviewed carefully and reorientated in order to intensify the programmes and activities which have a direct bearing on national economy and defence, and to curtail or allow down other activities which are not of such a pressing nature. In reshaping the Plan, the Planning Commission have taken care that besides intensifying the efforts on the industrial front, agricultural production is also stepped up as it will help in conserving foreign exchange by restricting imports of foodgrains. The further details of the Plan will be discussed later at the appropriate place. The Planning Commission and the States that as a result of the National Emergency, the Government of India will not be able to increase the quantum of their assistance to the States for the execution of the Plan. The States will also not enter the money market next year. Instead, the Central Government has proposed to raise a consolidated loan, covering the requirements of the Centre, as well as the States, and advanced to each State a loan equivalent to what it has been raising in the past. However, if the response to the consolidated loan is overwhelming, the States may be able to get something more also. It has also been decided that any shortfall in the estimated resources for the Plan will have to be met by the States themselves through additional taxation and other possible means. I have no doubt whatsoever that in view of the grave peril facing the Nation and the overwhelming response of the people to the call of the leaders, it should at all be difficult to raise the additional resources, but more about this when I come to the subject of additional taxation.

Turning to the economic conditions in the States, as in last year, a separate pamphlet has been prepared containing a review of economic trends during 1962. However, it may be briefly stated that the general economic situation during the year 1962 in Andhra Pradesh was satisfactory. There were no signs of deterioration either in agricultural production, the mainstay of the State’s economy, or in the industrial sector. There was, however, an upward movement in the annual average consumer price index numbers by about 2.1%. Similarly the annual average wholesale prices of important agricultural commodities in the State generally showed an upward trend as compared with the previous year except in the case of cereals. There was a considerable improvement in the labour situation in the State during the year 1962 compared to the previous year. The employment situation, however, showed some deterioration in spite of the increase in the average number of employers using Exchanges. The pamphlet containing the review of economic trends also describes the progress of the Plan during 1961-62 and achievements in the various fields of developmental activity.

Agricultural Production

Crops in certain parts of the State were affected by heavy rains, crop diseases and pests—particularly the stemborer. In spite of this, the yields of paddy and other crops during the last two years have been quite encouraging. In order to ensure increased production, steps have also been taken for expanding and intensifying plant protection activities and 25,000 acres were treated by; ;aerial spraying in 1962. It is proposed to further increase the provision for purchase and distribution of pesticides, hand sprayers and dusters and subsidy for serial spraying of crops. While the Central subsidy of 25% for pesticides will continue to be available to all farmers, it has been decided that a further subsidy of 25% may be given by the State Government to small farmers whose holdings do not exceed ten acres. It is hoped that this will enable the small farmers also to take full advantage of the subsidised scheme for distribution of pesticides.

The working of the well subsidy scheme has also been reviewed recently and it is now proposed to raise the quantum of Government assistance to a maximum of Rs. 2,000 per well, the amount being fixed in respect of each district having regard to the nature of soil, cost of labour, sub-soil conditions, water table etc. On satisfactory completion of the well a portion of the loan amount will be converted into subsidy.

Planning and Development

The Hon’ble Members are aware that the ceiling of the Third Five-Year Plan of this State was fixed at Rs.305.00 crores with central assistance of Rs. 200 crores. The balance of Rs. 105 crores representing State’s resources assumes additional taxation measures to the tune of Rs. 53 crores.

In 1961-62, the State implemented a Plan of Rs. 49.67 crores which was Rs. 1.67 crores higher than the original ceiling. In the current year, the Plan outlay will be Rs. 52.54 crores, as against Rs. 49.97 crores originally contemplated. The next year’s Plan ceiling will be Rs. 55.27 crores.

In pursuance of National Policy, the State Plans for 1962-63 and 1963-64 have been thoroughly reviewed and recast, and special priority has been accorded to the following items:-

Agricultural production including Minor Irrigation and Soil Conservation.

power.

Roads.

Medium Irrigation and Flood Control Schemes yielding quick results.

Teaching Hospitals and Medical colleges.

Training Programmes of Technical Personnel and;

Industries yielding results within one or two years.

