INTRODUCTORY

Sir,

I rise to present the Vote-on-Account budget of the Government of Andhra Pradesh for the year 1996-97.

At the outset, a word of explanation on why a vote-on-account instead of a regular budget?

Hon'ble members are aware that the quantum of tax devolution and Plan support are crucial inputs to the receipts budget of the State Government. Tax devolution is a function of central taxes under income tax and central excise whose quantum is as yet uncertain as the Central Government itself had gone in for a Vote-on-Account, deferring the full budget till after the elections. Similarly, the Planning Commission too has deferred the Plan discussions advising us to adopt, for the time being, the figures for Plan support at current year's level for next year as well.

3 . Given the tentative nature of the central flows, we thought it advisable to seek the approval of this House for a Vote-on-account, deferring the full budget till after the central budget is presented when we will have a precise estimate of the statutory and discretionary Central support. I would like to take this opportunity, however, to define our Government's policy agenda for the coming year even if each and every component is not backed up by financial allocation in this Vote-on-account. We also look upon this Vote-on-account as an opportunity to get the valuable reaction of the Hon'ble members to our policy agenda so that the final budget can reflect the collective wisdom of this House.

If we are to enunciate our Government's policy goal in a single phrase, it is eradication of poverty . Poverty anywhere is inimical to growth everywhere. And growth, by itself, is a meaningless statistic unless it makes a sustainable impact on the poor. It is on this crucial issue that we differ from the Central Government on the economic reforms agenda. The Centres' thrust has been to push for growth with total insensitivity to the concerns of the poor. We, on the other hand, believe that no end of growth has any real value unless the benefits of growth can be shared in equal or greater measure by the poor who, after all, are the large majority. The Centre is obsessed with creating a level playing field. We say yes, do that, but at the same time enlarge the playing field so that more players can get on it.

Poverty is not a scourge but a scandal. I say so because the anti-poverty programme designed and sponsored by the Centre for nearly half a century have singularly failed in making even a marginal dent on the problem of poverty. The programmes betray a total lack of conviction and imagination. To have spent hundreds of crores of rupees and yet to make no impact on the lives of poor people is a scandal of immeasurable dimensions. Poor people do not understand the value of comfortable foreign exchange reserves or declining fiscal deficits. The only reality they relate to is the availability of the minimum basic needs of food, clothing and shelter. It is towards fulfilling these basic needs that our Government is committed.

As this House is aware, our party came into office with a mandate for launching an all out assault on poverty through two major instruments - subsidized rice at Rs.2 /- per kg, and a total prohibition. Development experience of the last half century indicates that it is futile to depend on trickle down theories of growth. They work - but do so exceedingly slowly. The depth and dimensions of poverty in our country demand more urgent and more effective mechanisms of income transfer. Rs.2/- per kg rice is a scheme perfectly tailored to address this issue. Our Governments' poverty eradication strategy is to make a direct assault on poverty through the subsidized rice scheme which we view as the centerpiece of our thrust on human resource development. Around this nucleus, we plan to build a number of other programmes to give the poor enhanced and sustained earning power. The rice subsidy scheme has been criticized as populist and as a meaningless handout. I do not propose to join issues in this debate except to say that the criticism is misinformed. The scheme has been hailed as the most innovative and effective anti-poverty measure by dispassionate and distinguished scholars and policy experts across the world. Closer home, every political party, irrespective of ideological stance on other issues, is adopting some variant of the rice subsidy scheme in its policy agenda. What more vindication do we need?

Total prohibition is an article of faith with us not because we want to preach from the moral high ground but because we believe that the welfare of the people should be the paramount concern of a democratically elected government. In fact, we view prohibition as the second major pillar of our anti-poverty strategy. After all, 85% of the excise revenue came from the poor people who in turn were driven into quagmire of financial ruin. Lakhs of families, earlier afflicted with the tragedy of alcoholism, are now able to lead happy, dignified and meaningful lives. Children brought up in such happy and healthy homes are going to form a strong and resilient foundation for the next generation of Andhras. Enforcement of prohibition is admittedly a difficult task and we are learning from our experience. We have tightened vigil and enforcement. AT the same time, we have launched an educational campaign to propagate the evils of drinking. It is our earnest hope that in the years ahead we will be able to downsize the enforcement machinery as more and more people voluntarily opt for abstinence.

Admittedly, the rice subsidy scheme and total prohibition policy have had a heavy impact on State finances. In shifting from partial to full prohibition we sacrificed excise revenue of the order of Rs.600 crores and sales tax of the order of Rs.300 crores. In reducing the price of subsidized rice from Rs.3.50 of our predecessor Government to Rs.2 per kg., while simultaneously increasing the quantum of allocation from 20 kgs to 25 kgs per family, we have contracted an additional liability of Rs.600 crores at the current price level. The loss of revenue from prohibition and the additional commitment on rice subsidy together add up to a fiscal stress of the order of Rs.1500 crores which works out to 30% of our tax base of the order of Rs.5,000 crores. Making an adjustment of this order, and that too abruptly, is a difficult task; but not an impossible one.

No adjustment process can be totally painless, but it shall be our endeavor to minimize the pain and maximize the efficiency of our adjustment. We solicit the advice and guidance of the Hon'ble Members on methods for augmentation of revenues and reprioritization of expenditure so that we are able to build a robust financial structure that will not only balance our books but generate a surplus for the development of the State.

I want to take this opportunity to clear a very widely held misunderstanding that our Government has been fully compensated by the Tenth Finance Commission (TFC) for the expenditure on the rice subsidy scheme and the loss of revenue on total prohibition. This is far from true. What the TFC took into account was only the expenditure on rice at the subsidized price of Rs.3.50 per kg., and loss of revenue on account of partial prohibition - a policy regime obtaining under our predecessor government. The support extended by TFC for the rice subsidy scheme, even at the higher price of Rs.3.50 per kg., is on a declining scale and available only for 2 years. The burden of the additional liability of Rs.1,500 crores that I indicated earlier is being borne entirely by the State Government. We had requested the Centre to compensate us fully for the loss of revenue on total prohibition as this policy is in conformity with the cherished dream of the Mahatma and the Directive Principles of State Policy enshrined in the Constitution. It is with utmost disappointment that I have to inform this House that we have not yet got a positive response from the Centre.

