Speech of Dr. M. Channa Reddy,
Finance Minister
presenting the Budget for 1966-67
to the Andhra Pradesh Legislature
on the 21st February, 1966.

Introdution

Sir,

Before I present the Budget to the Honourable Members, I beg leave of the House to pay homage to the memory of Sri Lal Bahadur Shastri.

We are meeting today with painful memories of the death of one of the noblest sons of India, Sri Lal Bahadur Shastri. Sri Shastri will go down in history as the symbol of Indian determination to defend the integrity of the country as well as our unflinching eforts in pursuit of peace. His triumph at Tashkent will ever remain green in the membory of mankind as the triumph of reason over passion, and of peace over war, and the crowing testimony for the policy ofg peaceful co-existence enunciated by his illkustrious predecessor Sri Pandit Jawaharlal Nehru.

On this occasion we recall to our minds, the courage, fortitude and spirit of sacrifice shown by our armed froces on the battle front in the recent unproviked conflict created by Pakistan. In all solemnity we pay our homage to all those who laid their lives in the defence of the intgegrity of our country and convey our heartfelt condolonces to the members of the bereaved families. Our armed forces have triumphed over the machine inspite of heavy odds. The people of Andhra Pradesh are indeed proud of them and we convey our appreciation and greetings to all of them.

While we mourn the loss of Sri Lal Bahadur Shastri as citizens of the biggest democracy, we should feel grantified at the degree of maturity that Indian parliamentary democracy has attained under the nursing care of Sri Nehru for a period of 17 years which enabled us to choose leaderlship in historic kcontinuity with great dignity and high sense of purpose which can be an examploe to any countryin the world. In Srimathi Indira Gandhi, the dynamism of Indian life and the idealism of Indian tradition find a harmonious blending. We offer her our felicitations and assure her of our cooperation. We have no doubt that under her leadership our country would make significant strides towards the goal of establishment of peace in the world and a socialist society in our country through triumphs of democracy.

I shall now briefly review the economic situation and then proceed to deal wiht the financial position and Budget proposals for the coming year.

Economic Situation

The general economic condition of the State which was fairly satisfactory in the early part of the year, suffered very serious set backs later due to the situation created by the conflict with Pakistan and also the failure of rains in most parts of the jcountry and the State in particular. The development plans also generally suffered due to the preoccupation of the country with defence efforts and shrinkage of the overall economic and fianncial resources. Although somewhat away from the scene of actual conflict,

Andhra Pradesh also had its due share of difficulties and problems created by these unexpected events.

Seasonal Conditions:-Both the monsoons practically failed throughout the State. The failure of the North East monsoon was particularly catastrophic. As a result, serious damage was caused to both food and cash crops in several districts of the State Anantapur and Chittoor in Andhra and Khammam and Nalgonda in Telangana were the worst sufferers.

Industrial Production:-In spite of the situation created by the National Emergency, credit curbs and bottle necks in the movement of finished products, industrial production in 1965 was better than in 1964 and there was a general increase in the production in several industries.

Labour Situation:-As regards labour situation, there was some improvement over the previous year. The number of work stoppages was 113 as against 120 in the preceding year. The number of workers involved in these stoppages in f1965 was 31,034 as against 84,382 in 1964 while the loss of man-days was 4,91,780 as against 5,17,894 in teh previous year.

Employment Situation:-There wasw also considerable improvement in the employment situation mainly due to the openings created in the establishments under Government control which were able to provide employment for k23,684 persons as against 20,769 in the previous year. Private Sector undertakings were also able to provide new avenues of employment to 2,811 persons in 1965 as against 1,841 in 1964.

Wholesale Price:-The wholesale price index in 1965 showed mixed trends, as compared to previous year. For instance, the prices of rice and wheat showed downward trend as a result of the regulatory measures adopted by the Government. On the other hand, considerable increase was noticed in the prices of white jowar, bajra, ragi and pulses in particular. The price index for cane jaggery fell by 16% while sugazr prices showed a marginal increase of 0.9%. Oil seeds also registered higher prices ranging between 40% in the case of copra and 20% in the case of groundnut. Same mixed trends, i.e., rise in some cases and fall in some other cases, were noticed in the wholesale prices of several other commodities.

Account 1964-65

Actual Revenue Receipts in 1964-65 amounted to Rs.142.69 crores as against Rs.142.69 crores anticipated at the time of framing the Revised Estimates for that year. Expenditure, on the othe hand, fell shot by Rs.11.98 ducing a Revenue Surplus of Rs.4.44 croes. Capital outlay on both Plan and non-Plan schemes was of the order of Rs.43.42 crores, while the Debt Head transactions relating to Debt, Deposits, Loans, etc., resulted in a net incoming of Rs.37.14 crores and the year closed with a cash balance of Rs.6.13 crores.

Revised Estimates 1965-66

The Budget Estimates for 1965-66 provided for a total Revenue of Rs.154.53 crores and Expenditure of Rs.161.23 crores thusd revealing a deficit of RS.6.70 crores on Revenue Account. Revenue Receipts are now expected to be Rs.152.35 crores while Expenditure has increased to Rs.165.86 crores as a result of which the deficit for the year is now expected to be about Rs.13.51 crores. The decrease of Rs.2.18 crores in Revenue is the net result of a fall of Rs.5.17 crores under Land Revenue and of Rs.2.25 crores under Central grants for Plan Schemes, and increasede receipts of Rs.5.24 crores under Sales TAw (Rs.2.80 crores), Stamps (Rs.73 lakhs), Motor Vehicles Tax (Rs.66 lakhs), Forests (Rs.44 lakhs), and other Heads (Rs.61 lakhs).