Our State being primarily agricultural, special emphasis has been laid on the agricultural sector and adequate provisions have been made so as to further accelerate the drive for food reduction which is one of the vital defence needs of the country. In the current year, the Government of India have given an additional central assistance of Rs. 1.74 crores for Minor Irrigation Schemes and Rs. 7 lakhs for Soil Conservation Schemes. On the whole, the State Government will be spending Rs.5.91 crores on Minor Irrigation’s and Rs. 33 lakhs on Soil Conservation.

The position of allotments under major heads of development during the year and in the next year is as follows:-

Next year, the State Government would be spending altogether Rs. 5.42 crores on Minor Irrigation, Rs. 13.50 crores on Power and Rs. 10 crores on the Nagarjunasagar Project. All other Minor and Medium Irrigation schemes, which are likely to be completed early, have been provided for. Provision has also been made for the implementation of Srisailam Project, Kothagudem Thermal Schemes and the Balimela Dam Scheme in addition to other important power projects. Adequate provision has been made in the Industries sector, particularly for the land, drainage and water supply required by the Heavy Electrical Project and the Synthetic Drugs Factory. In order to hope increased food production, sufficient allotments have been made for the development of Fisheries, Animal Husbandry, Dairying and Milk Supply and co-operation. In the Social Services sector, adequate provision has been made for the training of N.C.C. Cadets, Craftsmen, Artisans and Para Medical Personnel. The State has taken all necessary steps in providing necessary funds for civil defence, maintenance of supplies and services, and other measures directly connected with the war effort.

I shall now briefly indicate the position of the financial transactions during 1961-62 and 1962-63 and then proceed to explain the Budget proposals for the ensuing year.

Accounts 1961-62

Receipts on Revenue Account and Revenue Expenditure for the year 1961-62 were Rs. 85.77 crores and Rs. 90.64 crores respectively, thus resulting in a revenue deficit of Rs. 4.87 crores. Capital Outlay for the year amounted to Rs. 33.20 crores, while the public debt rose by Rs. 39.60 crores. The transactions under deposits, loans and advances and other debt heads registered a net outgoing of Rs. 1.65 crores.

Revised Estimates for 1962-63

The original estimates for 1962-63 provided for a total revenue of Rs. 115.47 crores against which the Revised Estimate has now been placed at Rs. 96 lakhs under receipts is the net result of increases under the following heads offset by decreases under certain other heads.

Increases:-

Rs. In lakhs

State’s share of Income Tax 29

Land Revenue 395

sales Tax 87

Other Taxes and Duties 223

Interest 141

Forests 46

State’s share of Union

Excise Duties 81

Dividends from Commercial and

other undertakings 100

These increases were partly counterbalanced by decreases under the following heads:-

Rs. In Lakhs

Stamps 70

Industries 49

Electricity schemes 330

Miscellaneous 458

Grants-in-aid from Central

Government 103

These variations have been explained in the Finance Secretary’s Explanatory Memorandum on the Budget (vide pages 1 to 54).

Revenue Expenditur e:- The Budget Estimates for 1962-63 provided for a total revenue expenditure of Rs.113.72 crores against which the Revised Estimate is now placed at Rs. 116.01 crores. There is thus an increase of Rs. 2.29 crores, which is primarily attributable to increases under Interest on Debt and other Obligations (Rs.544 lakhs), Medical (Rs. 23 lakhs), Public Health (Rs. 16 lakhs), Irrigation (Rs. 28 lakhs), and Pensions and other Retirement Benefits (Rs. 18 lakhs). These have been partly offset by decreases under General Administration (Rs. 40 lakhs), Agriculture (Rs.23 lakhs), Animal Husbandry (Rs. 41 lakhs), Industries (Rs.25 lakhs). Large variations under Interest and Electricity Schemes, both on revenue and expenditure sides are due to certain adjustments in accounts involving re-classification of transactions. Other variations have been explained in the Finance Secretary’s Explanatory Memorandum (vide pages 54 to 125).

Revenue Surplus :- the Revised Estimates for 1962-63 indicate a revenue surplus of Rs. 42 lakhs as against Rs. 175 lakhs envisaged in the original estimates.

Capital Expenditure :- Capital Expenditure for the year is expected to be of the order of Rs. 30.17 crores.

