Speech of

Sri N. CHANDRABABU NAIDU

Hon'ble Finance Minister while Presenting

The Budget for 1995-96

To The Andhra Pradesh Legislative Assembly

21 March 1995

Introductory

Sir,

I rise to present the budget of the Government of the Andhra Pradesh for the year 1995-96.

At the very outset, I should mention that our governments overriding concern is eradication of poverty. Our first and foremost commitment is to the welfare of the poor. However, we have not allowed our expenditure commitments on welfare programs to preempt the out lays required for the all-round development of the State. This budget contains a plan outlay of Rs. 3159 crores, reflecting an unprecedented growth of 45.6 percent over the outlay of last year. But even this outlay is to be treated as the minimum allocation. It should be our endeavour to ensure that no development program is handicapped for want of resources.

This budget is being presented in a historic context historic, not so much because of the size of the mandate with which our party has been voted into office or even because of the gigantic, albeit sacred task entrusted to us by the people of the State. Historic because the electoral verdict delivered by the people of Andhra Pradesh has totally redefined the national agenda for economic reforms. The' Rs. 2 per kg rise' program, conceived and implemented by our Government, has stirred the collective conscience of the nation and triggered off a campaign across the country for' reforms with a human face'. What is even more gratifying is that this campaign has cut across ideological and political barriers. Hungry people do not understand the value of growing foreign exchange reserves or declining fiscal deficits-the only value they understand is the value of the minimum basic needs of food, clothing and shelter. It is to providing these minimum basic needs that our growth is pledged.

If there is one distilled lesson out of our' development experience' spanning nearly a half century, it is that' trickle down' theories of growth do not work. Our anti-poverty programmes, arguably designed and implemented with the best of intentions, have failed to reach the most deprived and the most indigent. And as we all know well by now, poverty any where is inimical to growth and welfare every where. The lesson is, therefore, clear. The most effective and possibly the only way, to alleviate poverty is by direct income transfer methods such as the rise subsidy programme.


The rise subsidy scheme and the total prohibition policy are going to impact on the State finance very significantly. I am also aware that the entire nation is watching the' Andhra experinent' with interest and, I should admit honestly, with scepticism. They are waiting to see how we will reprioritize our expenditure, mobilize larger resources and balance our books. I think it is my duty to respond to this' national audience' by defining our governments philosophy and approach. With your permission, sir, I will take a few minutes to do so.

First and foremost, we differ with the Central Government on the crucial issue of approach to economic reforms. We are supportive of the measures initiated towards libralization and deregulation. We also believe in the end objectives of structural ajustment. We believe, however, that in the euphoria of economic reforms, we should not forget the interest of the poor man. We are of the view that no end of reforms will have any legitimacy or justification unless the poor are protected, and more importantly provided an equal opportunity to participate in the reform process. Only if there is an explicit equity dimension built into it will the reforms provide enduring results and prosperity. It is in this important respect that we differ with the Centre on the issue of economic reforms.

We believe that development is not just a matter of cash inputs: Non--cash inputs are equally vital. The quality of the schemes and programmes that we implement, the motivation and zeal of the administrative machinery, people's participation and monitoring of programmes based on previous experience are all crucial non--cash inputs. With this end in view, we intend to streamline our delivery systems, modernize the administrative apparatus, introduce information net works, and most importantly sinsitize the governmental machinery to the needs and concerns of the people.

There is an on going debate internationally on whether economic reforms are consistent with a democratic set-up. India's experiment with economic reforms has proved to the world that democracy is not only consistent with reforms, but that a democratic route is, in fact, the best possible way of obtaining enduring results from reforms. Some critics contend that too much of democracy will undermine development. Without joining issues in this debate, I will only say that our country is suffering not from too much democracy but too little of it. Democracy means much more than going to the people once in 5 years it means the Government redeeming its accountability to the people every step of the way. Our Government will endeavour to improve the quality of our democracy by actively soliciting public opinion on all the major issues. Which believe that the people should not only be watch dogs but also be active participants in decision making. To initiate this process of public debate and discussion, we have already written to all the Vice Chancellors of the universities in the State to deliberate on the agenda before the Government and to make suitable suggestions and drecommendations. May I take this opportunity to invite people all over the State to help us with their suggestions and ideas?

Our Government is wedded to the principle of transparency in administration. It is to uphold this principle that we have started the healthy practice of taking the leaders of all political parties into confidence on our major initiatives. We have also started the practice of disclosing to the media all the relevant facts and figures governing major issues. Just to cite one example, the ways and means balances of the Finance Department used to be privy, is now disclosed to the public through the media. I hope and trust that our political friends, both in this House and outside, will reciprocate to this well meaning gesture with the same genuineness and sincerity by constructively participating in this dialogue.

The Indian experiment with development has been vitiated by looking upon it as a one way process with the government at the giving end and the people at the receiving end. We believe that this is a false paradigm. Sustainable development is possible only when development programmes are conceived and designed with people inputs and are implemented with people participation. I can claim with al modesty that it was the previous Telugu Desam Government which pioneered a novel way of enlisting people participation through the Telugu Grameena Kranti Padham. I am happy to announce that we are not only going to revive this Padham but are going to extend it to all possible sectors.

Economic reforms, by definition, imply the state yielding to the market, thereby suggesting a reappraisal of the government role and responsibilities. Put simply, governments need to do less in those areas where markets can perform conversely governments need to do more in those areas where markets alone cannot be relied upon. Above all this means investing in education, health, nutrition, family planning and poverty alleviation building social, physical, administrative, regulatory and legal infrastructure maintaining law and order mobilizing the resources to finance public expenditure providing a stable economic environment and pursing an economic strategy that is rational, transparent and predictable. In short, a lower quantity of government should lead to higher quality of governance.