Collection under Land Revenue have suffered due to the failure of rains which necessitated sanction of remissions on a large scale and slowing down of the collection of arrears. The reduction under Central grants for Plan Schemes was, however, covered by a corresponding increase under Sales Tax, Stamps, Motor Vehicles Tax and Forests improved mainly due to the rise in prices and tightening up of the administrative machinery.

The increase of Rs.4.63 crores in Revenue Expenditure is the net result of the increases and decreases under th following heads:-

(Rs.Crores)

Full details of variations under individual heads will be found in teh Finance Secretary's Explanatory Memorandum on the Budget.

Capital Outlay:- The Budget provided for a Capital Outlay of Rs.50.66 crores for PlanSchemes and Rs.5.06 crores for non-Plan Schemes. Corresponding figures for the Revised Estimates are Rs.55.47 crores and Rs.8.26 crores, respectively. In the case of Plan Schemes, increases have occurred under the Nagarjunasagar Project and the Tungabhadra High Level Canal. As Against the original estimate of Rs.18 crores, which was later reduced to Rs.17 crores, the Government of India have finally agreed to raise their assistance for Nagarjunasagar Project tjo Rs.20 crores. As regards Tungabhadra High Level Canal, the Government of India have been good enough to provide additional financial assistance of the order of Rs.1.6 crores, in view of the early results expected from this Project. Increase in the non-Plan expenditure thas occurred mainly under construction of godowns on behalf of the Government of India.

Debt Head Transactions:- Debt, Deposits, etc., transactions revealed a net incoming of Rs.48.09 crores.

Financial Position of the State during 1965-66

As I have already stated earlier, we had a comfortable opening balance Rs.6.13 crores on 1st April 1965 while the year is now expected to close with a minus balance of Rs.23.02 crores which means a worsening of the order of Rs.29.15 crores in the overall financial position of the State. This was partly due to the increase in the Revenue Deficit from Rs.6.70 crores to Rs.13.51 crores in the Revised Estimates. The rest of the difficulties have arisen on account of the following factors:-

(1) In view of their importance, we had made a provision of Rs.7.4 crores for the following Power Schemes, although the Government of India had indicated that their assistance would be limited to Rs.3 crores onloy resulting in a shortfall of Rs.4.4 crores:-

(Rs.crores)

(2) As far back as 1962, the Planning Commission had advised the State Government to increase the outlay on Minor Irrigation from Rs.18.26 crores to Rs.28.26 crores on the understanding that the Planning Commission would try to find additional Rs. 7 crores over and above the Central assistance already promised for the Third Plan and the balance of Rs.3 crores would have to be found by the State Government by internal admustments within the Plan. We were able to spend about Rs.21 crores during the first 4 years of the Plan, leaving a balance of Rs.7.26 crores to be spent this year. The Government of India, however, expressed their inability to find this additional money and, after a great amount of persuasion, have agreed to increasethe Central assistance on this account by Rs.4 crores. This has resulted in a shortfall of Rs.3 crores under Minor Irrigation.

(3) Provision for the development of ayacut under the vaious irrigation projects had to be revised from Rs.1.29 crores to Rs.2.43 crores thus resulting in a an excess expenditure of Rs.1.14 crores for which funds have to be found by the State Government.

(4) Unsatisfactory monetary conditions in the country prevented the State Government and the State electricity Board from raising open market loans in accordance with the origianal programme. There was a shortfall of Rs.3.9 crores in the net collections under the two loans.

(5) Shortfall in Plan Resources - Rs.10.30 crores.

The Revised Estimates for 1965-66 were also largely influenced by the economic and political conditions through which the country has passd during the year. Special steps were taken for mobilising the resources and for observing economy in public expenditure. I shall montion only a few of them.

(a) Besides placing a total embargo on the creation of new posts, except where such posts are necessary for the execution of work in the field, it has been ordered that all office establishments should be reduced by 10% and that the regulr staff thus rendered surplus should be absorbed in teh departments like Civil Supplies, etc.

(b) Similrly, expenditure on office contingencies, etc., has been ordered to be reduced by 10%.

(c) The Departments have been asked to stop purchase of vehicles and also to control the expenditute on petrol, etc, on teh existing vehicles.

(d) Construction of buildings which have not yet been started is required to be postponed while the works already in progress hve been ordered to be slowed down.

(e) All Government servants are now required to contribute additional amounts to Provident Funds at the following rates:-

Government servants drawing salaries upto

Rs.600 per month, at an additonal rate of . . 3%

Government servants drawing salaries bet-

ween Rs.600 and Rs.1,000 per month, at an

additonal rate of . . . . . . 4%

Government servants drawing salaries above

Rs.1,000 per month, at an additional rate of . . 6%

Budget Estimates 1966-67

I have already explained the background against which the Revised Estimates have been framed. It is expected that the conditions next year will improve and that the country will not be faced with the economic and political difficulties whihc arose during 1965-66. Economy measures will, however, continue to be enforced rigorously and it is hoped that the full benefits willbe derived during the course of 1966-67.

Revenue Receipts:- The Budget provides for a totasl Revenue of Rs.174.24 crores as against Rs. 152.35 crores in the Revised Estimates, the increase having occurred under the following principal heads:-

(Rs. crores)

Revenue Expenditure: The expenditure Budget envisages a total outlay of Rs.173.93 crores as against Rs.165.86 crores in the Revised Estimates for 1965-66, as follows:-

(Rs. Crores)

The increase in the Ordinary Expenditure in 1966-67 is accounted for by:

i. Provision for committed expenditure, i.e.,

recurring expenditure involved in continuing

and maintaining the Third Plan Schemes Rs.14.5 crores

(ii)Increase in dearness allowance was sanc-

tioned from 1-6-1965. Its incidence, for

8 months in the current year is reflected

in the Revised Estimates. Next Year’s

Budget makes provision for a full year

involving an excess of Rs.2.5 crores over

the Revised Estimates. Rs. 2.5 crores

(iii)Increased provisions under the following

Heads :-

a. Teaching grants to Zilla Parishads and

Panchayat Samithis Rs.56 lakhs

a. Maintenance of roads Rs.50 lakhs

a. Grant to the Municipal Corporation of

Hyderabad Rs.10 lakhs

a. Grant for school and college buildings Rs.20 lakhs

a. Hospital requisites,including diet to

patients and beds Rs.39 lakhs

Revenue Surplus:- Against the Revenue Deficit of rs. 13.51 crores in 1965-66, the Estimates for next year are expected to reveal a surplus of Rs.31 lakhs.