It may be appropriate at this point to define our position on Centre-state financial relations. WE are opposed to the structure of fiscal federalism as it has evolved over the years. The Centre is currently transferring as little as 26% of its total tax revenue to the States through devolution. The proportion of discretionary plan transfers has been going up as compared to statutory flows through the Finance Commission route. The Centre is also deploying large sums of money for centrally sponsored schemes which are rigid in structure and operation. These are all very disturbing trends as they reflect the tendency of the Centre to encroach on the financial and administrative autonomy of the States. It is futile, if not counter-productive , for the Centre to sit in judgment on prioritization of expenditure and operational details of Developmental schemes. These should best be left to democratically elected governments at the state level. The Centre should confine itself to transferring resources as a bulk grant.

Specifically, the broad contours of our policy on Centre - state financial flows are the following. The Centre must transfer at least 50 % of its total pooled tax revenue to the states on a formula to be determined by the Finance Commission. Gap filling grants under Article-275, of the Constitution should be in addition to this. The total allocation for the centrally sponsored schemes should not exceed 5% of the pooled tax revenue of the Centre. In addition, the Centre should give plan loans on a project by project basis. Restrictions on the State Governments' borrowing from the market should also be lifted. This restriction, may I add, is anachronistic in an economy that is shifting to a market system. The states should be allowed to borrow as much as they can or they want, the limit being determined not in an arbitrary manner by the Centre, but by the discipline of market forces. Lastly, transfers to local bodies should be a shared responsibility of the Centre and the states.

REVIEW OF ECONOMIC TRENDS

As per the quick estimates for the year 1994-95, the net State Domestic Product at current prices was Rs.50,679 crores, as against Rs.46,318 crores for 1993-94, registering an increase of 9.4 %. The net State Domestic Product at constant prices is estimated at Rs.13,167 crores during 1994-95 as against Rs.13,149 crores during 1993-94 reflecting an increase of 0.13%.

The per capita state income at current prices increased from Rs.6,651 in 1993-94 to Rs.7,155 in 1994-95, registering an increase of 7.6%. At constant (198081) prices, the per capita income declined from Rs.1,888 in 1993-94 to Rs.1,859 in 1994-95 showing a decrease of 1.5%

ANNUAL PLAN

The revised outlay for Annual Plan 1995-96 is Rs.2,720 crores compared to the budget provision of Rs.3,159 crores. We took this House into confidence on the reasons that forced us to downsize the Plan. Among them are shortfall in receipts under sales tax and Stamps and Registration, sluggish response to small savings in view of competing avenues for saving and non-sanction of the AP-3 project by the World Bank. The most important reason, however, is the reneging by the Planning Commission on the assurance given to us about additional plan support of Rs.750 crores. Of this assured support, the Planning Commission had given a paltry amount of just Rs.114 crores, leaving a huge gap of Rs.636 crores. The Chief Minister had written to the Prime Minister, Finance Minister and the Deputy Chairman, Planning Commission and also represented to the Prime Minister personally on this issue on a number of occasions. However, the response of Government of India has been extremely unreasonable and intransigent. This House would recall the resolution it passed on 15 th June, 1995 to request the Prime Minister to use his good office with the Planning Commission to honour its commitment of giving additional central support of Rs. 750 crores without linking it to the recommendations of the Tenth Finance Commission. I am deeply pained to report that Government of India has not acceded to this resolution of this House.

Even though we have had to scale down the Plan size for reasons beyond our control, we have taken care to protect the allocation for the Social Welfare sector and also made allocations of Rs.75 crores for the Assembly Constituency Development Programme and Rs.46 crores for schemes under Prajala Vaddaku Palana.

In view of the communication from the Planning Commission to tentatively adopt current year's figures for the next year Annual Plan as well we have kept the Annual Plan for 1996-97 at Rs.2,725/-., crores.

PRAJALA VADDAKU PAALNA AND SHRAMA DANAM

Administration at the door step of the people has a rich and hoary tradition in our history and folklore. In independent India, every government swore by this but they treated it as no more than a political buzz word. With the delivery systems at the cutting edge level becoming unsympathetic, unfriendly, if not outright hostile, the common man almost totally gave up on the system. It is a tribute to the imaginative leadership and true grit determinations of the Chief Minister that he changed this perception of the common man once and for all through the Prajala Vaddaku Palana Programme. Not only was the programme innovatively conceived but also systematically and methodically implemented with the Chief Minister personally participating in the programme in almost every district.

19 Under this programme, teams of officials and non-officials visited all the villages and habitations with population exceeding 200 in the State to identify the needs of the community and the grievances of the individuals. In similar initiatives of the earlier Governments, this would have been the end of the story but under our programme, there are repeat visits by the teams of non-officials and officials to redress the grievances and to evolve solutions to the problems in consultation with the people. This constructive interaction between the people and the administration has let not only to the solution of long pending problems but also to a better appreciation of the perceptions on either side . The programme has also contributed to better awareness among the common people of the various developmental schemes and programmes of the Government.

As up to the end of February 1996, as many as 68329 community works with a financial outlay of Rs.456 crores were sanctioned in 58,767 habitations under PVP, of which 48,786 works have been grounded and 16,086 already completed. Of the nearly 1.26,120 non-financial community problems and grievances, over a lakh have been redressed to the satisfaction of the people. As many as 42,79,126 individual grievances have been received of which 28,58,203 have since been redressed. The follow-up of the PVP related petitions was reviewed at the recent Collector's conference and necessary instructions were issued for redressal of the remaining grievances and problems. It is our Government's intention to continue with this programme so as to provide an institutional basis for the participation of people in administration.

We hear of an international debate today in mature democracies such as the UK and USA about operationalization of a 'stake holder' economy i.e., to give a meaningful role to the people at large in the development of the society. I am happy and proud to say that our Government has translated this issue beyond debate into action through the Shramadanam programme. The accent of the Shramadanam programme, launched to coincide with the New Year of 1996, has been to harness the energy, effort and enthusiasm of the people to build and maintain community assets. The programme evoked spontaneous participation from the youth, NCC and NSS cadres, womens' groups, officials and non-officials and people at large. A Shramadanam fund has been constituted in every district with a corpus contribution from the Government and with facility to receive contributions from the public. The fund will be utilized to supplement the contribution in terms of effort from the community. Upto the end of February 1996, 27,968 works were taken up spread over 21,278 habitations enlisting the participation of 18.59 lakh people. 24,170 works have been completed so far.