This implies that Government should concentrate on creating an environment for development. I have often marveled at the outstanding performance of our scientists, engineers, doctors, other professionals and businessmen in other countries. They have made significant contribution to the countries of their domicile while bringing pride and honour to our State. But the very same people lose their drive and initiative when they return home. The difference lies in the environment. It is such an environment that is conducive to innovativeness, hard work, productivity and commitment that we want to create in our State. In order to concentrate on this task, Government will encourage private initiative in much of the infrastructure building. We will also review the performance of our public enterprises with particular reference to the productivity of capital employed and take remedial action to get the best value for money. Should privatization be the best option, we will not hesitate to choose it. May I invite honourable members to deliberate on these issues and give us the benefit their advice?

Democratic decentralization is an article of faith with our Government. Our first task on assumption of office was to initiate the process of elections to local bodies and cooperative institutions. As honourable members are aware, the first phase of elections to the Mandals, Zilla Parishads and Municipal bodies is already over, while elections to the Gram Panchayats and cooperative institutions are on the anvil. STATE FINANCES

I Will be failing in my duty as the finance Minister, if before going into the specifics of this budget, I do not take this House into confidence on the financial position we inherited from the outgoing Government. We inherited not just empty coffers but a huge liability of debt. As on the day we assumed office the cash balance of the Government was RS (-) 50.75 crores which slipped rapidly into Rs. (-) 111.94 crores by 20.12.1994, plunging us into an overdraft situation. As honourable members are aware, Reserve Bank regulations allow State Governments only 10 working days to redress an overdraft situation. Our Government most urgent task in the first few days of office was to grapple with this very compelling and complex problem caused by the profligacy and recklessness of the previous Government. We had to take the painful but inescapable step of freezing al payments except those relating to employees slaries and other inevitable establishment costs. It is a matter of satisfaction that as a result of prudent financial management we have been able to gradually nurse back the financial position to near normalcy.

Iam glad to inform the House that we have since lifted the freeze on most items of expenditure, starting with centrally sponsored schemes and externally aided projects. As of today, there are very few restricted items of expenditure and we intend to lift these also at the earliest possible.

The financial ruin was entirely the result of the indiscipline and recklessness of the outgoing Government. They had sanctioned expenditure of Rs.1557 crores without budgetary approval and also released as much as Rs. 677 crores out of that. We have no objection, in principle, to borrowing, but we have serious objection to the way in which the previous Government had squandered away the borrowed resources in unproductive ways. It would not be an exaggeration to say that the amount lost by leakage and corruption was much larger than the sum total of productive expenditure. Compounding this profligacy on the expenditure side was the utter incompetence of the previous Government in raising resources. The time series trend over the last 5 years indicated that the State own resources, as a proportion of total incapacity to mobilize resources through efficient tax collection.

It shall now be our Government priority task to reconstruct the State finances and nurse them back to robust health.

REVIEW OF ECONOMIC TRENDS

As per quick estimates, the Net State Domestic Product at current prices for the year 1993-94 is Rs.45187 crores as against the provisional estimate of Rs.39467 crores for 192-93, registering an increase of 14.5 percent. At constant ( 1980-81 ) prices, the Net State Domestic Product for 1993-94 is estimated at Rs.12359 crores, as against the provisional estimate of Rs.11752 crores for 1992-93, reflecting an increase of 5.2 percent.

The per capita State Income a current prices increased from Rs.5767 in 1992-93 to Rs.6489 in 1993-94, registering an increase of 12.5 percent. At constant ( 1980-81 ) prices, the per capita income increased from Rs.1717 in 1992-93 to Rs.1775 in 1993-94, showing an increase of 3.4 percent.

We are deeply sensitive to the hardship caused to the people, especially the poorer segments, because of the double digit inflation that has been raging relentlessly for several months now. Honourable members are aware that India is a single common market and prices are largely dictated by the macroeconomic management of the Central Government.

There is an impression in some quarters that the recent trend of price rise is a result of the additional taxation measures by the State Government. This is a grossly mistaken view. Our resource mobilization efforts are largely directed at plugging loopholes in tax administration and capturing the buoyancy at the existing levels of taxation. Additional taxation, as I will explain shortly, will be restricted to the barest minimum and we will also ensure that the burden of this taxation will not fall on items of consumption by the middle and poor classes. In the best traditions of economic theory, we view taxation as a means of income transfer and the guiding principle of our tax policies will be ability to pay.

ANNUAL PLAN 1995-96

The outlay for Annual Plan 1995-96, as agreed with the Planning Commission, is Rs.3159 crores, reflecting a growth of as much as 45.6 percent over the revised outlay of the current year Plan of Rs.2170 crores. This growth rate, unprecedented as it is in the history of our State, is also the highest for any State Plan for next year. This should be conclusive evidence of our Government commitment to ensuring that developmental outlays on physical capital formation are not compromised because of the affirmative action programmes such as the Rs.2 per kg rice programme and total prohibition.

As already indicated earlier, the additional resources required for financing this much larger Plan will be drawn largely by modernizing the tax administration, restructuring the rates on a rational basis and capturing the buoyancy in the revenue to the Government, is programmed to go up from the revised estimate of Rs.2800 crores for the current year to Rs.3600 crores next year. Only an amount of about Rs.25 crores out of this increase will come by way of additional taxation. Additional taxation is also expected to yield Rs.103 crores under the Motor Vehicle tax and Rs.83 crores ( net ) under Stamps and Registration duties. These measures together will net Rs.211 crores. The concerned Ministers will be moving the necessary bills covering the above measures for the approval of this House.