Capital Outlay:- Principal items of Capital Expenditure in 1966-67 are as follows :-

Irrigation

(Rs. Crores)

Nagarjunasagar Project 8.20

Kurnool - Cuddapah Canal 0.12

Tungabhadra High Level Canal 1.98

Pochampad Project 1.20

Thandava Reservoir 0.43

Power

Upper Sileru Hydro Electric Scheme 2.48

Srisailam Hydro Electric Scheme 4.50

Balimela Dam 1.75

These Power Schemes are in addition to the following Schemes which will be executed by the State Electricity Board and for which necesswary provison is being included under Loans and Advances:-

Lower Sileru Hydro Electric Scheme.

Kothagudem Thermal Power Scheme.

Ramagundam Thermal Power Scheme.

Industries

(Rs. Crores)

Andhra Pradesh Industrial Development Corporation 1.05

Industrial Development Areas . . 0.42

Borrowings:- In view of the experience in the current financial year, the open market borrowings next year are proposed to be limited to Rs.9.5 crores in the case of Government and Rs.2 crores in the case of the State Electricity Board. These will, however, be supplemented by Central loan assistance and loans from Institutions like the Life Insurance Corporation of India. The gross borrowings next year will be about Rs.75.24 crores out of which Rs.36.63 crores will go towards repayment of old loans leaving Rs.38.61 crores for expenditure on Capital programmes.

Deposits, Loans, ETc. :- Transactions under Deposits, Loans, Remittance, Suspense, etc., are likely to show a net incoming of Rs.12.40 crores.

Cash Balance:- As against the opening balance of minus Rs.23.02 crores, the year is expected to close with a minus balance of Rs.11.68 crores which shows an improvement of Rs.11.34 crores in the overall financial position of the State. We are still having some giltedged securities in our investment portfolio which help in obtaining temporary advances from the Reserve Bank of India. The face value of such securitieis available at the moment is Rs.6.05 crores. The rest of the minus cash balance will have to be covered by further effrorts towards economy in expenditure and improvement of revenues.

Public Debt :- Total Public Debt liability at the end of March 1967 wilol be about Rs.462 crores.

Small Savings :- The gross and net collections under various types of National Savings during the past few years, have been as follws:-

(Rs. Crores)

Gross Net

1961-62 . . . . 13.75 2.37

1962-63 . . . . 13.42 (-)0.13

1963-64 . . . . 14.25 2.44

1964-65 . . . . 14.34 1.27

1965-66 (Upto end of . . 13.73 2.08

December, 1965.)

The Hon'ble Members will, I am sure, agree with me that the results are not very encouraging for a State like Andhra Pradesh. Certain other States, Maharashtra in particular, have done very well in the field of mobilisation of savings kin rural areas and from industrial labour.

It may be stated that success in our efforts to mobilise lksmall savings depends mainly on two factors-(a) financial capacity of an individual and (b) desire on the part of an individual to save and also his habit to save. While the Government is aware that the very nature of income distribution, as evidenced by the Mahalonibis Committee Report, limits the capacity of an individual to save among low income groups. However, as the "propensity to save" is dependent on various psychological factors, the Government proposes to launch a special drive for the mobilisation o small savings and I would appeal to the Honourable Members to extend their full support to this drive and make it a success.

Review of Third Plan

We are now in the final year of the Third Five Year Plan which will be completed at the end of March 1966.

The position of outlays under the principal heads of development during the last three Plans has been as follows:--

(Rs. Crores)

Iam separately circulating for the information of the Honourable Members a detailed Memorandum explaining the progress of schemes in various ectors and physical achievements during the Third Plan period.

The outlay of Rs.350.71 crores in the Third Plan hahs been financed as follows:-

(Rs. crores)

1. Balance from current Revenues . . 12.60

2. Yield from new taxes . . 47.16

3. Open Market Borrowings by the State and

Public Undertakings . . 58.20

4. Share in Small Savings . . 7.49

5. Miscellaneous Capital Receipts including

withdrawals from Reserves, etc. . . 5.07

6. Total resources raised in the State field

(total of 1 to 5 above) . . 130.52

7. Central assistance . . 220.19

------------------- Total . . 350.71

--------------------

Annual Plan for 1965-66

The annual Plan for 1965-66 as originally framed contemplated an outlay of Rs.100.33 crores. During kthe course of the year, however, it was found necessary to increase the outlays on the Nagarjunasagar Project, Tungabhadra High Level Canal and the Power Schemes, apart from minor adjustments under several other Heads.

The following statement will give an idea of original and revised sectoral allocations.

(Rs. crores)

Annual Plan for 1966-67

In normal circumstances, the Annual Plan for 1966-67 should have been of the order of about Rs.125 crores. Inview, however, of the great strain on the financial resources of the Central Government and the State Government due mainly to the defence requyirements, funds needed for importing food grains, increased expenditure on dearness allowance, loss of revenue due to the drought conditions and expenditure on relief measures, the Plan outlay for 1966-67 had to be limited to Rs.79.25 crores. The Government of India have promised to provide Rs.50 crores and the balance of Rs.29.25 crores has to be raised by the State Government. I have already mentioned that the year f1966-67 is likely to close with a minus cash balaznce of a;bout Rs.11.68 crores which in effect represents the gap between the proposed outlay and abailable resources for 1966-67. Nearly half of this gap will be covered by gilt-edged securities and the rest of the gap together with any addition that may become necessary on account of the revision of dearness allowance and possibly the scales of pay of the N.G.Os. will have to be covered by economy in expenditure and improvement in collections of land revenue, sales tax, motor vehicles tax, etc, over and above what has been provided in the Budget. This is absolutely necessary for executing the next year's Plan.