IRRIGATION

Our Government attaches utmost importance to the full exploitation of the irrigation potential of the State by completing the ongoing projects while simultaneously making a headway on new projects. Of the 413 acres of potentially cultivable land, 292 lakh acres is being cultivated now of which only 121 lakh acres has been drought proofed under various assured sources while the rest is rained. The ultimate irrigation potential under surface water in the State is estimated to be 217 lakh acres and the Government is determined to achieve this goal in a phased manner.

Government intend to accelerate the construction of new projects under the Krishna Basin to utilize the maximum surplus water allotted to AP by 2000AD. Towards this end, steps have been initiated for grounding Galeru Nagari Srujala Sravanthi (GNSS), Handri-Niva Srujala Sravanthi (HNSS) and Veligonda Projects, which will provide long-awaited irrigation facilities to the drought prone areas of Telangana and Rayalaseema. The work on Priyadarshini Jurala Project is at an advanced stage and water is proposed to be let out by the next crop season to irrigate an extent of 44,000 acres. Work on Srisailam Left Bank Canal (SLBC), dormant for the last 5 years, has been expedited. Pulichintala has been started in right earnest.

Hon'ble Members are aware that the Vamsadhara -Stage:II project is being delayed pending a negotiated settlement with Orissa. In order to overcome this problem, the project is being designed in two phases. The first phase will entail a Lift Irrigation Scheme for pumping water from the existing Gotta barrage into the Heeramandalam reservoir. This will not cause any submergence in Orissa and will therefore obviate the need for negotiating a settlement with them. This first phase will provide irrigation potential to 87,245 acres with an outlay of Rs.527 crores. This first phase will be launched during next financial year without any prejudice to the second phase which will complete the balance work of Vamsadhara stage-II as originally conceived.

We expect that the boundary dispute between Andhra Pradesh and Orissa covering some reserve forests, which is responsible for the delay in completion of the Janjavathi Project, will be sorted out during 1996-97 so that the reservoir can be made operational. In order to complete the modernization of the entire KC Canal system, financial assistance has been secured from OECF of Japan.

We are making all-out efforts to complete most of the ongoing medium and minor irrigation projects under the RIDF scheme. A total number of 74 schemes (2 major , 10 medium, 48 minor and 14 lift irrigation projects) have been approved by NABARD for loan assistance with an outlay of Rs.207 crores (Rs.162 crores for medium irrigation , Rs.35 crores for minor irrigation, Rs.6 crores for major irrigation and Rs.4 crores for lift irrigation sectors ) to create an irrigation potential of 2.25 lakh acres. The projects are proposed to be completed by the end of the next financial year.

Projects awaiting external aid like SRSP, SRBC and NWMP continue to receive our due attention and all works are continuing as per the original schedule. The foundation stone for SRSP (Phase-II) was laid by the Chief Minister recently. Work on this project will be started immediately. Under Telugu Ganga Project, apart from supplying water to Madras city, we expect to provide irrigation cover to 60,000 acres under the project next year.

Under the APWELL Project, the Government of Netherlands has cleared the project proposed by AP State Irrigation Development Corporation for drilling 5400 borewells in 7 districts viz, Kurnool, Mahaboobnagar, Ananthapur, Prakasam, Nalgonda, Chittoor and Cuddapah Districts at a cost of Rs.52 crores to create irrigation potential of 40,500 acres.

In the delta areas of the State, productivity gain is as much dependent on irrigation facilities as on efficient drainage systems and their proper maintenance. Though under the cyclone emergency project, many major and medium drains could be improved, there are still many minor drains and a few medium drains in need of repair. We are taking steps to improve the drains which were not covered by the cyclone project.

To expand and utilize the irrigation potential of the State, we need to have accurate information base on hydrology. Therefore we are taking up implementation of the World Bank aided Hydrology Project during 1996-97. This project would help us in installation of modern instruments, equipments etc., for collection of surface as well as ground water data. The project also provides for construction of field laboratories for testing the quality of water.

In order to augment public resources for quick exploitation of the irrigation potential, Government have recently tapped the market through a private placement bond issue using the AP State Irrigation Development Council as the window. The size of the issue is Rs.100 crores with a green shoe option for a similar account. We have so far been able to tap Rs.64 crores while an additional amount of over Rs.40 crores is under pledge.

Although irrigation is a "state" subject, there has been great deal unwarranted centralization in the clearance of projects. In the recent meeting of National Water Resources Council, the Chief Minister argued that Government of India should appreciate that the objective of national food security, achieved through self-sufficiency, can be best fulfilled if the large number of irrigation projects formulated by the State are cleared immediately. If the urgency with which the state is pursuing these projects, especially those in Krishna and Godavari basins, is ignored and the legitimate aspirations of the people of Andhra Pradesh are stone-walled and countered by ceaseless queries and clarifications, the frustration of the people of the state may further increase. We have been actively canvassing CWC clearance for 17 major and 10 medium irrigation projects. Clearance for 5 projects has since been given due entirely to the perseverance of our Government under the determined leadership of the Chief Minister. We will purse the remaining projects with the same determinations.

ENERGY

The energy sector is beset with acute demand supply imbalances requiring urgent intervention at a number of levels. The installed capacity for power in the state sector as at the beginning of the financial year was 5.211 MW comprising 2,453 MW of Thermal, 2.656 MW of hydel, 100 MW of gas and 2 MW of wind power. In addition, the state is receiving 987 MW as its share from the central grid. Further, wind power stations with a capacity of 3 MW in the private sector have been commissioned recently. Thus, the total capacity feeding state grid stands at 6,111 MW.

As is well known, our thermal power stations have a record of efficiency with an operating plant load factor as high as 74.5% . The current shortage is because of poor hydel generation owing in turn to poor inflows into the Srisailam reservoir coupled with a simultaneous increase in demand from the farm sector because of deficient monsoon. Hon'ble members will kindly note that the structural shortages in the Power Sector, however , are a result of years of neglect of the power sector by the previous government. In order to manage the demand supply imbalance, Government had to reluctantly impose power cut on HT consumers and load shedding on domestic consumers. However, supply to the agricultural sector is being maintained for 9 hours a day. In order to ensure power supply of stable voltage to the farm sector, the APSEB commissioned about 14,000 transformers for the farmers over the last 6 months at a cost of Rs.130 crores. APSEB, in consultation with the Government has made every effort to rationalize the HT cut and load shedding programme in order to minimize loss of production and inconvenience.