A quantum jump in Plan outlay also calls for a thorough review of expenditure priorities. As I have already said earlier, we believe that human resource development should constitute the major thrust of proactive Government intervention. Few initiatives of the Government yield more enduring rewards than effective investments in education and health. Indeed, behind the much celebrated East Asian miracle is the efforts by their governments at improving the quality and reach of education and health, which put them on a virtuous circle of growth and welfare.

Economic reforms do not mean leaving everything to the market, because there are certain sectors like primary education, primary health and social safety net programmes which cannot be left to the market. Our increased outlay for the education sector and our accent on extending effective health cover to all the people reflect our abiding faith in this route to development.

Providing shelter to the poor ranks in priority next only to providing food security. The enhancement in the quality of life of the poor as a result of a decent structure to live in is large, but too intangible to be capture in words. The increase in allocation for weaker section housing by as much as Rs.25 crores is reflective of this philosophy.

Even as our Plan size of Rs.3159 crores is hailed as a historic watershed, I must confess that even this large plan is far too short for the many things that need to be done urgently in the social and infrastructure sectors. I want to close my comments on the Annual Plan just by reiterating that we will not let resource constraints hamper our development needs. We will somehow find the resources. Where there is a will, there is a way.

Rs 2 PER KG RICE SCHEME


Our Government scheme of supplying rice at Rs.2 per kg to the poor people has received extremely positive endorsement from across the country and even internationally. If the recent round of State elections is any indication, this major social safety net programme is going to dominate the political and economic agenda over the next couple of years. It is a matter of deep satisfaction to us that not only are we implementing this gigantic programme in our State, but are being instrumental in it being replicated in other parts of the country.

It is frequently argued that subsidies like this militate against growth and efficiency. We believe that this is not a question of growth vs equity, a popular dichotomy, but a false one. We view the subsidized rice scheme, not as a hand out or a sop, but as a major initiative towards human resource development which is crucial to the success of the reforms.

The importance of proper nourishment to improving the quality of life of the poor is too self-evident to need any reiteration. Malnourished men and women can hardly be expected to reach their full potential of productivity levels and consequently they, as individuals, and we, as a society, lose out in economic reforms. Women suffer disproportionately as they have to work in the household in addition to doing wage labour. Most importantly, the quality of future lives of children is most severely compromised by malnourishment. It is this scourge of hunger and malnourishment that is the target of the rice subsidy programme. You will agree with us, sir, that investing in human capital through these direct intervention methods is not only consistent with faster long term growth it actually contributes to it.

There is a lot of speculation, bordering on rumour mongering, about our ability to sustain this programme. I want to take this opportunity to reaffirm our deep and abiding commitment to the Rs. 2 per kg rice programme. We will not let financial constraints or logistic problems come in the way of this most crucial programme. It is also our Government firm resolve to see that all eligible poor people are covered by the rice subsidy scheme regardless of the costs involved. This assertion, I trust, will put at rest all doubts and speculation.

PROHIBITION

In accordance with the verdict of the people, our government has also implemented the policy of total prohibition. We did this not out of populist or political compulsions but out of a deep conviction that the welfare of the poor should be the paramount concern of a democratic Government. We dedicate this policy to the Andhra women who, by their spontaneous grass root agitation for prohibition, have secured for themselves a place in the history of independent India, of which all of us are indeed proud.

It is our earnest hope that this prohibition policy will mark the beginning of a new life for lakhs of families afflicted with the tragedy of alcoholism. Prohibition is an anti-poverty measure in as much as 85 percent of the revenue used to come from the poor people. Furthermore, the prohibition policy, we expect, will improve health standards, enhance productivity levels, raise savings ratios and contribute to an all round increase in the quality of life of our poor people.

Doubts are being raised in some quarters about our Government ability to enforce the prohibition policy. Let me put at rest all speculation by reaffirming our abiding commitment to the prohibition policy. Government will lose revenue of the order of Rs.1269 crores next year, on a base of no prohibition, on account of the total prohibition policy. But we believe that this sacrifice of revenue is well worth the cause of eradicating the scourge of alcoholism, which has impoverished lakhs of poor families. The measure of love, as a Greek philosopher said, is what one is willing to give up for it. Let me take this opportunity to express our Government deep appreciation for the social and intellectual leaders who sustained it and to the media who supported this crusade.

We have strengthened the enforcement machinery and have also made sufficient allocation for giving hem the necessary infrastructure. Government will spare no effort in enforcing the prohibition policy. Even then prohibition, which started off as a people movement will have to continue to be so. Women, intellectuals and media who all contributed to the prohibition policy should continue their crusade against this evil by being active and vigilant against any infringement of the prohibition policy.

IRRIGATION

We have more than doubled the allocation for the Irrigation sector from Rs.612 crores this year to Rs.1240 crores next year, so as to accelerate the process of drought proofing our agricultural economy. A resilient agricultural economy, as the honourable members are aware, is the surest way of laying a strong foundation for the growth of secondary and tertiary sectors.