Plan Resources :- The statement below indicates the position of financial resources for the Revised Plan for 1965-66 and the Annual Plan for 1966-67:

Agriculture

The activities of the Agriculture Department fall under the following four heads, namely Agricultural Production and Research, Land Development, Minor Irrigation and Soil Conservation. The total expenditure under all these heads in f1965-66 will be about Rs.4.74 crores while the provision for 1966-67 is Rs.5.06 crores.

The Intensive Agricultural District Programme which was started in West Godavari District in 1960-61 with a view to increasing the agricultural production in areas having optimum potentialk within the shortest time possible, has made rapid progress during the last five years. An additional production of f1,65,925 tonnes of paddy valued at Rs.8.30 crores has been recorded during 1964-65. The yield of sugar has increased by 2,87,f192 tonnes valued at Rs.1.5 crores. The yield in the case of other crops cvered by the programme lkhas also improved form 16 to30 percent with corresponding financial benefits to the farmers.

Our State occupies an important position with regard to the production of commercial crops, such as cotton, oilseeds, sugarcane, tobacco, etc. Intensive efforts are therefore, being made for increasing the production and improving the quality of the various commercial crops.

Chemical Fertilisers :- The programme of distribution of chemical fertilisers which was limited to about 2 lakh tonnes in 1960-61 has been ksteadily expanding over the years and it is proposed that about 6 lakh tonnes of nitrogenous fertilisers in terms of ammonium sulphate will be distributed during 1965-66. Some difficulties were esperienced last year and also in the current year in financing the purchases of these fertilisers as the Government of India are unable to provide credit faclilities to the extent required. An alternative scheme under which co-oprative organisations will be brought into picture more actively not only for the purpose of distribution of fertilisers but also for securing credit facilities, is being considered and is expected tgjo be finalised very soon.

Food Situation

The Government of India and the State Governments are doing their best to meet the situation that ahs arisen due to combination of a number of difficult factors. With the easing of international tension and establishment of more peaceful atmosphere, and with the speeding up of promised food aid from U.S.A. and other countries, the Government hope that the situation can be met with confidence.

As stated already, the failure of the monsoon has hit most of the districts in this State and has created severe drought conditions. Consequently, though our State is traditionally ;surplus in rice and in several other foodgrains, it has to meet a difficult good situation during 1966. To tide over the shortage of foodgrains, to conserve available foodgrains to regulate their distribution as well as to regulate the prices there of, the State Government have taken several measures. They are briefly indicated below:

Procurement:

The scheme of procurement of paddy by levly from producers in nine border districts of Srikakulam, Nellore, Chittoor, Anantapur, Kurnool, Adilabad, Medak, Mahaboobnagar and Nizamabad has been in force together with a separate scheme for procurement of rice from millers in all the 20 districts. In view of the administrative and other difficulties which have been noticed in the proper enforcement of levy from producers, the whole question has been reviewed recently and it has been decided to abolish the levy procurement from the individual cultivators altogether and to restrict the procurement of rice from millers only.

The Food Corporation of India has been the agent of the State Government for procuring the grains both under paddy and rice levy schemes. The Corporation will pay for the stocks procured, store them and release the same to dealers and others as directed by the Government at the release prices approved by the Government.

During the current season 2,68,447 tonnes of rice and 6,042 tonnes of paddy have already been procured, out of whihc 1,07,000 tonnes of rice and 5,825 tonnes of paddy have been exported through the Food Corporation while kthe balance is being utilised for meeting the local demands and for building up buffer stocks.

Enforcement:

Movement of rice outside the State is regulated under the Southern States (Regulation of Export of Rice) Order, 1964. Certain restrictions have also been placed on movement of rice within the State. A number of check posts have been kestablished besides creating 14 mobile squads, for the purpose of preventing smugglinhg of rice and foodgrains to areas outside the State.

Prices:

Government have issued price control orders fixing the maximum wholesale and retail prices for rice and paddy. Price have also been notified for broken rice. Sale of rice or paddy at prices in excess of the rates notified has been made an offence.

Prohibition of Conversion into Boiled rice:

Government have also promulgated orders prohibiting manufacture of boiled or par-boiled rice from Akkullu as well as from allvarieties of paddy in the districts of East Godavari, West Godavari, Krishna and Guntur and from Palasannalu paddy in all the Telangana districts, except under permits.

Statutory Rationing:

Following the national policy, the State Government have introduced Statutory Rationing with effect from 1-2-1966, in the first instance, in the twin cities of Hyderabad and Secunderabad and in Visakhapatnam town, including specified adjoining villages in respect of them. Rice and wheat have been declared as rationed articles and a portion of ration will be issued in the form of wheat. Provison has also been made togive additional rationto families wiht an income of Rs.200 or below per month.

Co-operation

In the Agricultural sector, apart from other factors, non-availability of credit has been a great hurdle. The financing organisations, such as scheduled banks, etc., both in public and private sector, have to come in a big way to pump in necessary credit into this sector.