Our strategy in the Power sector is to bridge the demand-supply gap from the demand side in the short term and from the supply side in the medium term. Towards this end, Government have prepared an urgent action plan aimed at a capacity addition of about 2,000 MW by the end of December, 1996. The first unit of the Kothagudem Thermal Power Station is expected to be commissioned shortly. The Jeegurupadu and Kakinada power stations, both in the private sector and gas based, will also go on stream during this calendar year. These major capacity additions will be augmented by wind power stations and short gestation mini power plants coming up in the private sector.

The Rayalaseema Power Station Stage-II has now received all the necessary clearances, including those from Central Electricity Authority (CEA), Planning Commission and coal linkage. We are exploring the possibility of external financial support for this project.

The CEA has also accorded techno-economic clearance for Jurala Hydro-electric station. AS Hon'ble Members are aware, this is an inter-state project with the costs and benefits to be shared equally by Andhra Pradesh and Karnataka. We have requested the Government of India to obtain financial support from the OECF of Japan, for this project. The CEA has also cleared the Tail-pond Dam Power House on the downstream of the Nagarjunsagar Dam with a capacity of 50 MW at an estimated cost of Rs.358 crores. However, clearances are awaited from the Ministry of Environment and the Planning Commission. Meanwhile we are seeking external support for this project also.

What would have been an extremely critical power situation has been brought under control entirely because of the untiring efforts of the Chief Minister. Despite many other issues demanding his attention, he spent several days and nights on devising a power management strategy that would minimize inconvenience and production losses. He has also been monitoring the power situation on a daily basis. I also want to assure the Hon'ble Members that while encouraging private initiative in the Power sector, we have ensured that our policies and procedures are rational transparent and predictable.

INDUSTRIES

The new economic policy of liberalization and deregulation has meant dismantling of controls on the types of industry, their size and location. States now have to compete with one another to attract investment. We have several advantages in this competition, such as geographically central location, a rich endowment of industrial resources, a resilient agricultural base , competent scientific and technical manpower, skill and knowledge intensive workers and productive and peaceful labour. Our main weakness is the gaps in infrastructure like roads, power, industrial water, ports, etc. The more attractive incentive structure offered by our neighboring states has also been diverting potential investment away from our state. The new industrial policy formulated by our Government factors in these strengths, weaknesses, opportunities and threats. The policy has three main components.

First, the policy offers a competitive package of incentives. It offers sales tax exemption for 7 years or sales tax deferral for 14 years, besides capital subsidy and rebate on power tariff in the initial years. The package of incentives for entrepreneurs belonging to weaker sections is significantly higher. In order to reduce the pressure on urban areas the incentives scheme has been made inapplicable within the municipal corporation limits of Hyderabad, Visakhapatnam, and Vijayawada.

The second major thrust of the industrial policy is to bridge the gaps in infrastructure. Government have thrown open development of ports, roads and industrial water supply to private initiative on a commercial basis. Bids for investment for infrastructure are invited, scrutinized and approved in a competitive and transparent manner.

The third thrust area of the new industrial policy is to make the entrepreneur - government interface friendly , constructive and meaningful. The accent is on making the decision process transparent and time bound. A single window clearance system located in the office of the Commissioner of Industries acts as a one stop shop for all clearances. Large industrial projects are also assigned escort officers for trouble shooting and facilitating smooth project implementations. For speedy decision making at the apex level, Government have constituted the State Investment Promotion Board under the chairmanship of the Chief Minister. The Board has been meeting very frequently to appraise specific investment proposals and streamlining the clearances.

The response to the new industrial policy has been extremely encouraging. There has been substantial increase in the number of enquiries being received by the Industrial Department as also in the number of enquiries translating into projects at the ground level. Some of the green field projects under implementation are a major fertilizer factory near Visakhapatnam, a large cement plant at Tadipatri, a major unit for manufacture of PTA at Samarlakota, a1 million tonne urea plant by IFFCO at Nellore, development of Krishnapatnam port besides expansion and diversification of a number of existing large industries. By the end of January 1996, 569 projects involving investment of over Rs.15,000 crores and an employment potential of over one lakh were under various stages of implementation.

Government also plan to develop large scale industrial parks over areas exceeding 10,000 acres with dedicated infrastructure facilities by way of power, roads, industrial water and telecom. The 5 pilot projects in this regard are coming up at Krishnapatnam, Kakinada, Nagarjunasagar Sagar, Tirupathi and Visakhapatnam.

It is our Government's endeavor to achieve investment of the order of Rs.100,000 crores before the turn of the century.

AGRICULTURE

To say that agriculture is the backbone of our economy is a cliché. Even so the statement is more true today than ever before. Even as the thrust of the economic reforms is on the modern sectors of the economy, we are deeply conscious that it is the agriculture sector alone which can provide resilience to our economy and employment to the vast millions. It is our Government's intention to impart dynamism and vibracy to both farm and non-farm segments of the agriculture sector. While we will continue to support small and marginal farmers through credit and extension inputs, we will simultaneously encourage large farmers and corporate houses to take up agriculture on a commercial basis. This will have a significant multiplier effect on both forward and backward linkages and employment in the rural sector.

To attract private investment into the Agriculture sector, our Government will create an environment for the integration of the three sub-systems of agricultural production, marketing and processing. A beginning has been made in this regard by issuing orders that floriculture is an agricultural activity, but at the same time making it eligible for all the subsidies and concessions available to industries including investment subsidy. Floriculture enterprises will also be governed by more liberal guidelines relating to pollution control land use. Government propose to extend similar benefits in a phased manner to mushroom and tissue culture units. To facilitate the flow of institutional credit to these value added activities, we will request financial institutions to include the value of land in the project cost and to capitalize the working capital requirement for the first year.

Government propose to give a thrust to the export of mango. In order to penetrate global markets, our mango fruits has to be competitive both in price and quality. The Banganapalli variety of mango, although premier pedigree, is not known internationally . Government propose to set up a boards to provide an integrated package of advice and services to mango farmers. Simultaneously, the AP Agricultural University will be advised to concentrate on upgrading the quality and productivity of mango.