Our Government is deeply conscious of the urgent need to complete all the projects under the Krishna basin by 2000 AD in accordance with the Bachawat award. Completion of these projects is also an urgent imperative to provide relief to the people in the arid tracts of Rayalaseema and Telangana. Our accent will be on expeditiously completing the ongoing schemes while simultaneously making headway in respect of new schemes. Considering these priorities, we have provided outlays of Rs.200 crores for Telugu Ganga, Rs.115 crores for SRBC, Rs.100 crores for SLBC and Rs.40 crores for Jurala. Galeru-Nagari, Handri Niva and Pulichintala, which are all new projects, have been allocated Rs.25 crores each.

Even as completing the Krishna basin projects is urgent, we need to simultaneously focus on exploiting the immense potential of Godavari. The prosperity of our agricultural sector will, in fact, depend critically on the speed and effectiveness with which we can tap this potential. Major irrigation projects are capital intensive. At the same time, it will be unwise for us to forego the benefits of irrigation for several years merely because of the limitations of government finances. It will be in the best interest of the State in general and the farming community in particular to launch these projects by supplementing government finances with people support. One possible route for doing this would be to raise resources from the public through issue of bonds and debentures with the redemption of the instruments being linked to cost recovery from the beneficiaries. Another possibility, not necessarily: exclusive of the first, is to involve the farmers in the execution of project itself. These are all infant ideas and we are open to suggestions on modes of financing and executing the large irrigation projects. I request the honourable members to kindly give us the benefit of their advice.

Honourable members are aware that because of the initiative and leadership provide by our Chief Minister, we have been able to sort out all pending issues with Orissa on implementation of the Vamsadhara project. I am glad to inform the House that we have made an allocation of Rs.27 crores for Vamsadhara Phase-II project for next year. It is our intention to complete this project at the earliest so as to bring prosperity to the poor farmers in the dry tracts of Srikakulam district.

Like Bhagiratha of ancient India who brought the heavenly waters to the earth with unwavering determination, NTR will go down in history as the Bhagiratha of modern India and will be venerated by future generations for having taken water to the arid tracts of the state.

We are particular that our efforts in the major irrigation sector should not compromise the attention that needs to be given to the medium and minor irrigation sectors. We have made an allocation of Rs.50 crores for the medium irrigation sector which, apart from being an all time high, is also reflective of the balance we want to strike between major irrigation projects on the one hand and medium and minor irrigation sectors on the other. This amount will be spent towards making critical balancing investment to complete the ongoing medium irrigation projects and also to start work on 3 new projects.

Equally important is minor irrigation which give quick results with relatively smaller investment. The allocation of Rs.142 crores for the minor irrigation sector for next year is much larger than the outlay of Rs.100 crores provided last year by the previous Government in the supposed year of Minor Irrigation .

I would urge the honourable members to treat this allocation for minor irrigation as only indicative as we will provide additional funds wherever there is a viable scheme.

Next year programme in the minor irrigation sector includes completion of EEC Phase-I and the Netherlands aided schemes which will provide drinking water to 36 villages and create an irrigation potential of 4000 hectares. We have also secured bilateral assistance from the Government of Netherlands with an outlay of Rs.70.24 crores for launching a new scheme APWEL covering the drought prone areas of Rayalaseema and Telangana. We will also concentrate on building percolation tanks which will provide irrigation besides recharging ground water.

We have been seriously concerned about the recent trend of large excesses over the estimates in the tenders for major irrigation projects. Such large tender premia cut into the size of the quantum of work planned for execution besides resulting in runaway cost escalation. Our enquiries have revealed that the excess premia are not reflective of increase in costs but of certain mafia type activities that have vitiated the process of genuine competition. We discovered to our horror that the money spent had gone more towards leakage and wastage rather than to building productive assets. We are determined to stop this mafia type activity with a heavy hand. We will ensure free and fair competition so that public money is spent most productively and that the quality of construction is not compromised on any account.

Maintenance of the existing irrigation systems is as completing new projects. It is our Government intention to decentralize the maintenance and management of irrigation systems by entrusting this task to farmers committees. Honourable members will recall that such a decentralized system used to work very effectively in the past. We are also contemplating transferring the resources raised through water rate to these local committees. I urge honourable members to react to this suggestion and let us know their views on the best means of effecting this decentralization.

ENERGY

A major aim of the ongoing process of economic reforms is to increase investment in the industrial sector. Development of the energy sector is the most crucial requirement for encouraging investment. This is also the weakest link in the infrastructure set up across the country, beset as it is with large demand-supply gaps. With increasing demand for power from both the agriculture and industrial sectors, the supply demand gap is expected to widen even further. A rough estimate indicates that the demand for energy will go up by 20 percent per annum over the next 7 years requiring a total capacity of a least 26888 MW. As against this, we have an existing installed capacity of 6110 MW and another 5000 MW in the pipeline, leaving a gap of around 15000 MW. Creation of this additional capacity of 15000 MW will entail an investment of the order of Rs.40000-50000 crores which is gigantic by any standard.

The energy sector, therefore, demands innovative and path-breaking initiatives. We are of the view that the current policy of the Centre of picking and choosing a few private players for development of new power projects is tantamount to placing an arbitrary impediment in the creation of capacity. Our Government policy, on the other hand, is to encourage as many entrepreneurs as possible as per the dictates of the market force. Furthermore, whereas Government of India policy is confined to privatizing only the generation segment, our policy makes an important departure in as much as we believe in entrusting generation, transmission and distribution to new developers. This policy of ours will eliminate the need for guarantees and counter-guarantees which invariably lead to high costs to consumers.