Public Debt

At the end of March, 1962 the Public Debt liability stood at Rs. 258.24 crores. During the current year, the Government raised a fresh Public Loan of Rs. 10.96 crores while Central loans for Plan Schemes and other purpose amounted to Rs. 51.15 crores. After providing for the repayment of installments of loans falling due for repayment during the course of the year , the total public Debt liability at the end of March, 1963 is expected to be Rs. 291.09 crores.

Debt, Deposits , Etc.

The receipts and disbursements under loans and advances, deposits and other debt head transactions during 1962-63 are expected to result in a net outgoing of Rs. 4.66 crores.

Cash Balance

As a result of the transactions under Revenue and Capital heads, which I have just mentioned, the year 1962-63 which opened with a cash balance of Rs. 138.05 lakhs is now expected to close with a minus balance of Rs. 18.03 lakhs.

Budget Estimates for 1963-64

I now turn to the Budget Estimates for 1963-64.

The estimates of revenue and expenditure for 1963-64 provide for a total revenue of Rs. 118.36 crores as against Rs. 116.43 crores in the Revised Estimates for the current Rs. 116.43 Crores in the Revised Estimates for the current year. The improvement of Rs. 1.93 crores is the net result of increases and decreases under Taxes on Income other than Corporation Tax [Rs. 34 lakhs], Land Revenue [Rs.108 lakhs], State Excise Duties [Rs. 56 lakhs], Taxes on vehicles [Rs. 94 lakhs ], Sales Tax [Rs.24 lakhs], Stamps [Rs. 94 lakhs], Interest [Rs. 276 lakhs], State’s share of Union Excise Duties [Rs. 29 lakhs], other Taxes and Duties [minus Rs.217], Contributions towards Pensions and Retirement Benefits [Rs. 47 lakhs], Dividends,

etc., from Commercial and other undertakings [minus Rs.97 lakhs],and other heads [minus Rs. 108 lakhs], Reasons for these variations have been explained in detail in the Finance Secretary’s Memorandum on the Budget [vide pages 1 to 54].

On the expenditure side, the Budget Estimates for 1963-64 provide for a total outlay of Rs. 118.26 crores, as against Rs. 116.01 crores in ;the Revised Estimates. The increase of Rs. 2.25 crores in the expenditure is a result of increase of increase under Appropriation for Reduction of Avoidance of Debt [Rs.177 lakhs], Education [Rs. 25 lakhs], Medical and public Health [Rs.64 lakhs], Agriculture [Rs.42 lakhs], Community Projects [Rs. 40 lakhs], Multi-purpose River and other Irrigation Schemes [Rs.111 lakhs], and Electricity Schemes [Rs.141 lakhs], counterbalaced by reductions under interest due to adjustments in accounts [Rs. 347 lakhs], Public Works [Rs.19 lakhs] and other heads [Rs. 9 lakhs].

The expenditure Budget for 1963-64 includes special additional

grants under the following heads :-

Rs. In Lakhs

1. Maintenance of State Highways .. 75.00

Grants to Zilla Parishads and Panchayat

Samithis for primary and Secondary Education .. 84.50

Compensation to municipalities for loss of

income on tolls and taxation of Motor

Vehicles .. 3.00

4. Dietary charges to patients and purchase

of medicines .. 7.60

Primary Health Centres .. 9.60

Construction of roads in Sugarcane areas. .. 10.00

Capital Outlay [Non-Plan]

All the major schemes of Capital expenditure have been included in the Plan. There are, certain items relaing to Irrigation, Roads, Buildings, Public Health, Industrial Development, Zamindari Compensation etc., which could not find a place in the Plan and are being continued outside the Plan. The next year’s Budget contains a total provision of Rs. 470.13 lakhs for these items as follows:-

Rs. In Lakhs.

Zamindari Compensation 142.41

Capital Outlay on Industrial Development 67.96

Capital Outlay on Irrigation, Navigation,

etc. schemes 37.93

Capital Outlay on Buildings and Roads 146.61

Capital Outlay on Schemes of Government

Trading 48.57

Other heads 26.65

Total 470.13

Loans and Advances (Non-Plan)

A credit of Rs.5.06 crores has been taken in the Revised Estimate for 1962-63 for the recovery of loans and other dues from cultivators of which Rs. 2 crores represent arrears and the balance represents normal recoveries. In the Budget Estimates for 1963-64 credit has been taken for a recovery of Rs. 1.50 crores under arrears of Taccavi and other loans.