Our state has a long tradition of cooperative movement. However, certain undesirable developments over the years in the cooperative sector have necessitated a review of their regulation and functioning. It is with pride, I think justifiable pride, that I inform this House that while the rest of the country is still debating on the modalities of allowing greater autonomy in the functioning of the Cooperative institutions, our Government led the way by passing the AP Mutually Aided Cooperative Societies Act in July, 1995 with a view to according autonomy to the Cooperative institutions in their management and functioning.

Since its enactment, 36 Societies have been registered under this Act while another about 100 proposals are under consideration. Government have constituted a broad based Committee, including representatives of national level cooperative institutions, for registration of new societies as also conversion of existing Societies under the new statute. It has also been decided to delegate the powers of the Registrar to District Cooperative Officers to facilitate registration of new Societies.

With a view to enhancing the quantum and streamlining the procedures for cooperative credit, a Memorandum of Understanding (MoU) was entered into with NABARD and the progress of implementation is being constantly monitored. The Government have also constituted a Committee to comprehensively examine the various issues for improving the viability of the Primary Agricultural Cooperative Societies and we are eagerly awaiting the report of the Committee. Similarly, Government have constituted a Committee to recommend the total integration of cooperative marketing structure for providing more-efficient forward and backward linkages for the marketing of agricultural produce.

The ongoing Integrated Cooperative Development Project for comprehensive development of Cooperative Societies has been expanded by adding two more projects for Kurnool and Nalgonda districts with a total outlay of Rs.15.42 crores during 1995-96.

53. During 1995-96, the Agricultural Market Committees are expected to collect the highest ever market cess of Rs.150 crores. A major portion of this amount will be utilized for improving facilities in the market yards, their modernization, agricultural produce and for providing soft loans to the farmers to dissuade them from resorting to distress sales. It is also proposed to earmark about Rs.20 crores from the Market Fund for trade in fertilizers to ensure its timely availability to the farmers at reasonable price.

ROADS AND PORTS

Roads is another infrastructure sector that will accelerate both agricultural and industrial development. Our effort in the roads sector would be to improve the quality of state highways and major district roads and widen the network. Towards maintenance of state highways and major district roads, we have stepped up the provision from Rs. 197 crores of the current year to Rs. 2500 crores for the next year.

This House was informed about Government's efforts to secure assistance of the order of Rs. 1300 crores from the World Banks for the improvement of important roads in the State. Over the last one year, several World Bank Mission have further studied the project and we expect that the loan negotiations will be concluded during the next financial year. Similarly , we have reiterated our request for assistance from the OECF of Japan for the project covering improvement of major district roads and reconstruction of weak bridges with an outlay of Rs. 632 crores . The Hyderabad-Karimnagar -Ramagundam and Kakinada-Rajanagaram high speed road corridors, with support from the Asian Development Bank, are near completion and will be commissioned by the end of this calendar year.

Government have an open mind about enlisting private initiative in the construction of roads and ports. The response, however, has not been very encouraging, mainly because of this being a new arrangement and lack of experience among private parties in such ventures. With several pilot projects under private initiative already launched in other parts of the country, we hope that our initiative will translate into action in the course of this year.

Kakinada port is being developed as a deep water port at an estimated cost of Rs.293 crores with assistance from the ADB. In order to maximize returns from this investment, Government intend to augment the traditional business of this port by developing a market niche for import and export of high value products. A comprehensive project for developing Krishnapatnam as a major port to cater to the needs of the industries as well as southern power plants has been launched.

CIVIL SUPPLIES

In order to make the rice subsidy scheme more broad based and reach out to all the poor, Government raised the family income for eligibility for white ration cards from Rs. 6,000 to Rs. 11,000 per annum. It is our intention to cover all eligible families as per this revised income criterion with white cards notwithstanding the burden on then exchequer.

Several steps have been taken to streamline the public distribution system. Weighments at the fair price shops is required to be conducted in the presence of Food Advisory Committee/Village elders. The composition of the Food Advisory Committee itself has been broadbased providing membership to women, representatives of consumer organisations, recognized political parties, weaker sections, minorities and social workers.

In a further effort towards empowering the women and bringing them into the mainstreams of development process, our Government have decided that all fair price shops other than those held by institutions will be transferred to women in a phased manner.

In order to eliminate cheating of consumers, the end consumer price of sugar has been rounded off to Rs. 9 per kg and that of kerosene to Rs. 3 per litre. The resultant expenditure is being borne by the State Government.

Even as the Centre is claiming credit for the downward spiral of inflation, the common man is still having to face a very harsh price line., The inflation index, computed on the basis of changes in wholesale prices and that too of a basket of commodities unrelated to the consumption pattern of the common man, is a poor indicator of the burden of inflation at the consumer level. This house is aware that it is the macroeconomic fiscal and monetary policies of the Centre that influence price line. The State governments have very little influence. Even so our government is doing its very best to keep prices under check. The prices of essential commodities are being monitored by the Government on a day-to-day basis. Several meetings were also held with dealers and millers to appeal to them to keep the prices under check. Similarly, at the district level, the Collectors have been holding meeting with representatives of trade and consumer organisations.

WOMEN WELFARE

If poverty has a gender, it is female. If poverty has a face, it is that of the girl child. The developing world has learnt, albeit the hard way, that no intervention at poverty eradication can be successful unless it has a distinctly positive female bias. Our Government's action plan for women is founded on this principle.

In order to bring women into the mainstream of polity and society, we need to focus on the girl child. Towards this end, we have evolved a comprehensive scheme whereby any girl child who is registered under the scheme will be provided financial inputs at critical stage such as admission into school, promotion from primary to middle school, monthly stipend during the high school years for 10 months in a year and a final payment of Rs. 20,000 on completion of 20 years of age in anticipation of career and marriage. An amount of Rs. 2 crores is proposed to be provided for this in 1996-97.

Government plan to set up a State Commission for Women on the lines of the National Commission which will serve as a watchdog for women's rights. The Commission will examine the existing legislation which attempts to ensure equal opportunity to women to participate on an equal footing with men in all areas, ascertain its effectiveness and appropriateness and also bring in amendments wherever necessary. The Commission shall be invested with the necessary powers to ensure that all cases of violence against women are investigated in an effective manner without undue procedural delays and the guilty are brought to book in a manner which serves as deterrent to such crime in future.

In addition to the existing Mahila Court at Hyderabad, Government have issued orders setting up 2 more such Courts - one at Vijayawada and one at Visakhapatnam to provide speedy and effective justice to women. Orders have also been issued reserving 40 per cent of the seats in RTC buses for women.