Our model of privatizing all the segments in the power sector will not only bridge the demand-supply gap much faster but also protect the interests of the consumer. Government also intend to set up an independent power utility commission which will decide on the price of power based on all relevant factors, including the efficiency norms. Our comprehensive policy will put in place a system of power development which will be fully sensitive to the market demand, check the scope for arbitrary pricing and protect the interests of the consumer. Simultaneously, APSEB will continue to play an important role in generation and distribution, for which Rs.653 crores have been provided as Plan outlay.


COMMUNICATIONS

Communication is another infrastructure sector crucial for facilitating private investment. We are actively canvassing external assistance from the World Bank for improvement of important State highways and high density corridors with a project outlay of Rs.1314 crores, work on which is expected to commence in January next year. Another project for improvement of major district roads and reconstruction of weak bridges with an outlay of Rs.360 crores is under process for external assistance from OECF of Japan. To augment the Government efforts in the communication sector also to private initiative with a mandate that they will complete and operate world class road networks. We have already invited bids from private parties for construction of roads and bridges involving an outlay of Rs.200 crores.

Government have received offers from some internationally reputed firms for conducting feasibility studies for constructing parallel express ways in four high density corridors of the State. These are Ichapuram - Tada, Hyderabad - Vijayawada, Hyderabad - Bangalore corridor and the Hyderabad Ring Road bypass. We will pursue these options so as to build the much needed modern infrastructure to aid industry and trade.

The Light Rail Transit System of Hyderabad has been in the conception and planning stage for too long and is unlikely to take off if it is linked to Government financing. We therefore plan to entrust this major project also to private enterprise.

Ports are another critical segment of the communication infrastructure. The Deep Water Port project at Kakinada, under implementation with assistance from the Asian Development Bank, is slated to be completed by May 1996 and will give further fillip to industrial and trade activity in the State. In the next phase of port development, we will cover 2 intermediate and 7 minor ports. Ms. RITES, a Government of India undertaking, have been appointed as consultants for preparing a feasibility report.


INDUSTRIES

The new economic policy of liberalization and deregulation has triggered off vigorous investment activity across the country. It has simultaneously triggered off an aggressive competition among States to attract investment. We have an advantage in this competition, endowed as we are with several positive features such as central location, natural resources, competent scientific and technical manpower, skill and knowledge intensive workers and a peaceful labour situation. We need to exploit these advantages to make industrial enterprise a rewarding and fulfilling activity in the State. Simultaneously, we need to improve and expand our infrastructure facilities and make our delivery systems responsive and investor - friendly. In order to coordinate the wide gamut of activities in industrial promotion and facilitate single window clearances, Government have posted and officer of the rank of Special Chief Secretary as Development Commissioner for Industries.

Our rich and diverse agriculture base offers immense scope for agro-industries. This is a sector that has witnessed rapid technological advances and expanding export markets in recent years. Being employment intensive, agro industries will reinforce the off-farm sector in the rural areas. We will draw up a special program to exploit the promise in this sector.


HANDLOOMS

Government attach high priority to policy and planning for the development of the handloom industry in the State. Considering the rapid growth in the export market for garments, it has been decided to establish and exclusive industrial estate for the production of export garments. Suitable land for this purpose near Hyderabad city has already been identified and handed over to the APIIC for infrastructure development. These efforts will not only foster handloom industry but also generate additional employment opportunities.

To support the growth of the garment sector, it is essential to have highly skilled fashion designers. Government have agreed, in principle, to extend all support to the Central Government for opening a branch of the National Institute of Fashion Technology at Hyderabad. This institute will give further fillip to the growth of the garment industry in the State.


SUGAR

Sugar Industry occupies a prominent place in our State economy. At present there are 36 sugar factories in the State, of which 18 are in the cooperative sector, 8 in the public sector and 10 in the private sector. Recognizing the immense potential in the State for increasing sugar production and to create employment in rural areas, Government have been encouraging setting up of more sugar factories. There are 15 letters of Intent in the pipeline for establishment of new sugar factories in Andhra Pradesh and they are expected to come on stream over the next 2 years.

SERICULTURE

Andhra Pradesh ranks second in the country in sericulture development, next only to Karnataka. Sericulture is an employment intensive activity that can raise the income levels of small and marginal farmers. During the year 1994-95 and additional extent of 10533 acre has been brought under mulberry, exceeding the target of 10000 acres.

For the year 1995-96, an outlay of Rs.13.06 crores is earmarked for Sericulture development under Plan. It is proposed to bring an additional area of 10000 acres under mulberry next year creating additional employment to 50000 persons.


AGRICULTURE AND COOPERATION

The interests of the farming community are closest to the heart of our Government. The agriculture sector has been the backbone of our state economy and our Government will endeavor to enhance the vibrancy land dynamism of this sector. In addition to agro-industry development, we will pay priority attention to development of horticulture and floriculture which, in recent years, have witnessed growing opportunities and expanding markets. We will concentrate, in particular, on promoting the use of latest technologies, training of farmers and building the necessary forward and backward linkages.

We are also determined to give a farmer-friendly orientation to the administration of out market yards. We propose to upgrade the weighing technology in the market yards to prevent exploitation of the farmers. We will also deepen the process of computerization so as to disseminate market information to the farmers. The Market Committees will be revamped by providing representation to women and weaker sections so as to protect their interests.

The benefits of economic reforms have so far remained confined to large enterprises. The process will not, however, be complete unless liberalization is extended to the country side to reach small farmers operating off farm enterprise. With this approach in mind, our Government are contemplating far reaching changed in the cooperative sector so that farm producers, workers, artisans and consumers can establish and operate rural enterprise productively. Honorable members will agree with me that our cooperative institutions have decayed because of excessive political interference. Our Government have taken steps to restructure the management and operation of cooperative institutions to help them function effectively land independently.