Public Debt

The Budget Estimates for 1963-64 have been framed on the assumption that Central assistance for Plan schemes and other purposes next year will be about Rs. 48.25 crores. The provision for repayment of the various loans from the Central Government and the public, which will become due next year, amount to Rs.27.50 crores, as a result of which the public debt liability of the State at the end of March, 1964 is expected to be 311.84 crores which means a net increase of Rs. 20.75 crores over the position as at the end of March,1963.

In this connection it is necessary to mention that it has been decided that the State Government will not float any public loan next year. Instead, the Central Government will undertake open market borrowings both for the Government of India and the State Governments and allot reasonable amounts to all the States. Andhra Pradesh is likely to receive a Special loan of Rs. 11 crores next year from the Centre under this arrangement. The State electricity Board will, however, be permitted to raise about Rs. 5 crores from the market in 1963-64 for its own programmes.

Cash Balance

As I have stated earlier, the year 196-64 is expected to open with a minus balance of Rs. 18.03 lakhs. The Estimates for 1963-64 disclose a surplus of Rs. 10.00 lakhs on Revenue account and a deficit of Rs. 9.70 crores on Capital account. The year is thus likely to close with a minus balance of Rs. 9.78 crores.

Plan Resources 1963-64

As I have already mentioned earlier, the State Plan for 1963-64 envisages a total outlay of Rs. 55.27 crores. The Central assistance for this Plan is expected to be of the order of Rs. 34.40 crores while the balance of Rs.20.87 crores has to be found by the State Government. Unlike previous years, we have a very heavy programme of old loans falling due for repayment next year involving a sum of Rs. 27.50 crores with the result that the Special Central loan of Rs. 11 crores ( in lieu of market borrowings ) will no longer be available for financing the Plan Schemes in 1963-64 as it will be required for the repayment of old loans. Out of Rs. 20.87 crores to be raised by the State Government Rs. 5.87 crores are expected to be contributed by current revenue surpluses and net receipts under loans, deposits , etc., while another Rs. 5 crores will be found by this State Electricity Board through market loans and Rs. 40lakhs from out of its contribution to Depreciation Reserve Fund. The remaining gap of Rs. 9.60 crores will have to be filled by additional resources to be raised through fresh taxation, economies in expenditure and other possible methods.

Taxation

The land tax legislation which was passed by the Legislature originally was further reviewed by the Government and revised by an amending legislation in deference to the wishes of the Hon’ble Members in order to remove undue hardships to the extent possible. It has resulted in a considerable reduction of yield compared to the original estimate. However, it will go a long way in stabilising the finances of the State and fulfillment of Plan targets. I should like to thank the Members of this House for the co-operation and support extended by them in this connection.

Proposals for increase in Motor Vehicles taxation have also since been approved by the House and the relevant legislation placed on the Stature Book. This will further improve the finances.

While presenting the Budget for 1962-63 I had informed the House that a request had been made to the National Council of Appalled Economic Research to enquire into the working of sales tax in the state and make recommendations for improving the receipts from sales tax without affecting, as far as possible, the trade adversely, Dr. P.S. Lokanadhan, Director-General, National Council of Applied Economic Reassert , New Delhi, has accordingly given his report a few days ago recommending measures for improving administrative efficiency and rationalisation of the scope and rate structure of sales tax. I should like to express my grateful thanks to Dr. Lokanadhan for undertaking the work. The report is now under the consideration of Government and I propose to introduce, during the current session of the Assembly, a bill for carrying out the necessary changes.

These proposals, along with; changes made in the Motor Vehicles taxation, are expected to yield an additional revenue of about Rs. 2 crores next year.

It will be necessary to undertake other measures also for raising at least a further sum of Rs. 4 crores in1963-64. One such measure under contemplation of Government is the reorganization and tightening of the arrangements for the sale of Neera Shops. Another possible measure is a suitable levy on non-agricultural lands in urban areas.