Besides the State Co-operative Bank at the head quarters, there are at present 25 Co-operative Central Banks at district and regional levels and 14,696 Agricultural Credit Societies with a membership of 30 lakhs at the village level. 24,856 villages out of a total of 27,084 villages in the State are now served by Co-operatives. The remaining villages will also be covered during the Fourth Plan period. Credit facilities made available in 1965-66 will be of the order of Rs.30 crores while th eprogramme for 1966-67 contemplates distribution of a total credit of Rs.36 crores. In addition, long-term credit facilities are being provided to the extent of Rs.6 crores in 1965-66 and Rs.4.7 crores next year through the Central Co-operative Land Mortgage Bank by organising Primary Land Mortgage Banks at the rate of one for each Taluq. Central Land Mortgage Bank has also undertaken specfiaqlschemes for kthe development of land in the Project areas and for raising mango gardens. These will particularly benefit the ayacutdars in the Kurnool-Cuddapah Canal area and in the Kadam and Nagarjunasagar Projects, besides, several other smaller projects.

Market Cooperatives are also being assisted through State participation and financial assistance for construction of godowns and installation of processing plants.

Government also sanctioned an advance of Rs.one crore to the Andhra Co-operative Marketing Federation for taking up procurement of paddy through the District Co-operative Marketing Societies. These Societies are now assisting the Food Corporation in the procurement of rice. The Marketing Federation has also been permitted to utilise part of the funds for the procurement of other foodgrains such as maize, greengram, blackgram, jowar, etc. In view of the failure of groundnut crop in the current year, Government have also sanctioned an advance of Rs.50 lakhs to enable the Marketing Federation to procure and supply groundnut seed to the agriculturists.

In 1964-65 a scheme was undertaken for th consruction of godowns with a view to improving th storage facilities in the Co-operative Sector for the supply of agriculrural requisites including feritilisers. The scheme is being financed by the Government of India. 53 godowns have already been completed.

Forests

Nature has endowed Andhra Pradesh with large tracts of very good forest. There is, however, much to be done for their propoer exploitation in a scientific manner and also for the processing of the forest produce like timber eucalyptus, matchwood, etc. It is necessary to open up the forests by having a net work of roads.

The Forest Guards and other smaller employees in the Department are not at present having any quarters. In some cases salaries and allowances having any quarters. In some cases salaries and allowances have also not been revisd in keeping wiht the increases in the dearness allowance granted to othe3r employees of their class. It is proposed to attend to all these problems during the course of the next year.

Coffee plantation is also an important source of forest re4venue. We started coffee plantations in 1961 on a small scale and the total yield in the current year is expected to be about 30 tonnes which is likely to go up by another 10 to 15 tonnes next year.

Irrigation

Five major and twentythree medium spillover schemes included in teh Third Plan are expected to be completed by the end of March 1966, there by bringing the total potential under such projects to 9.98 lakhs acres. The actual utilisation is, however, likely to be of the order of 8.3 lakhs acres. The Annual Plan for f1966-67 includes 25 major and medium Irrigation and Flood Control Projects which are being carried over from Third Plan to the Fourth Plan. The major projects included in the Plan are the Nagarjunasagar Project, the Tungabhadra High Level Canal Stage I, the Pochampad Project and the Srisailam Project.

The work on the Nagarjunasagar Project is proceeding according to schedule. The Government of India were able to provide additional assistance to the extent of Rs.10 crores for this project in the current year which will enable the completion of the Dam up to the Spilway level thus enabling fulfilment of our original commitment of creating a potential of 5.79 lakhs acres by June 1966. This will help in bringing an additional 2 lakhs acres in second crop in the Krishna Delta.

The Tungabhadra High Level Canal is making steady progress. By the kend of the current year we shall be spending about Rs.l5.46 crores on this scheme. The Midpennar North Canal hahs already been completed and thrown open for irrigation. The Mid-Pennaar South Canal has ben excavated to the extent of 20 miles and the balance of the work is expected to be completed by June 1966 by which date it is hoped to complete the main canal as well as the Pedda Hagari and Chinna Hagari aqueducts and Urabakonda Cut. The Government of India were good enough to provide additional assistance of Rs.1.6 crores for this project also in f1965-66.

Due to pressure of demands for several projects and schemes, it hahs not been possible to provide more than Rs.1.20 crores for the Pochampad project next year. Its progress will, however, be reviewed during the course of the year and if necessary, Government will be prepared to provide additional funds having regard to the progress of the work.

The work of excavation of diversion tunnel, diversion channel, and of foundations for the dam under the Srisailam Project is in progress. The construction of coffer dam which was taken up in November 1965 if expected to be completed by June1966. A provision of Rs.4.5 crores has ben made next year for completing the coffer dams and the deep foundations and for laying transmissionline.

Minor Irrigation

Minor Irrigation Schemes are being executed through the Public Works Department, the Board of Revenue, and also the Zilla Parishads. The Annual Plan for 1966-67 makes a provision of Rs.6.41 crores for Minor Irrigation Schemes.

Power Schemes

The Annual Plan 1966-67 includes a provision of Rs.31 crores for the following Power Schemes:-

(Rs. lakhs)

. .

It is expected that during d1966-67 it will be poissible to increase the installed capacity by 300MW as follows:-

Upper Sileru Hydro Electric Scheme . . 120 MW

Kothagudem Thermal Scheme - 2nd Unit . . 60 MW

Kothagudem Thermal Scheme - II Stage . . 120 MW

------------------- 300 MW

-------------------

Works on the follwing transmission line and substations are in progress:-

Cuddapah - Madras Border . . 220 KV lines

Upper Sileru - Kothagudem . . 220 KV lines

Upper Sileru - Simhachalam . . 220 KV lines

Warangal - Hyderabad . . 132 KV lines

Cuddapah - Chittoor . . 132 KV lines

Kurnool - Srisailam . . 132 KV lines

220 KV Sub-station at Nagarjunasagar, and Gazuwaka.

Most of these schemes are being executed by the State Electricity Board for which the Government will provide necessary loan capital to the Board to the extent of Rs.17.53 crores.

The Board is expected to supplement its funds to the extent of Rs.6 crores from its internal resources and through Open Mrket and other borrowings.

It is also proposed to electrify 700 villages and 13,500 aricultural pump sets during d1966-67.

It was wiht great difficultyr that the Electricity Board was able to maintain the supply of power by running the two Gas turbo Sets with a capacity of 20 MW for about 20 hours a day as against 2 or 3 hours per day during the peak period. The operation cost of these sets is very hgh as a result of whihc the Electricity Board will be losing about Rs.1.3 crores in 1965-66. Recently, the Board has imposed 30% cut in power due to the loss of generating capacity as a result of the failure of rains in the Machkund and Nizamsagar areas.

Industries

Honourable members are aware of the progress of industrial development of the State during the last few years. The Central sector projects, such as, the Bharat Heavy Ele4ctricals, Synthetic Drugs and Hindustan Machine Tools commenced production during the last year, and the first of them was inaugurated by the late Prime Minister during his visit to the State in December last. A number of other projects are also under contemplation, the most notable of them being a complex to be set up by the Atomic energy Commission for the manufacture of electronic instruments and the fabrication of fuel rods for the Atomic Power Plant. It was, in this connection that Dr. Homi J.Bhabha, the then Chairman of the Atomic Energy Commission visited the State and was greatly impressed with the facilities obtaining here. In this connection, we would like to pay our tribute to the memory of this great Scientist who had been the leader of Atomic Energy Programme in India and had helped to develop a new scientific spirit amongst our young generation.

Members are also aware of the efforts the State Government has been making for locating the Fifth Steel Plant in the public sector at Visakhapatnam. We hope that a favourable decision would be taken very soon by the Government of India for locating it at Visakhapatnam both on its own merits as well as on the recommendations made bky the high level experts of the A.A.C. Team. Further the assurance given by the late Prime Minister Shri Lal Bahadur Shastri, strengthens the confidence of the State Government that the Steel Plant at Visakhapatnam will soon become a reality.

State Government , while having a measure of satisfaction at the industrial development of the State, are not entirely satisfied with the tempo as well as the pattern of such development. Industrial development has so far been largely confined to urban areas such as Hyderabad, Visakhapatnam and Vijayawada and a few other towns like Kothagudem. Due to this isolated pattern, the impactof transformation generated through this development has not been felt on the economy all over the State. Government are anxious to disperse the industries as widely as possible and for this purpose propose to acquire large areas inimportant town sof the State for developing the Industrial Area. The State Government hopes that thought such a process new potential "growth-centres" could be set up which will tend to diffuse industries more evenly throughout the State.

Government are also anxious that the capital intensive heavy industry shoudl not work in isolation but should generate ancillary industrial development. They have therefore suggested to industries, such as, the Systhetic Drugs, the Ship-Building Yard, the Heavy Electricals and H.M.T.the setting up of functional industrial estates where accessories and subsidiary items could be manufactured by the localindustrialists. This process of ancillary industrial development is also necessary to avoid the growth of the monopolistic structure to whihc attention has been recently drawn both by the Monopolies Commission as well as in the presidential address of the Congress President at Jaipur.

The small scale industries in the State have ben going through a period of crisis due to the non-availability of essential raw materials such as non-ferrous metals due to shsortage of foreign exchange. This shortage seems to beas essential concomitant of industrial growth and it is imperative that our limited foreign exchange reservesshold be conserved and utilised and for the promotion of basic industries.

The psychology of undue dependence on foreign aid is also detrimental to the long range development of the country. It is therefore a matter of satisfaction that the national laboratories are now actively engaged in undertaking research to find out necessary indigenous substitutes kfor scarce raw materials that arebeing imported. This is a process that must be taken up in right earnest and as a challenge to the inventive spirit of the country. Aluminium, for instance, can substituted inplace of copper and it should not be difficult to find, in most cases, indigenous substitutes for imported raw materials.

I have no doubt that our industrial engineers and research scientists would cooperate in providing new materials for the manufacturing industry and thus help to create a sense of self-reliance which would free the country from the recurring crises which are generated by political oscillation of foreign Governmental plicies.

The State Government are fully aware that while Industry is to expand considerably in the next few years our State is, and wil continue to remain, predominantly agricultura. The agricultural economy which is now undergoing the process of stabilisation will necessarily form a strong formation for the development of the industrial economy. Unless a strong agricultural base is set up industry cannot flourish while without development of industry, agriculture itself will remain in a stagnant condition.

It is a matter of satisfaction to the State Government that more and more yound men in the rural areas are coming forward to take part in the industrial programmes of the State. Such a programme which aims at setting up of agro-industries would transform our agricultural economy into an agro-industrial economy.

The State Government also propose to set up shortly lan Agro-Industrial Corporation which would further help this transformation by providing the necessary tools and equipment which are vital for this purpose. I would make a special appeal to the Honourable Members of this House to help in this transformation by impressing upon the public the need for a new climate of agro-industrial development al over the State.

The policy of developing basic industry in the public sector has now been accepted and it is a logical continuation of this policy that the public sector should also participate in the setting up of major consumer industries. Such a growth should not be looked upon as encroaching on the rightful domain of the private sector but memmrely as an evidence of the determination of the Government to ensure that goods relquired by the common people are made available at reasonable prices and are free from any monopolistic price structure.

Even the savings of the public which are now in the control of private financial institutions should ultimately be utilised for public purposes both in the interest of speedy growth and to prevent any monoploy growth.

While these are largely matters for the Government of India to decide, the State Government hope that necessary steps would be taken in this direction in the coming years.

Abolition of Central Stores Purchase Department :- The State Government purchases several items ranging from pins to comples equipment at an annual cost of aproximately Rs.40 crores. Some Heads of Departments have already been empowered to make purchases for certain specialised items such as boilers, transformers, heavy earth moving machinery, tractors, etc. In all other cases, such purchases are being routed through a special Department of Stores Purchase and Industrial Marketing which is an adjust of the Industrieis Departmment.

There have been several complaints of delays in the purchases of these items, which become particularly meaningful in the present tempo of development where speed is essential in such matters.

All these problems have ben carefully considered and is has been recently decidedto empower all Heads of Departments to make purchases of the specialised articles required by them.

In the case of general items which are required by all Departments, such as, stationery, livery, furniture andoffice equipment and where bulk purchases would be economical, it has been decided to continue the present practice but to entrust the work tjo the Stationery Department which is already under the control of the Director of Printing.

The need for a separate Department of Stores Purchase would no longer exist and that Department is therefore proposed to be abolished.

It will be appreciated that this decision has ben taken solely wiht a view to avoid the delays that seem to be inevitable in the present procedure and also to ensure that the purchasing department takes full responsibility for their specialised requirements.

India Productivity Year

An important event in 1966 is the observance of the India Productivity Year by the National Productivity Coucil. It is also significant that productivity which was a concept applied so far to Industries only has now been extended to Agriculture and its is being recognised that increased productivity in agriculture is the kingpin for the future prosperity of the country.

The National Productivity Council and the State Productivity Council are doing a great service in focussingpublic attention on the need for increased per-capita productivity both in agriculture and industry.

I appeal to the Honorable Members of the House to participate enthusiastically in the programmes to be organised during the year and to impress upon the public the need for takinhg all steps for increased productivity in agriculture and industry.

Medical and Health Services

The Ear, Nost and Throat Hospital has now beenprovided with a new building of its own where it will expand and develop into a first class up-to-date hospital.

Medical Colleges at Kakinada and Visakhapatnam have been strengthened by sanctioning of extra posts of Professors, Tutor, etc.

A two-year Diploma course has been started at the Gandhi Medical College at Hyderabad and the Guntur Medical College.

Besides increasing the bed strength of the various hospitals, the next year's programme alsoincludes upply of X-Ray equipment to a number of district and taluq hospitals. Provision for dietary charges and purchase of hospital requisites is also being increased by Rs.39 lakhs in the next year's Budget.

On the Public Health side, the Budget also includes necessary provison for th various public health programmes, such as, eradication of Malaria, Small-Pox, Filaria, etc., and further expansion of the Family Planning Schemes.

Out of the 38 schemes of Urban Water Supply, Drainage etc., taken up in the Third Plan, 27 schemes are expected to be completed before the end of the year while the remaining 11schemes will continue during 1966-67.

These include the Tadipudi Reservoir in Visakhapatnam, Manjira Water Supply Scheme for Hyderabad, the Khammam Water Supply Scheme, the Drainage Schemes for Vijayawada and Eluru and Water Supply Scheme for Warangal, besides a few other schemes. The Manjira Water Scheme is almost complete and trails are in progress. The Tadipudi Reservior Scheme is also expected to be completed next year. These two schemes will go a long way in meeting the demands for water from the industries in these areas.

Education

The next year's Budget includes necessary funds for expanding and upgrading of the existing educational institutes so as to provide for the following targets:-

Primary-age group . . 50,000

Middle-age group . . 40,000

Secondary stage . . 30,000

University education . . 4,000

Provision has also been made in the Budget for increasing the admission capacity by 170 in the case of Engineering Colleges and by 310 in the case of Polytechnics.

Telugu Medium College

Honourable Members are well aware of the Government's policy to adopt progressively Telugu as the official language of the State Administration. It is in this context that he Government welcome the proposal made by a Committee to start a College at Hyderabad employing Telugu as medium of instruction. It is hoped that candidates who are educated in this College will be that candidates who are educated in this College will better equippd to handle administrative matters, once Telugu is introduced fully as the official language. It is, however, pertinent to point out that for a venture of this type to be conpletely sucessfuly, steps wuld have to be taken simultaneously to provide adequate and suitable text boods in Telugu on such subjects as Economics, Public Administration, Civics, History, Sciences etc. which are to be taught in the proposed college. I an happy to state that it has been decided to provide an amount of Rs.50,000 for this purpose.

Road Transport Corporation

The Raod Transport Corporation has made good progress during the last one year. Its gross earnings have risen from Rs. 1063 lakhs in 1964-65 to Rs. 1241 lakhs in the current year and the next years's Budget provides for gross earnings of Rs. 1537 lakhs. There is, however, a steep rise in the working expenses also due to the increase in the salary bill of employees on account of revision of dearness allowance, increase in the proce of tyres, oil and lubricants and other articles. After allowing for interst, depreciation, etc., the Corporation earned a nominal profit of Rs. 8 lakhs in 1964-65. In the current year the Corporation expects a net profit of Rs. 15 lakhs while the estimate for 1966-67 is of the order of Rs.49 lakhs.

The fleet strength which was 1986 as on 31-3-64 is expected to rise to 2120 in the current year while the route length will be rising from 1046 lakhs kilometeres in 1964-65 to 1161 lakhs kilometers in 1965-66. It is proposed to open 68 new routes in 1966-67.

Fourth Finance Commission

A summary of the recommendations of the Fourth Finance Commission was circulated to the Honourable Members during the last Session of the Legislature. Their immediate effect, so far as the next year's Budget is concerned, is as follows:-

From the above analysis it will be observed that the additional benefit accruing to the State Government is of the order of about Rs.8.84 crores per annum.

Ways and Means Position

As I have stated earlier, the year 1965-66 opened with a cash balance of Rs.6.13 crores and normally one would have expected that even after allowing for the Revenue and Capital Deficits envisaged in the Budget, the situation will remain well under control. As the months passed, however, it was noticed that the ways and means position was steadily deteriorating as a result of the following factors :-

(1)Unforeseen demands on the exchequer on account of the situation created by the National Emergency.