The earlier 30% preference for women in Government jobs and in education has been amended to 33 1/3% "reservation". The Prime Minister has also been addressed requesting him to order reservation of one third of vacancies for women in Central and All India Services. This will not only neutralize generations of disadvantage but also give our policy formulation and implementation apparatus the necessary female slant.

In order to ensure institutional support for women development , Government have issued orders directing all industrial promotions and welfare agencies to 'reserve' 33 1/3 per cent of their assistance to women. All Government benefits such as titles for assigned land and development loans will be given in the name of women. In addition to the existing 192 ICDS Projects in the State, 17 new projects were added during 1995 for which an additional budget of Rs. 3 crores is provided towards supplementary nutrition.

YOUTH WELFARE

Youth constitute about 35 per cent of our population. It is imperative that this vast storehouse of potential is harnessed for nation building. With a view to channelizing their energy for the purpose, Government have initiated a comprehensive youth policy in the State. We propose that youth associations be formed at village levels. These associations will be associated with the overall development of the village and would be liaising with various Governmental agencies and Departments e.g. DRDAs, Engineering Departments and financial institutions to ensure adequate and purposeful flow of funds for the economic development of the village. Similar youth federations are contemplated at the Mandal level also. Government , on its part, would be extending financial help through Departmental budgets to such associations and federations to enable them to take up their activities Wherever possible, maintenance works would be entrusted to them to enable generation of resources.

We have also recognized the hardships faced by candidates who have to appear for interviews conducted by the A.P. Public Service Commission and various State Government agencies and departments. Consequently, we have ordered that they shall be allowed free travel by APSRTC buses anywhere in the State when they are to attend such interviews. Youth Hostels at District headquarters will also provide them with rent free or concessional accommodation. In addition, the youth would also be paid a daily allowance of Rs. 25.

To enable a successful and purposeful implementation of the youth policy, we will earmark Rs. 150 crores in the regular budget;.

SOCIAL WELFARE

Our broad policy goal in welfare of the weaker sections is to neutralize the burden of generations of disadvantage and helps them join the mainstream of society as useful and relevant citizens.

To start with, Government have issued orders replacing the work 'harijan' by 'dalit' in all official correspondence. It is proposed to distribute 5 lakh house sites during the current year. Outlay is proposed to be increased for community service projects of agricultural lands. Government have also launched a special drive to fill up 13,000 backlog vacancies of scheduled castes and schedule tribes by March, 1996. Study Circle Centres have been established in every district headquarters to provide training to schedule castes and scheduled tribe candidates for competitive examinations.

The mess charges for pre-matric hostels borders have been enhanced from Rs. 150 to Rs. 210 pm with effect from 16 January, 1996.

Government will also bring in a legislation to enforce the reservation for scheduled casts and scheduled tribes more rigorously. The legislation will propose criminal action against those violating the rule of reservation. Government will also provide representation to candidates from scheduled casts and scheduled tribes on the Executive Councils of Universities. Besides introducing reservation for scheduled casts and schedule tribes in the posts of Legal Officers, Government will also bring an amendment to the existing laws, in consultation with Government of India, for introducing reservation for scheduled casts and scheduled tribes for the posts of judges at all levels.

To avoid inconvenience caused in obtaining caste and nativity certificate, it has been decided to issue an integrated caste certificate indicating the caste and nativity of the individual on a permanent basis.. Government of India will be requested to accept the integrated caste and nativity certificate for purposes or reservation in education, jobs, etc,. Fort the welfare of the tribals, in addition to continuing and expanding the existing programmes, our emphasis will be on improving the effectiveness of the delivery systems. We will also concentrate on improving the quality of education and health care.

Some of the specific components of the Government's tribal welfare policy are establishment of 200 additional domestic requirement depots, upgradations of all tribal welfare residential schools into residential junior colleges in a phased manner and accent on development of irrigation and drinking water facilities in all tribal habitations of the State. Financial support will be extended to 5000 tribal youth under self-employment programme while 5000 self-help women groups will be promoted for the propagation and implementation of health, education and nutrition programmes.

BACKWARD CLASS WELFARE

The welfare of backward classes has been a long neglected sector and our Government is determined to making amends for past neglect. Towards this end, several policy initiatives will be launched .

Steps for educational advancement include reservation of 1/3 post-matric scholarships for backward classes girls; conversion of backward class welfare hostels into Residential Schools over the next four years; sanction of at least one Junior College Hostels for backward class girls in each district and establishment of pre-examination coaching centres in each district to enable the back ward class students prepare for competitive examinations.

Government have decided to introduce the carry forward principle in implementing the rule of reservation in public serviced on par with scheduled castes and tribes. In order to implement the rule of reservation effectively, Government have also decided to amend the AP Commission for Back ward Commission to inquire into specific complaints of violation of rule of reservations.

In order to improve the economic condition of the backward class below the poverty line, Government have decided to take up 10,000 irrigation borewells for small and marginal farmers with an outlay of Rs. 50 crores.

We will also launch a massive economic development programme for the traditional occupational groups among the Backward Classes with an outlay of Rs. 148 crores to benefit about 1.3 lakh families over a period of two years with subsidy of Rs. 35 crores; margin money of Rs. 28 crores; loan component of Rs. 69 crores and beneficiary contribution of Rs. 16 crores.

MINORITIES WELFARE

Our Government is deeply sensitive to the fact that minorities in general, and their women in particular, are trapped in the vicious circle illiteracy, unemployment and economic backwardness. The intervention strategies of the past, targeted at educational and economic development, did not make much headway as they were at best piecemeal and adhoc efforts. Our Government have launched a comprehensive minority welfare policy based on the lessons of experience and aimed at bringing minorities into the mainstream of society. The policy aims at removal of illiteracy and backwardness, promotion of cultural heritage, removal of the sense of discrimination and creating access to developmental programmes administered by the Government.

Several initiatives have already been launched. 10 per cent of the houses and house sites under the Weaker Sections Housing Programme are earmarked for minorities. 750 vacancies of Urdu Teachers have been filled by offering free coaching for eligible candidates. Selection Committees for recruitment of 10 or more candidates in Groups 'C' and 'D' will have representation of the minorities. An amount of Rs. 1 crore has been sanctioned for repairing and renovating mosques and other wakf institutions while funds have been provided for construction of Urdu Bhavans cum Shadikhanas in various locations in the State. Plans are afoot for the constructions of a 'Haj House' at Hyderabad. Keeping in view the large concentration of minorities in the old city, an amount of Rs. 3 crores has been earmarked for developmental activities there.