EDUCATION

64.If I were asked to identify the single most important key to economic growth and welfare, I would unhesitatingly opt for education. Possibly the most instructive lesson from the East Asian experience is their sustained emphasis on investing in people by increasing both the quality and reach of primary and vocational education. They made a very clear policy choice through massive investment in school education, while leaving both the supply of and demand for university education to the market forces, with important pay-offs both for efficiency and equity. It is this concerted, albeit extremely focused, emphasis on investment in school and vocational education the put them on a virtuous circle, whereby the demand for knowledge and skills from the real sector of the economy generated a demand for higher quality education through a positive feedback loop.

We believe that uniform and compulsory education empowers the people in a more immediate way than even universal franchise. Specifically our Government is committed to achieving the objective of EDUCATION FOR ALL through emphasis on primary, vocational and adult education. Universalization of primary education for all children in the 6-14 years age group shall be the specific target to be achieved by 2000 AD. We will urgently address the issue of school drop outs with sympathy and understanding. It is also a matter of concern that gender inequities in education, pervasive across the country, are more pronounced in our State. We will therefore pay special attention to first enrolling and then retaining the girl child through at least the primary education curriculum. We Also plan to multiply the School Health Care program to ensure that children receive Medicare along with education.

I am glad to inform the House that in order to finance these initiatives and in general improve the quality and reach of primary education, we have increased the Plan allocation for school education from Rs.41.36 crores to Rs.82.81 crores, reflecting a growth of as much as 100 percent. May I take the opportunity to invite suggestions from the honorable members as also from the public to make our school education system responsive and sensitive to the needs of the nation?

I am happy to inform the House that the District Primary Education Program (DPED) with assistance from the Overseas Development Administration of the UK will be launched in the districts of Vizianagaram, Nellore, Warangal, Kurnool and Karimnagar. This programme pioneers the concept of participatory process in imparting primary education and based on the experience gained here we intend to replicate the process of decentralizing primary education. This, we hope, will lead to greater accountability, lower costs and higher quality of education.

Even as Government support for school education will rank priority, we intend to increasingly encourage private initiative, including cooperative ventures, in promoting and imparting higher education. We are deeply sensitive, however, to the concern of students with merit but no means, whose access to higher education should not be compromised by privatization. Government is also concerned about the quality of higher education. We are concerned in particular that the emphasis presently is only on giving degrees and diplomas rather than on imparting education that will prepare the students for making a constructive contribution to the society. This is a complex subject which should be debated and discussed extensively. Focusing on the content, quality and approach to the entire issue of revamping the system of higher education.

In order to foster the integration of the rich cultural diversity of South India, our State has taken the initiative to establish a Dravidian University with participation from all southern states. Land for this purpose has also been identified.


RURAL DEVELOPMENT

Rural Development is a sector that will receive our priority attention. I need hardly reiterate that mass migration of rural poor to urban areas in search of employment has resulted in urban squalor and poverty of unprecedented dimensions, besides putting enormous pressure on urban services. The only sustainable solution to this urgent and pressing problem is to redouble our effort at rural development, mainly by providing durable employment opportunities to the poor in the rural areas itself. This employment, in turn, has to be directed at creating permanent assets which will reinvigorate the rural economy, through the downstream multiplier effects. Towards this endeavor, allocations under the Jawahar Rojgar Yojana (JRY), IJRY, DPAP, IRDP and other rural development programs have been stepped up substantially during the current year to match the increased allocations from the Centre. Next year, notwithstanding the budget provision of Rs.143 crores, the allocation will be increased suitably to match the flow of funds from the Centre as was done this year.

Significant reorientation of the various employment generation programs is also on the anvil. As much as 50 per cent of the total allocation under IJRY and EAS will be allocated for watershed development in drought prone areas and tribal tracts with the twin objectives of providing employment in the short run and regenerating the natural water reservoirs in the long run. We also plan to pursue the process of eliminating contractors in these works to a logical conclusion so as to ensure that the wage levels are elevated.


RURAL WATER SUPPLY

One of the most distressing aspects of our development scenario is that despite-the-plethora of programmes and enormous expenditure, we have not yet been able to ensure are and adequate drinking water to every village. Our Government is committed to covering all the no source habitations and flourishes affected villages in the State with protected water supply within the next 2 years. Though this gigantic task is going to cost over Rs.1000 crores, our Government will find the necessary means and methods of mobilizing the required resources with the support of people, non-governmental organizations, private trusts and external agencies to relieve the women folk who, for generations, have had to undergo the drudgery of carrying drinking water every day.

A recent survey indicated that as many as 16 districts in the State are afflicted with excess fluoride problem, causing severe health hazards to the population. 12 projects spread over 10 districts under the Technology Submission program are under implementation to remedy the excess fluoride problem. Besides, an integrated project for providing safe drinking water to fluoride affected areas in Nalgonda district is at an advanced stage of processing for bilateral assistance by the Netherlands Government.

Ananthpur has been identified as one of the districts to be covered by the Integrated Fluorosis Control Program with assistance from the UNICEF. The first phase of the program will cover 258 villages. In addition, Sri Bhagwan Satya Sai Trust of Puttaparthi has launched a project with an outlay of Rs.80 crores to cover 700 fluoride affected and scarcity villages of Ananthpur district with safe drinking water. At our request, Government of India have also provided special assistance of Rs.30 crores as plan support during this year to supplement the Sathya Sai Trust initiative. Further, Bhagawan Sri Sathya Sai Trust has indicated its willingness to extend the scheme of providing protected drinking water to 766habitations in neighboring Chittoor district and other parts of Rayalaseema. May I take this opportunity to express grateful thanks, on behalf of the Government and the people, to Bhagwan Sathya Sai Baba and his Trust for this noble and generous gesture?

The maintenance of existing rural water supply schemes is as vital as implementing new schemes. In fact this has been the weakest link in our rural water supply program. In order to remedy this, Government are contemplating decentralizing the responsibility of maintenance of the schemes to the village Panchayats and local committees.


HOUSING

Andhra Pradesh has consistently ranked first in the country in the provision of houses for weaker sections, both in rural and urban areas. Furthermore, over the years, our housing program has also pioneered many innovative and cost effective technologies. It is a matter of pride to our Government that the scheme of rural and urban permanent housing for the poor, pioneered and perfected by NTR in our earlier regime, has now become a scheme of national appeal. We plan to accelerate the momentum of weaker section housing and in this direction we have increased the Plan allocation for the Housing sector by as much as Rs.25 crores. The physical target of 2.25 lakh house will cover, in addition to rural poor, also specific target groups such as beedi workers, fishermen, weavers etc.

The Andhra Pradesh Housing Board will accelerate and expand its programs of building houses for low, middle and high income groups.

Government will pursue the program of provision of house sites more vigorously to match the accelerated tempo of the housing program.

Another major initiative of our Government in the housing sector will be directed at slum improvement in urban areas. The Surat plague epidemic has reminded us that urban squalor can have disastrous consequences, transcending the urban borders. The situation calls for urgent and proactive government intervention. In an effort at addressing this issue, we are planning a major program of 1 lakh houses with utilitarian design and innovative architecture aimed at slum improvement by relocating the haphazard settlements in orderly low cost multi-storied blocks. We will make a beginning in this regard in the twin cities where urban squalour is most acute with over 400 slums.

HEALTH AND MEDICARE

Our priority in the health and medicare sector will be on improving the quality and reach of our delivery systems with emphasis on preventive and primary health care over curative and tertiary medical cover. Our experience with the ongoing School Health project has demonstrated that the best results are obtained when children are given both education and health cover simultaneously. We plan to expand this program.

In order to improve the medical infrastructure, our Government has secured relaxation from Government of India for use of JRY funds for construction of Primary Health Centres. Accordingly, our plans for next year include construction of 300 PHCs with a total outlay of Rs.30 crores, reflecting a significant expansion from the current year outlay of Rs.3.25 crores. It shall be our endeavor to ensure that all the 1104 mandals in the state have permanent PHC structures within the next 2 years.

Keeping in view the increasing costs and increasing demand, the amount allocated for purchase of drugs has been enhanced from Rs.2000 to Rs.5000 for sub-centres, from Rs.30000 to Rs.70000 for PHCs and from Rs.90000 to Rs.1 lakh for upgraded PHCs and Community Health Centres. We have made suitable budget provision to fully cover this enhancement.

Suitable budget provision has also been made to cover the increase in the bed charges being given to teaching hospitals from the current level of Rs.6000 to Rs.10500 per bed per year. A similar enhancement of bed charges in the hospitals under the AP Vaidya Vidhana Parishad is also under consideration.

Government have issued an ordinance to rugulate transplantation of human organs on the lined of the Central Act recently passed by Parliament. This step, it is hoped, will set at rest the procedural difficulties in the transplantation of human organs.

URBAN DEVELOPMENT

Our urban services have suffered from both inadequate resources and inefficient use of available resources. It shall be our endeavor to remedy this situation. We will encourage civic bodies to mobilize resources by more efficient tax collection, restricting government grants to the minimum, as may be decided by the State Finance Commission. Civic bodies will also be encouraged to take up new projects on a self-financing basis. In fact, experience world over proves that tax payers are not averse to paying taxes provided they can link their payment directly to the provision of a service.

HYDERABAD WATER SUPPLY


The previous Government wasted a lot of precious time in unproductive discussion on the alignment and modalities of implementing the scheme of bringing Krishna water to the twin cities. Meanwhile, the drinking water problem of the twin cities has further intensified. In just 3 months in office, we have been able to firm up all details after taking all political parties into confidence and work in this crucial project, costing Rs.650 crores, is expected to commence soon.

WELFARE

Commitment to the welfare of the weaker sections is much more than a political responsibility we view this as a moral obligation. As honorable members have noted, even as we have increased allocations for the infrastructure sectors, we have not, however, allowed this to preempt the allocations for the welfare of the weaker sections. In addition to vigorously pursuing ongoing schemes, we will particularly focus on improving the quality and reach of the education facilities to the weaker sections as it is ultimately education levels that will have lasting impact on their welfare and neutralize the burden of generations of disadvantage.

Providing employment through various self-employment programs by pooling funds from different schemes will be the main thrust of our program in the next financial year. All the deserving candidates from among the disadvantaged groups like SCs,BCs,STs, physically handicapped and women will be provided necessary support for self employment. Special training program will be organized on a large scale to impart skills and enhance their earning power.

Towards this end, the economic support activities implemented by the various finance corporations in the welfare sector would be pursued more vigorously. In addition to financial support from the Government, we will make active efforts to augment the resources available to these corporations by soliciting increased support from banks and financial institutions. We will pay special attention towards providing economic support to specific target groups as such as educated unemployed, bonded labor and scavengers. Self/Special employment programs targeted towards families below the poverty line are programmed to cover 3 lakh families over the next year.