(2)Shortfalls in Open Market Borrowings due to the monetary conditions arising on account of the Emergency.

(3) Delay in the sanction of Central assistance for certain items.

(4) Centre's reluctance to grant additional assistance for certain essential schemes calculated to increase the food production.

(5) Failure of rains in large parts of the State involving remission of land revenue and considerable expenditure on relief measures.

As a result of these factors, the receipts have not kept pace with expenditure and the State has been compelled to overdraw its accounts with the Reserve Bank of India. Both the Government of India as well as Reserve Bank have expressed concern over the deteriorating financial position of the State. I must acknowledge however, that the Reserve Bank has extended utmost consideration to the State and but for their assistance, it would have been doubtful whether the Third Plan itself could have been executed. I am glad to say that the worst of the crisis is now over and our unsecured advance from the Reserve Bank of India at the end of March 1966 is likely to be about Rs.7 crores which will be further reduced to about Rs.5 crores by the end of the next financial year.

The question of moratorium, in respect of interest on Central loans for Nagarjunasagar Project which has been baffling solution for the last several years was recently discussed with the Government of India, along with several other outstanding problems regarding increased Central assistance for certain Plan schemes and I am glad to say that the Government of India are now inclined to take a more practical and helpful attitude. It is expected that the arrangements which are now envisaged will considerably ease the present ways and means difficulties.

Administrative Reforms

The Administrative Reforms Committee appointed by the State Government in 1964 and headed by the Hon'ble Minister for Revenue has recently submitted its report recommending important changes in the present administrative structure such as the grant of secretariat status to the Heads of Departments with consequent changes in the procedures. Recommendations have also been made in procedures for secretariat examination of proposals, establishment of separate cells for financial scrutiny, vigilance, abolition of the Board of Revenue etc.

Some of these recommendations are far reaching in nature and their full implications are being considered by the Government. A final decision in this regard will be taken only after the Honourable Members have had an opportunity express their views during the Budget discussions on the recommendations made in the Report. It is needless to emphasize the importance of a sound administration particularly in the context of increased tempo of the development plans and hence this is a matter to which Government attach great importance.

Reorganisation of Courts

Two patterns of judiciary co-exist in Andhra Pradesh in the Andhra and Telangana regions of the State. It has been a common experience that the handling of civil and criminal matters by different Courts at the Taluka level has been causing hardship to the public. It was also observed that since the local Magistrates could not exercise the power of summary enquiry, there was considerable delay and accumulation of cases. In view of these circumstances and in consultation with the High Court, it has now been decided to reorganise the Courts from 1st March 1966 at the Taluka level in the Andhra Region on the pattern obtaining in Telangana. A start will be made with five districts of East Godavari, West Godavari, Krishna, Anantapur and Nellore and in due course the pattern will be extended to the rest of the Andhra region.

Gold Bonds

Andhra Pradesh has already Contributed 9.12 lakh grams of gold towards Gold Bonds Scheme of the Government of India. The time for collections under this Scheme has been extended up to the end of February and the officials of the State Government, Zilla Parishads, Panchayat Samithis, in co-operation with the officials of the State Bank of India and the State Bank of Hyderabad are making all possible efforts to secure sizeable contribution in the rural areas, since gold world appear to possess considerable attraction, even in these days, for the rural population.

Defence Efforts

The contribution of Andhra Pradesh towards Defence efforts in terms of men and material and financial resources has been commendable and along with the rest of the country we have shown to the world that, while we are essentially men of peace, we would not hesitate to undertake any amount of sacrifice for protecting our frontiers and safeguarding the honour of the Nation.

Non-Gazetted Government Officers

Honourable Members are aware of the demand made by the employees of the State Government for further increase in the dearness allowance. Honourable Members will, I am sure, appreciate that any measures for providing relief to the employees, which involve large financial commitments, can be taken only after a careful consideration of other demands on the exchequer and the State's capacity to meet the financial obligations. The Fourth Finance Commission had recommended that the Government of India should assist the States in meeting such contingent liabilities. The question as to how best this can be done is still under the consideration of the Government of India. Meanwhile, the State Government is trying to do whatever is possible within its limited resources. The details of relief to be afforded are being settled in consultation with the Employees Organisations and I hope to be able to announce something definite during the next few days.

Conclusion

We have great and heavy tasks ahead of us. During the last few months at the time of the unprovoked conflict of Pakistan our country has witne4ssed a magnificient spectacle of popular enthusiasm and national unity in the entire country. There was a spirit of determination and dedication amongst al the sections of people t contribute their mite towards the strength of the Nation. Although the immediate emergency in purely military terms has passed there are far graver challenges in the economic field which face us to day.

It is for us, the representatives of the people, to mobilise this widespread enthusiasm and to channelise it for constructive and productive purposes. Although this involves sacrifice and hardwork, I have no doubt that all of us, belonging to different political parties and groups, would take up this task in the spirit which animated the nation in September last.

Honourable Members are also aware that this is the last budget session of the present Legislature. In these five years we have tried our best and faced various situations with both courage and conviction. The task set before us is no light one. It is the creation of new social order based on economic and social equality.

In this task, it is the Common Man that is a central figure of the planning exercises that have gone on since 1950. Science and technology are rapidly creating new condition, and in a few year, perhaps in a few months, Man will, for the first time in his history, land on the Moon. And yet the unique role of Man in Planning still remains; we have to develop new social values to match the changing world conditions in which we live.

Public policies should lead us towards the creation of an egalitarian society while the democratic process of election would surely help the growth of a new national consciousness in the country. Let us all, to whatever party of group we belong, play our parts at this historic hour in the life of our nation with determination and pride and fulfill the tasks that lie before us.