Small Savings

The collections from Small Savings, which is one of the important sources for raising the finances for the Plan, have not been according to expectations in the current year due to the diversion of attention of all the concerned agencies to collections for the National Defence Fund, Defence Bonds and Defence Savings Certificates. Even otherwise it is felt that the importance of National Savings has not yet been fully realised by the people, particularly in the rural areas. It is, therefore, proposed that the responsibility for propagation of the message of Small Savings and securing collections should be entrusted in future to local bodies and social organisations who can reach all the nooks and corners of the States more effectively than the purely Governmental agencies.

Ways and Means

The Ways and Means position of the State Government has not been quite happy for the last few years due primarily to the raising tempo of development activities involving, sometimes, the spending of large sums of money at a faster rate than that of collections of the various taxes, recoveries of loans, etc. This has occasionally involved the State Government into huge overdrafts on the Reserve Bank of India. Thanks however, to the timely assistance given by the Government of India and the Reserve Bank of India on all such occasions it has been possible to turn the corner and we now hope that the year 1962-63 will close with a minus balance of Rs. 18.03 lakhs only.

The Government of India, with very large Defence commitments, can no longer be expected to come to the rescue of the State Government with increased loan assistance, ways and means advances, etc., as they have been doing in the past and we shall, therefore, necessarily have to rely on our own ability to raise adequate fund for the Plan as well as other requirements.

Industries

Industrial development has achieved a special significance in the present context and I am glad to say that the need for increasing industrial production has been fully realised by all concerned.

The Singareni Collieries Company proposes to raise its production of coal from 3 million tons at the end of the Second Plan to over 6 million tons at the end of the Third Plan. The Company requires Rs. 25.83 crores for its expansion programme during the Third Five-Year Plan. According to an; agreement recently arrived at between the State and Central Governments, this expenditure will be met by issue of additional capital of Rs. 6 crores to be contributed by the State and Central Governments in the ratio of 3:2 by a loan of Rs. 2.5 crores to be raised by the Company and the rest by loans from the Central Government. The State Government and Central Government will be allotted equity capital of Rs. 3.60 crores and Rs. 2.40 crores respectively. The State Government will be allotted additional share capital against conversion of its existing loan of Rs. 54 lakhs and the rest against cash, for which the Central Government agreed to grant a loan of Rs. 3.06 crores. Under this arrangement, the State Government will retain its present controlling interest in the Company.

The Nizam Sugar Factory has also stepped up its production considerably.

The Praga Tools Corporation is expected to raise its production to Rs. 85 lakhs in 1962-63 as against Rs. 68 lakhs in 1961-62. In addition to the expansion of the existing units, the Company has also acquired a site at Kukatpalli for setting up new units. It is hoped that the difficulties which have so far hampered the progress of this Company will be removed soon and that it will be granted all the finances and foreign exchange required for the various programmes.

The Allwyn Jahi Mills, like several other textile mills in the country, is however reported to be facing some difficulties mainly on account of uncertain conditions in the cotton market.

Some progress has also been achieved in respect of the two Fertililser Project. The Andhra sugars Ltd., which will manage the Fertiliser Project at Kothagudem, have already obtained the approval of the Government of India for foreign collaboration. The land required for the establishment of the factory is being acquired. The State Government are also building a dam across the river Kinnerasani for the supply of water to the project. This project, when completed will be able to manufacture 16,000 metric tonnes of urea per mensem.

The other project which is being located at Visakhapatnam contemplates the manufacture of 3.65 lakhs metric tonnes per annum of Ammonium Phosphate and 16,500 Metric tonnes per annum of prilled urea. A comprehensive project report has been submitted to the Government of India and preliminary discussions have been submitted to the Government of India and preliminary discussions have been held with the Visakhapatnam Port regarding lease of factory site. Negotiations for foreign and technical collaboration are also in progress.

On the recommendation of the State Government, the Government of India, have also, during the year, licensed 18 new units of spinning mills with a spindlage of 12,000 each. It is reported that most of the licensees have already started taking preliminary action for the setting up of these mills. It is hoped that they will complete all the necessary processes within the stipulated time. Otherwise, they will run the risk of the licenses being canceled.

The Co-operative Spinning Mill at Chirala has already gone into production recently.

In spite of the various difficulties in the way of securing machinery etc. the C0-operative Sugar Mills are making a steady headway. Some of them have already started production this year and the others, it is hoped, will go in production during the next season.