Government will reactivate the implementation of the protective legislation to safeguard the interests of the scheduled tribes. A most distressing aspect of scheduled castes and scheduled tribes situation has been the manner in which they have been deprived of their lands. Even as Government spends money to promote the welfare of the weaker sections, it is tragic to see thousands of these families reduced to total deprivation through exploitation. It shall be our endeavor to arrest such exploitation.


MINORITY WELFARE

Reflecting our concern for the welfare and development of various minority groups, we have made an allocation of Rs.4.81 crores for minority welfare which, apart from being an all time high, reflects an increase by more than 21/2times the amount allocated last year. This amount will be spent towards expanding the employment opportunities of the minorities and for strengthening the minority institutions.

LAW AND ORDER

Maintenance of law and order is the fundamental and inalienable responsibility of any Government indeed the reason d etre of the Government itself. Even at the best of times, an adverse law and order situation can undermine the processes of growth and development. The ongoing process of economic reform has strengthened the nexus between investment and the law and order situation. Potential investors build the law and order situation into their cost benefit calculus and negative perceptions on the account will mean not only no new investment but even flight of capital. Our Government, therefore, intend to guard the law and order situation very jealously. We will invest not only in the hardware required for modernizing our police force sensitive and resp0onsive to the people concerns and needs.

ADMINISTRATIVE APPARATUS AND EMPLOYEE WELFARE

Fostering growth and development, as the honorable members will appreciate, is much more than a matter of designing development programs and providing resources for them. No enduring results can be obtained unless we complement them with efficient delivery systems. World over, the revolutionary advances in information processing are changing the very character of management, both in the government and private sectors. It shall be our endeavor to reorient our administrative apparatus so as to exploit the advantages and opportunities of this information revolution . We plan to launch a massive programme to computerize all areas of administration. There are some misgivings about disemployment on account of computerization. I want to allay these fears by asserting that no employee will be displaced on account of computerization. We will, in fact, train existing employees in computer based administration.

In order to improve the administrative infrastructure, we plan to take up a massive program for construction of buildings for Mandal offices.

Modernization apart, we need an effective and motivated administrative apparatus. Over the years, our employees have earned enviable reputation for their sense of duty, enthusiasm and innovativeness. We hope and trust that they will continue to extend their support in helping us redeem our pledge to the people. It is incumbent on the Government to be sensitive to employees' kwelfar4e. I have personally received repre4sentations that the amount allocated for house building and marriage advances is far short of the demand. In order to redress this demand - supply gap, I am happy to announce an increase in allocation for house building advances from Rs.22.70 crores this year to Rs.52.70 crores next year and a similar hike in the allocation for marriage advance from Rs.1 crore to Rs.2crores.

RELIEF AND DISASTER MANAGEMENT

Relief effort to cope with natural calamities is no more treated as a fire-fighting exercise in the State. A well-planned strategy has been evolved for integration of relief measures with long term development like drought-proofing through better watershed management and comprehensive contingency plans to effectively meet natural calamities like cyclone, floods and drought etc.

Government are maintaining a strict vigil to meet any eventuality.


ACCOUNTS 1993-94

The final accounts for 1993-94 reveals a revenue surplus of Rs.232.28 crores. After taking into account the transactions on capital as well as public accounts, the year closed with an overall deficit of Rs.111.65 crores.

REVISED ESTIMATE 1994-95


Transactions as per the revised estimate of 1994-95 indicate a revenue deficit of Rs.739 crores as against the budgeted estimate of a revenue deficit of Rs.703.66 crores. The overall transactions of the year are estimated to result in a net deficit of Rs.3.69 crores. After taking into account the opening balance of (-) Rs.100.03 crores, the year end balance is estimated to be (-) Rs.103.72 crores.

BUDGET ESTIMATE 1995-96

During the financial year 1995-96, we have programmed for an expenditure of Rs.10459.75 crores under non/Plan and Rs.3159 crores under State Plan. This will result in a revenue deficit of Rs.925.37 crores. After taking into account the additional resource mobilization measures indicated earlier, the revenue deficit will reduce to Rs.714.37 crores. After taking into account the overall transactions of the year, we will have a net surplus of Rs.62.64 crores. With the opening balance of (-) Rs.103.72 crores, the financial year is expected to end with a negative balance of Rs.41.08 crores.

Notwithstanding the above deficit projections, I would urge the honorable members to appreciate that this is, in fact, a surplus budget. It would be surplus if we provide for compensation from the Centre for the total prohibition policy and support for the Fs.2 per kg Rice Scheme, which are our legitimate dues. As this House is aware, I had the privilege of leading an all-Party delegation to the Prune Minister and Union Finance Minister to request financial support for these major initiatives by our Government as a follow-up of the Chief Minister request for central support for these programs. May I once again urge the Central Government, through the forum of this House, to consider our request with the sympathy and urgency it deserves? Should central assistance be forthcoming, we will be in a position to increase our Plan outlays further.

Before concluding, I would like to stress that this budget should be evaluated not merely by the size of the allocations, but by the approach and philosophy of our Government for a new economic order under the dynamic leadership of NTR. Quality of programs, honesty of intent, transparency of action sincerity of effort and people involvement will be our guiding principles. I would also urge that we should keep politics out of development effort. We request the cooperation of all political parties in helping us in the gigantic task of development ahead of us.

With these words, I commend the Budget to this august House for approval.