Our plans for next year include earmarking proportionate percentage of grants for the benefit of minorities under anti poverty programmes like IRDP, Self Employment Schemes etc., An amount of Rs. 1 crore will be set apart exclusively to provide self employment opportunities and implement anti poverty schemes in the old city. Government will take initiative in arranging Enterpreneur Development Programmes to encourage the spirit of enterprise among minorities while minority women in the urban areas will be brought under DWCRA coverage.

To focus attention on the problems of minorities, District Minority Welfare Officers will be located in 8 districts where minorities are concentrated viz., Hyderabad, Ranga Reddy, Nellore, Guntur, Kurnool, Cuddapah, Medak and Anantapur. The Secretary, Minorities Welfare Department will also function as the Commissioner for Minority Welfare with operational flexibility.

In the Education Sector, the infrastructure facilities in Urdu medium schools will be improved. 300 posts of urdu teachers will be created in phases for serving areas of minority concentration. 3 Urdu medium residential schools and 4 junior colleges will be established while 3 rural polytechnics and 3 ITIs will be set up in the districts with concentration of minorities. We are in the process of identifying and recommending a suitable site around Hyderabad for the location of the National Urdu University. Scholarships will be sanctioned to minority students starting this year as a non-statutory benefit.

To inspire the trust and confidence of the minorities, the Minorities Commission will be accorded statutory status. Minorities will also be provided representation on the Boards of public enterprises, autonomous bodies and University Executive Councils.

EDUCATION

If empowerment of the people is the objective, education is the key. We believe that uniform and compulsory education empowers people in a more immediate way than even universal franchise. Our Government is committed to the objective of education for all through emphasis on primary, vocational and adult education. Our strategy will be to enhance both the supply of education through public and private initiative and demand for education of children from parents. We will pay particular attention to the education of the girl child, as female literacy is, in our opinion, the single most dominant variable in achieving sustained development.

The District Primary Education Project, with financial support from the Overseas Development Administration of the UK, will be implemented effective 1996-97 in the districts of Kurnool, Nellore,Vizainagaram, Karimnagar and Warangal., 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 the primary education in other districts. The project emphasizes teacher training and motivation, child centered learning and activity based teaching. One of the maladies afflicting our primary education system is high children-teacher ratio. In order to improve this ratio, while continuing the posts under the OBB scheme, Government have sanctioned additional 3,000 special teacher posts as a second teacher to all primary schools and 3,255 posts as a third teacher in primary schools with enrollment exceeding 100 teachers.

Towards improving the physical infrastructure of primary education 2,227 class rooms are proposed to be constructed next year under OBB with a financial outlay of Rs. 10 crores. Quality of instruction is sought to be reinforced through audiovisual aids, computer teaching through the CLASS project and strengthening of science education in schools.

In the Higher Education sector, Government's effort will be to improve the quality of education without encroaching on the autonomy of the institutions. An expert Committee, appointed by the Government to evaluate the functioning of the Universities in the State, has since submitted its report. The report is being examined in consultation with the State Council for High Education. As the House is aware, a technical education project with World Bank assistance for the improvement of the Polytechnics is already under implementation; the outlay has now been increased by nearly 30% to Rs. 103.20 crores. Consistent with our intention to provide access to higher education to students of merit, we have taken a decision to introduce a State level common entrance test for students seeking admissions to professional courses of MBA and MCA as well from the next academic year. While state funding of higher education will not be reduced, there will be an effort to encourage private initiative and investment in higher education. Government funding will increasingly focus on job oriented vocational and technical education.

MEDICAL HEALTH

Health care, along with education, constitutes the foundation for sustained growth and development. In this regard, our priority is to develop preventive and promotive health care services and not get confined to merely curative aspects.

The year 1995 also marked the launching of a massive programme with World Bank assistance to strengthen the secondary level hospitals under the control of AP Vaidhya Vidhana Parishad. On completion of this project, we will have a network of district, area and community hospitals spread all over the state, with infrastructure and trained manpower equipped to deal with various medical exigencies. The project is now well under implementation and is expected to deliver results from early next year.

We are also committed to ensuring the presence of doctors and availability of drugs and medicines in rural areas. Notifications have already been issued to fill all the vacancies of Medical Officers both in respect of the newly-constituted Tribal Health Service and the general Medical and Health Service. It is hoped that about 400 new Doctors would be in position in a period of three months. In the last year, provision for purchase of medicines and drugs has been raised from Rs., 2,000 to Rs. 5,000 for sub-centres, from Rs,. 30,000 to Rs. 70,000 for PHCs and from Rs. 90,000 to Rs. 1,80,000 for the upgraded PHCs and CHCs. Similarly, bed maintenance charges and diet charges for the institutions under the control of the AP Vaidya Vidhana Parishad and the Director of Medical Education have been raised substantially.

The Japanese International Cooperative International Agency sanctioned diagnostic equipment worth Rs. 25 crores to the Osmania General Hospital. The equipment is currently under installation.

The annual budget for purchase of medicines in respect of dispensaries of the Indian Systems of Medicine and Homeopathy has been enhanced from the existing level of Rs. 3,000 to Rs. 10,000 per dispensary.

We are vigorously implementing the national Programme on Cataract Blindness to ensure that the contract patients are operated upon and once again become useful and productive members of the society. Under the project, 8 district hospitals and 107 PHCs are being upgraded to help implementation of the project.

Our state is one of the first in the country to have passed a legislation for the regulation of removal, storage and transplantation of human organs. This has resulted, to a considerable extent, in prevention of commercial dealings in human organs.

FAMILY WELFARE

We are deeply conscious of the urgency of population control. International experience indicates that development is indeed the most effective contraceptive. Even so, we need to supplement our economic development effort with a sustained campaign to increase the awareness of and access to family planning. Simultaneously, we need to provide health support to women and children to bring down child mortality rate and desired fertility rates. Our family planning programme is designed with this broad understanding and objective.

Towards this objective, we are targeting to bring down the natural growth rate from the current level of 1.54 per cent to 1.20 per cent by 2000 AD. Correspondingly, the infant mortality rate is to go down from 63 to 60 per thousand and the maternal mortality rate from 3.8 to 2 per thousand by the turn of the century. Both pregnant mothers and infants are being covered by a wide and relevant immunization programme with effective coverage being as high as 90 per cent.