The Industrial Development Corporation which was set up two years back for the purpose of promotion and development of industries in the State has applied to the Government of India for industrial licenses for a number of industrial projects. The Government of India have already issued a license in respect of High Tension and Low Tension Insulators Project and a Letter of Intent in respect of Ball, Roller, Tapered and General Bearings. Permission of the Government of India is also expected t be received shortly for an; Integrated Glass Project and a Pig Iron Project. The Corporation is also negotiating with firms in Czechoslovakia, Japan and Hungary for technical collaboration for these projects. The proposal to establish a Pig Iron Project in Andhra Pradesh has been under the consideration of Government for some time. The Technical Committee which was constituted by the Government of India to examine the Report of the National Metallurgical Laboratory, Jamshedpur, regarding the production of foundry grades of pig iron from the raw-materials available in the State has found it a feasible proposition and advised the State Government to study the economies of production in greater detail. The industrial Development Corporation has accordingly applied for a license for the manufacture of one lakh tons of pig iron per annum by low shafat furnace process. The total cost of this project is estimated at Rs. 7 to 8 crores.

The Andhra Pradesh Mining Corporation which has been set up as a wholly State-owned undertaking for systematic prospecting and exploitation of various minerals in the State and also for the promotion of mineral-based industries in collaboration with; the private sector, wherever possible, is at present engaged in the exploitation of iron ores in the Krishna and Kurnool Districts and barytes in; Khammam District. The iron ore is being exported through; the State Trading Corporation of India while the barytes ore raised in Khammam will be supplied to the Barium Chemicals Ltd., Kothagudem. The Corporation is shortly going to take up exploitation of high; grade limestones in Kurnool District. It has also schemes for exploitation of other iron ore deposits, manganese, marble, clay, limestone and other minerals and for the prospecting and detailed investigations of valuable minerals like asbestos, copper and graphite. On the processing side, the Corporation has been sanctioned an industrial license for Cement Unit in Khammam District with a capacity of two lakh tons and is considering schemes for setting up of a lime calcination lant, clay washing plant, marble processing plant, graphite crucible plant, mica and insulating bricks and other medium scale industries based on mineral resources in the State.

the work on the Synthetic Drugs Project is proceeding according to scheduled.

Recently, the Government and the people were greatly agitated that the Heavy Electricals Project at Ramachandrapuram would be abandoned or indefinitely postponed on the ground of some technical difficulties. But thanks to the assurance given by the Prime Minister in reply to our Chief Minister’s letter on the subject, and also the re-assurance given by the Union Minister for Heavy Industries and Steel a few days ago at Hyderabad, we are confident that the difficulties which were apprehended previously would now be got over and the project implemented according to schedule, ushering in, in its wake, a welcome industrial climate.

The Andhra Pradesh State Financial Corporation which extends loan assistance to Medium and Small-scale Industries sanctioned loans to 32 units aggregating approximately Rs. 58 lakhs in 1962-63. The business handled by the Corporation is gradually increasing. The liberalised terms of assistance to small-scale units established in the Industrial Estates which the Corporation introduced in 1961-62 has had a very good response from the public. During the year the Corporation has raised its lending rate from 7% p.a. to 7 ½ % p.a. subject to a rebate of ½ % p.a. for prompt payments.

Irrigation

The execution of all major and minor irrigation projects under progress is proceeding satisfactorily. Regarding the River Waters dispute which; was unfortunately raised by some States, the Government while continuing to reiterate their basic stand are constantly impressing upon the Government of India for early clearance of Srisailam and Pochampad Plan Projects, as under no contingency, can they be further delayed.

Power Schemes

While every effort is being made by the Government and the various corporations and companies for stepping up industrial production, further progress in this field depends, to a very large extent, on the supply of power. Electricity schemes have , however, suffered a certain amount of setback due to the difficulties about foreign exchange, imports etc. Various measures have already been adopted by the government for improving both; the short-term and long-term requirements of power and it is hoped that the situation will improve very soon.

The Tungabhyadra Hydro-Electric Scheme and the Tungabhadra-Nellore Hydro-Thermal Scheme contemplate installation of 8 units of 9 mw. Capacity each out of which 4 units were installed during the Second Plan period and the remaining 4 units are now under progress. These are expected to be commissioned in 1963-64 . it is also proposed to install a 30 mw thermal station at Nellore. Major portion of the pant and machinery has already been received and the erection will commence next year. It is expected to be commissioned by about April , 1964.

The Upper Sileru Hydro-Electric Scheme which envisages the construction off a weir at Guntawada and establishment of a hydro-electric station with two sets of 60mw. Capacity each is also being pushed forward. Orders for plant and machinery have already been placed under Swiss credit while civil works are in progress.

The Kothagudem Thermal Scheme envisages establishing of a thermal station at Kothagudem with two 60 mw sets. Pending receipt of the final sanction of the World Bank which is assisting the scheme financially, preliminary civil works have already been taken up and orders for plant and machinery are expected to be placed next financial year.

Similarly, orders for the Turbo-alternator for the Ramagundam Thermal Extension scheme have already been placed while orders for boilers and accessories are expected to be placed in 1963-64.

It is proposed to install two 10 mw. Gas-turbo sets at Hyderabad to meet, some extent, the acute power shortage during peak and the sets are expected to be commissioned in 1963-64.

Under the agreement reached with the Government of Orissa the dam at Balimela, which is a joint venture of the two Governments, is being constructed by the Orissa Government and necessary funds have been provided both in the Revised Estimates and the next year’s budget towards the share of this Government.

Old Age Pensions

With a view to expediting the issue of orders on the applications for old age pension, the Government have amended the relevant rules delegating the powers of sanction of such pensions to the District Collectors. At present certificate of age has to be furnished according to the entries in the National Register of Citizens or Electoral Rolls. But as entries in such registers are not available in some cases, Government are considering the acceptance of medical certificate testifying to the age of the applicant to mitigate hardship in deserving cases.

Necessary allotments under this scheme as well as under "Brilliant Boys Scheme" announced by me in my last Budget Speech have been made.

National Emergency

Ever since Independence, India, under the dynamic and inspiring leadership of our great Prime Minister has been actively engaged in furthering the economic progress of the country so as to ensure a decent standard of living to its people. The people rightly believed in the policies of peaceful co-existence and non-alignment in the international sphere and internally in creating a socialistic pattern of society under a democratic set-up. But the wanton and unprovoked aggression by the war-lords of China on our sacred soil has rudely shocked us and brought to us an awareness that our defenses should be fully strengthened to enable us to pursue our policies and programmes unhampered. The spontaneous response of the Nation to the call of the prime Minister and determination of the people of the entire country, and in particular the people of this state, to meet the challenge of the aggressor has been magnificent and is a tacit re-affirmation of the faith of the people in our policies and programmes. We are indeed proud of our people who are prepared to make all sacrifices necessary for making India strong, peaceful and great.

The State Peoples Defence Committee, which was set up soon after the declaration of Emergency, and its sub-committees have been regularly attending to the various functions assigned to them, in connection with the collection of funds, increase in agricultural and industrial production, holding the price line, provision of amenities for the fighting forces and their families, etc. Committees on the same pattern have been formed at the District, Muncipal and Block levels to enable the entire population of the state to participate in the defence efforts. I should place on record my appreciation of the volunatry response of the general mass of people in the State specially the peasantry in generously contributing to National Defence Fund and making it possible to achieve the initial target of Rs.3 ½ crores in a short time. The Chief Minister and his colleagues have undertaken extensive tours in the state to enlighten the people about the situation and secure their co-operation in the collection of funds etc. In particular, I am grateful to the Collectors and other officers, Legislators, Chairmen of Zilla Parishad and Samithis, and public representatives and social workers who did commendable work in this regard. I would like to pay a tribute to all sections of Labour for the significant contribution made by them to the defence effort by maintaining industrial peace, increasing production, and contributing generously to the National Defence Fund.

Government are aware of the imperative need for maintaining the morale of our jawans who are fighting heroically for the country. Various measures have been undertaken for the welfare of the jawans and their families. As early as December, 1962, Government have ordered:-

that all unassigned waste lands at the disposal of the State Government should be reserved to soldiers after demobilisation;

that all children of Defence personnel engaged in fighting or posted on the frontier and also the children of those killed or disabled in action in the present emergency, should be exempted from payment of fees; and

that wives and widows of the defence personnel should be given priority in regard to registration and placements for employment through employment exchanges.

Education, Medical and other departments have granted further concessions to these jawans and their families.

Another important step taken by the Government to hold the price line and to ensure equitable distribution of foodgrains and other essential articles at a fair price to the consumers is to open Co-operative Consumer Stores for Government employees who are persons with fixed incomes on a pilot basis in all district headquarters and in Vijayawada. In order to ensure success of the scheme, Government are providing substantial financial assistance to these organisations by way of share capital contribution and provision of working capital, loans through the State Board of India on Government guarantee, adequate managerial staff and above all, advances to Government employees towards "Trade Deposits" with the stores, against which they could make purchases on credit. The institutions have been registered and are functioning. The intention is to extend the scheme to other centres also, in course of time. This scheme involves an outlay of Rs.32.80 lakhs over a period of 2 years, besides the provision of guarantee to the State Bank of India to the extent of Rs.56 lakhs.

For the benefit of the general public also, Government have sanctioned another scheme, sponsored by the Government of India, for organising Consumer Stores in major cities and towns with a population

exceeding 50,000. The scheme is being implemented in 5 towns during the current year and is proposed to be extended to 11 more towns during 1963-64. The entire cost of this scheme amounting to Rs.18.77 lakhs in 1962-63 and Rs.52.51 lakhs in 1963-64 is being met by the Government of India.

The Government of India have decided to build up adequate reserves of foodgrains in order to stabilise their prices and to feed the deficit pockets in the country. At the instance of the Government of India, the State Government have undertaken to procure 2½ lakh tons of rice during 1963 for which necessary funds are being provided by the Government of India and it is proposed to extend this scheme on voluntary-cum-compulsory basis in the districts of East Godavary, West Godavary, Krishna, Guntur, Nellore, Nizamabad, and Warangal.

Following the lead given by the Central Government the State Government have also adopted strict austerity measures in the incurring of public expenditure. These include avoidance of expenditure on heavy building programmes, strict economy in the use of stationery in Government offices, minimising the transfers of staff, reduction in the expenditure on public entertainment and official functions, staggering of maintenance of public buildings, etc. Construction of the new Secretariat building which was estimated to cost about Rs.1½ crores has consequently been postponed. Government have also imposed a virtual ban on the creation of new posts during the period of Emergency except those which may6 have a direct bearing on the war effort. It has also been decided to reduce expenditure on office establishments in the various Departments to the extent feasible according to the nature and requirements of work in each Department. As a part of the austerity drive a 10% cut is proposed to be effected on the Budget provision relating to contingencies and traveling allowances for the year 1963-64 of all departments. All these steps put together are estimated to yield a saving of about Rs.1 crore in the public expenditure.

Conclusion

I have tried to present to the House a complete picture of our financial condition, achievements and aspirations and call made on our financial resources due to the impact of the National Emergency on the Third Five-Year Plan. The plan has now been identified with our war effort and its fulfillment would be in index of our patriotism. The requirements of defence, which of course would have top priority, will to a certain extent impinge upon and curtail the requirements of the civilian population and we all have to tighten our belts and see that the Defence effort is completely successful. The Indian Union finds itself today in a somewhat similar situation as the U.K. in 1940 after entering into war with Germany wherein increased burdens have to be borne by the people for discharging obligations which in normal times would look extremely heavy and even unbearable. John Maynard Keynes, the eminent British Economist, in the following words offered the solution as to how the Nation should pay for the war:-

"In peace time the size of the cake (consumer expenditure) depends on the amount of work done but in war time size of the cake is fixed. If we work harder, we can fight better. But we must consume less".

I thought this quotation particularly appropriate to our case as the size of the plan which is now synonymous with the Defence effort has been fixed for us and it is up to us to find the wherewithal for fulfilling the targets by our sacrifices and efforts. No sacrifice will be great considering that not only the fundamentals of Democracy and peaceful co-existence for which we stand (Panchasheela) but our very independence and our way of life are threatened by an enemy who is unscrupulous and deceitful. Let us not forget that by safeguarding our own freedom and existence for, who lives if India dies and who dies if India lives. May God help us.