Our state participated effectively in the national campaign for Pulse Polio Immunization which was scheduled on 2 days - 9 December, 1995 and 20 th January, 1996. Under the programme, all children in the 0 - 3 years age group were to be administered oral polio vaccine. The entire administration was mobilized for this purpose and with the cooperation of private doctors and hospitals, NGOs and social service organization, we were able to administer the vaccine to an overwhelming percentage of the 6 million children in the target group.

The World Bank Aided India Population Project No. VI covering rural areas of the State and No,. VIII covering the Municipal Corporation of Hyderabad are under active implementation. Under these projects, primary health training infrastructure is being expanded and its quality is being enhanced so as to effectively deliver an integrated package of primary health and family welfare service. Government of India sanctioned an additional amount of Rs. 24 crores the under IPP-VI Project din recognition of the effective and efficient project implementation.

HOUSING

As the Hon'ble Members are aware, sour pioneering programmes for rural permanent housing in the plain areas and semi permanent housing in the tribal areas have attracted nation wide attention and emulation. We not only help build a permanent dwelling but indeed a cost effective and echo friendly unit for the family. We propose to construct 4 lakh houses with the active involvement of the beneficiaries. I also assure this House that we will match Central releases under IAY fully so as to expand the size of the Housing Programme.

Our Government has given a fillip to the urban housing programme to tackle the housing shortage. The vote on account reflects a provision of Rs. 158 crores for housing.

The AP Housing Board has been allocated an amount of Rs. 3.45 crores under plan for 1996-97. The Board will supplement this allocation with institutional finance. Various alternatives are being explored to make the housing activities of the Board more attractive to the low and middle income groups.

RURAL WATER SUPPLY

Covering every habitation with safe and adequate drinking water continues to be a challenging task. Our Government is determined to meet this challenge head on irrespective of resources and technology constraints. The 1994 revalidation survey identified 4,055 habitations with no source and 19,596 habitations with inadequate sources of drinking water. Besides 7,377 habitations have been noticed to have source affected by fluoride while 3,977 habitations have brackish water . During the current year, we have tackled the problem in 3,100 habitations with an outlay of Rs. 60.27 crores. The programme for next year will cover 4,050 habitations with an outlay of 305 crores.

RURAL DEVELOPMENT

One of the major structural impediments of our economy is large scale migration of rural poor to urban areas resulting in urban squalor and poverty . Our objective in rural development sector is to provide durable employment to the poor in the rural areas itself, at the same time providing them success to civic amenities and facilities of urban standards. Towards increasing the employment avenues at the margin, Government have been matching central releases fully under JRY, intensified JRY and EAS. Durable assets are being built under all these programmes as also under area based programme like DPAP and DDP. During 1996-97 we will make a provision of Rs. 530 crores for these employment programmes to generate employment of 905 lakh man days. Should the Centre increase their contribution, we will match it rupee for rupee. Under IRDP and TRYSEM, 1,50,000 families are proposed to be covered.

SOCIAL SAFETY NET

The State Government have dovetailed their already existing schemes with the old and disable pension and maternity benefit schemes launched by the Centre earlier this year. This decision to integrate our schemes with the new central schemes is informed by the need to prevent duplication and to widen the coverage. Recipients of pension under the Old and Disabled Pension scheme of 1966 and Landless Agricultural Workers Pension scheme of sd1984, with a monthly pension of Rs. 30, have now been brought under the revised pension programme with the enhanced pension of Rs. 75 per month. Similarly, the existing maternity benefit scheme has been revamped and its coverage is now extended to 4b lakh mothers with financial assistance of Rs. 500 per live birth, subject to a maximum of 2 children. The revised provision for 95-96 and the provision for Vote-on-account provision for 96-97 reflect adequate provision under these schemes.

NATURAL CALAMITY RELIEF

Honourable Members are aware that the Coastal and Telangana areas of the State reeled under cyclone/floods of unprecedented dimensions during October-November, 1995. Due to the effective measures taken by the administration loss of life was minimized. However, the damage to crop and property, initially estimated at Rs. 293 crores, was revised to Rs. 917 crores after detailed survey. A central team made a field inspection to assess the damage but we have yet to receive any assistance from out of the National Calamity Relief Fund. We had to meet the entire expenditure under relief from out of the State’s Calamity Relief Fund together with an advanced of Rs. 23 crores relating to the first quarter of the next financial year. I am deeply pained to bring to the notice of this Honourable House the rigid and unsympathetic attitude of the Centre to providing relief to victims, most of whom belong to the disadvantaged sections.

Owing to the failure of the north-east monsoon, several Coastal and Rayalaseema districts are in the grip of severe drought. Government have declared a total of 182 mandals as drought affected comprising 40 mandals in Nellore, 63 in Chittoor, 42 in Kurnool and 37 in Cuddapah Districts.

ACCOUNTS 1994-95

The final accounts for 1994-95 show a revenue deficit of Rs. 727.74 crores. However, taking overall transactions, the year closed with deficit of Rs. 158.85 crores.

REVISED ESTIMATE 1995-96

Transactions as per the revised estimate of 1995-96 indicate a revenue deficit of Rs. 650.91 crores as against the original estimate of revenue deficit of Rs. 714.37 crores. As promised at the time of presentation of budget of 1995-96, we have tried to balance our total receipts with expenditure. The overall transactions of the year are accordingly estimated to result in a small surplus of Rs. 0.14 crores. However, after taking into account the opening balance of Rs. 158.85 crores, the year and balance is estimated to be Rs. 158.71 crores.

BUDGET ESTIMATE 1996-97

For the financial year 1996-97, the revenue deficit is estimated at Rs. 302.30 crores. However, on the overall transactions of the year, there will be3 a surplus estimated at Rs. 0.05 crores. But with the opening balance of Rs. 158.71 crores, the financial year is expected to end with a negative balance of Rs. 158.66 crores.

Before concluding, I would like to stress once again that this Vote-on-account projects only the bare minimum expenditure on essential items. We will come back to this House with a regular budget soon after we have a precise estimate of central flows, which I expect, will be around July. Honourable members are aware that Government would like to substantially step up the allocation for various projects in the coming years. The projected expenditure on some of the major projects is as follows: