Previous Budget Speeches




2006 - 07


ON 20th Feb 2006.
Honourable Speaker Sir and Honourable Members,
1. I rise to present the Budget of the Government of Andhra Pradesh for the year 2006-07.

2. This is the third Budget I am presenting to this house after the present Government took over the reigns of governance. I introduce the present budget with great enthusiasm and with lot of optimism in contrast to the circumstances under which I presented my last two budgets. We had inherited a difficult financial position and under such situation, presenting the first budget to this august house was a great challenge. Hon'ble Members are aware that Tsunami shocked the conscience of the entire nation. I am happy to present this year's budget under favourable economic situation as the state's economy got a big boost with copious rainfall. The reservoirs are full, there is all round greenery and there is twinkle in the eyes of the farmers. I also deem it a great privilege to present the golden jubilee budget to this august house as the state completes 50 years of its formation.

3. Our Government has put in great efforts during the last two years in trying to rejuvenate the economic growth in the State, which was stagnant during the last decade. Having recognized the importance of the agricultural sector for faster economic development, we concentrated largely on its development and introduced several schemes for the benefit of the farmers. Though the contribution of Agriculture to the GDP of the State is low, approximately 70% of the population depends on this sector. That means, the purchasing power of 70% of the population depends on agricultural earnings. When there is improvement in agricultural income the purchasing capacity of the people dependant on this sector increases, thereby leading to increase in demand for industrial goods and other services, which inturn through multiplier effect gives a fillip to overall economic growth. Even though the contribution of the primary sector to GSDP does not exceed 1/4th of the total GSDP, on account of timely as well as adequate rainfall received, the rate of GSDP growth during the current year is likely to be 7.55%. This is indicative of the significance of the agriculture sector in the economic development of the State. That is why, we are not sparing any effort in the improvement of agriculture in the State. We are supplying free power to the agriculture sector. Irrigation Projects are being executed on war footing, special efforts are made to provide improved credit facilities to the farmers through consultations with the banks, apart from taking necessary steps to release crop loans to several lakh farmers hitherto outside the purview of the banking sector.

4. During the year 2005-06, the GSDP of the State at constant prices as per the advance estimates is expected to be Rs.1,17,434 crores as against Rs.1,09,193 crores recorded last year which translates into a growth rate of 7.55%. The average Per Capita Income has also increased considerably in Andhra Pradesh. During 2004-05, the average Per Capita Income at current prices was estimated at Rs.23,153. This is expected to increase by 10.25% during 2005-06 and reach a level of Rs.25,526.

During 2005-06, agriculture and allied sectors have made considerable progress yielding good results owing to our efforts. While it is difficult even to achieve 3% or 4% growth in the primary sector, this year we are going to witness a growth of 5.72% in primary sector. This is 2% more than the estimated growth of primary sector at National level. Food grains production is expected to increase by 18 lakh tonnes to 152 lakh tonnes as against last year's food grains production of 134 lakh tonnes. The Kharif season ended with an improved production of food grains at 91.20 lakh tonnes registering a growth rate of 8.62%. At present, the contribution of primary sector to GSDP, is around 23.7% and this sector is providing livelihood to 72.7% of the population.

6. Between April-November 2005, the industrial sector recorded a growth rate of 6.9% over the corresponding period of previous year. During the same period mining and quarrying sector recorded the highest increase of 18.1% and the manufacturing sector recorded 6.8% growth. During the same period, Capital Goods sector recorded an increase of 13.3% which indicates the strengthening of the industrial base of the State. On the whole, during the current financial year the industrial sector is expected to achieve a growth rate of 6.22% as per the estimates. The services sector, which has a lion's share in the GSDP, is expected to record 9.15% growth rate during 2005-06. The growth rate in the export of software products during 2004-05 stood at 65% which signifies the equal emphasis given to the development of all sectors and also that no sector is neglected by the Government. Poverty - unemployment:

7. The fruits of development were not reaching the poorest sections to the desirable extent, due to inequitable distribution of income in spite of high growth rate achieved by the state's economy. With the objective of reducing the disparities in income distribution, we have taken up several programmes for the betterment of the poorer sections of the society. Surplus and Government land to an extent of 3.25 lakh acres was distributed in two phases to the land less poor and weaker sections in all the villages. This Government have noticed that the land distributed to the poorer sections since independence could not be cultivated by them due to insufficient means. Hence, our Government introduced Indira Prabha scheme to ensure that not even a single acre of land distributed by the Government remains uncultivated. Under this scheme we are providing necessary financial assistance to the beneficiaries to develop and cultivate the land allotted to them. Further, to encourage self-employment and thrift among the women's' self help groups, Government is implementing interest subsidy scheme by providing subsidy to bring down effective interest rate to 3% on loans availed by women's' groups.

8. In order to reduce the impact of abject poverty we are offering improved services to the poor through the public distribution system. It has come to our notice that inspite of ration cards being made available in more than the required number, many eligible poor families are still not having ration cards. With this in mind we have decided to provide ration cards to all deserving poor families. During the last calendar year, new ration cards have been distributed in all the municipal towns except Tirupathi, Rajahmundry, Hyderabad and its surrounding municipalities. At present ration cards are being provided to all those eligible poor in the villages and in the above-mentioned places. On account of this Rs.550 crores of food subsidy provided in 2005-06 is being increased to Rs.720 crores during 2006-07.

9. We are making serious efforts to eliminate unemployment and underemployment in the organized and unorganized sector, by providing extensive employment opportunities. In order to provide employment to the rural folk who are facing disguised unemployment, we are implementing 'Andhra Pradesh Rural Employment Guarantee Scheme' (APREGS) from this month. This scheme is likely to bring about revolutionary changes in rural economic scene. Due to construction of irrigation projects, agriculture activity is going to increase manifold in the villages, further boosting employment opportunities. Unlike the previous Government, which had spent resources on unproductive activities, this Government is investing resources for productive purposes and for employment generation schemes in a planned manner. In order to improve the employment opportunities in the industrial and service sector, we are providing improved and necessary infrastructure facilities to attract national and international investors to invest in the state. REVENUE RESOURCES

10. Our Government has been continuously emphasizing on fiscal prudence and towards this end has been striving to augment tax revenues by systematically strengthening the revenue earning departments and by increasing their allocations, improving staffing, training and other facilities, so as to improve tax compliance. Computerization and Management Information Systems (MIS) have been set up in all revenue earning departments and the infrastructure is being strengthened at the field level.

11. Further, Government has rationalized the tax rates in the departments of Stamps & Registration and Transport for better collections. Rationalization and reduction of duties have ensured better compliance. Stamp duty in respect of sale deeds of flats together with transfer duty is uniformly brought down to 7%. The basic rates of Stamp duty, transfer duty and registration fee have been rationalized to bring down the rate from 13.5% to 9.5% in urban areas and from 12.5% and 11.5% to 9.5% in other areas. Stamp duties payable in respect of General Power of attorney, partition deeds, release deeds and settlement deeds were reduced to ensure better

12. Government of Andhra Pradesh is implementing VAT in the state from 1st April, 2005 along with 22 other states. By the end of January, we have registered a growth rate of 14% in VAT collections and hope to further improve the growth rate in the coming months. In the ensuing financial year we hope to achieve an increased growth of 19% in VAT and sales tax revenues.

13. Twelfth Finance Commission (TFC) had recommended total transfers amounting to Rs.50,353.26 crores to the state for the award period 2005-06 to 2009-10. Out of this amount, Rs.5214.58 crores pertain to Grants-in-Aid for maintenance of Roads & Bridges, maintenance of Public Buildings, Heritage conservation, maintenance of Forests, state specific needs, local bodies and calamity relief and the residual amount pertains to state's share in central taxes and duties.

14. Apart from the above, the state stands to benefit to an extent of Rs.2683.74 crores as interest relief on account of consolidation of central loans and reduction in the rate of interest to 7.5%, consequent to the recommendations of TFC. Further, based on the fiscal performance of the Government in terms of reduction of revenue deficit, incentive for total debt relief amounting to Rs.3834.29 crores during the TFC award period of 2005-10 is also available and this incentive can be availed at the rate of Rs.766.86 crores per year, if we reduce our revenue deficit in each successive year and reach revenue surplus by 2008-09.

15. This Government believes in deployment of scarce resources judiciously to improve the productivity levels and therefore, the Government have been increasing the annual plan outlays consistently. During 2005-06 our state had the highest plan outlay in the country. This year also allocations for the productive sectors are increased considerably. Annual Plan outlay for 2006-07 has been fixed at Rs. 19551.90 crores. While this is 30.78 % of the total expenditure, it is higher by 24.93 % of the Annual Plan of the current year.
16. Our Government has attached a very high priority for the speedier completion of Irrigation Projects. Accordingly, the allocation to irrigation sector in the Annual Plan is increased to Rs.10,000.00 crores reflecting a 51.15 percent increase over the current year's allocation. Plan allocations in respect of Rural and Urban Development have considerably increased in 2006-07, as the Government intends to implement INDIRAMMA & APREGS for the integrated development of the state. In the plan outlay we have allocated Rs.1602 crores towards Panchayat Raj and Rural Development. In respect of Urban Development Rs.1024 crores have been allocated in the Plan. Other important allocations are Rs.1545 crores towards welfare sector, Rs.566 crores towards education, Rs.535 crores towards Medical & Health sector, Rs.1222 crores towards Infrastructure facilities and Rs.1161 crores for housing for the weaker sections.

17. The state has received copious rainfall in all the regions during the current year leading to good agricultural harvest. These rains gave a new lease of life to the dejected farmers who were subjected to continuous droughts and inconsiderate Government policies during the last decade. We are rededicating ourselves to the task of completing the irrigation projects which will herald a new era of agricultural prosperity. I am immensely happy to announce to this august house that a provision of Rs.10,000 crores is made for Irrigation projects in the next financial year, which is unmatched by any other state in this country.

18. We promised during our election campaign that we would complete 26 Irrigation projects in 5 years. During the last 2 years we have been making sincere and serious efforts to fulfill this promise. Various elections that were held in the past two years have confirmed our understanding that people have recognized our commitment to the cause of the farmers. Apart from the projects that have been promised during the election time, we have taken up four new mega projects on river Godavari namely Polavaram (Indira Sagar), J. Chokka Rao Lift Irrigation Scheme (L.C.R.L.I.S Phase-II), Yellampalli (Sripadasagar) and Dummagudem (Rajiv Sagar) Lift Irrigation Schemes in order to utilize the fertile water of river Godavari for the benefit of parched lands of Telangana.

19. In addition to the above major projects, 17 Medium Irrigation Projects have also been taken up for execution and the works are in progress. All the above projects when completed will create new Irrigation potential to an extent of 71.00 lakh acres besides stabilization of 21.32 lakh acres

20. RESULTS ACHIEVED The first benefit of Jala Yagnam is reaped by Vijayanagaram District. We have been able to complete the Jhanjhavathi Project before the targeted date. This was pending for last 3 decades. From 1st January this year, Irrigation water is being provided to an extent of 9,000 acres in 5 Mandals in Vijayanagarm District. In order to complete this project quickly Rubber Dam has been used. I feel proud to inform the august house that for the first time in Asia this new technology is used in Jhanjhavathi Project resulting in the completion of the project well before the targeted date.

21. We have speeded up efforts to obtain clearances from the Central Government and Central Water Commission for the new projects. Site and forest clearances etc., have already been obtained for several of the prioritized projects, with the perseverance of the Special Representative appointed for this purpose at New Delhi and officers of the State Government and remaining clearances are being pursued.

22. Land acquisition is being expedited with the creation of additional posts of special collectors and special deputy collectors, along with the field staff required for completion of the projects as targeted. A new State Relief and Rehabilitation policy 2005 is notified for giving better relief and rehabilitation to the displaced families as compared to National Relief and Rehabilitation policy. I assure the august house that the Government is committed to implement the best rehabilitation package for the people displaced by 'Polavaram project'. If the package given by any other state for project affected people is better than our rehabilitation package, we will adopt those features to protect the interests of project affected population

23. Elections to the Water Users' Associations in the remaining nine Districts have also been conducted paving the way for complete participation of the farmers in the Water Management System.

24. SPECIAL SCHEMES All irrigation tanks are being taken over by Irrigation Department from Panchayat Raj Department for better maintenance and monitoring. Government has taken a policy decision to provide free power supply for Lift Irrigation Schemes and transfer all the lift irrigation schemes having an ayacut upto 10,000 acres to the committees through APSIDC in a phased manner.


25. 'Jala yagnam' in itself is not enough for improving the status of the farmer. The Government is of the firm belief that it is only through integrated rural development in the state that overall agricultural development can be achieved. You are aware that for the last few years the agriculture sector has been in a crisis. Government recognized the magnitude of the agrarian crisis and took several measures to protect the interests of the farmers in the State. With a view to bring agriculture and allied sectors under one roof in the State, Agriculture Technology Mission has been established and inaugurated by Hon'ble Chief Minister on 15th January, 2006.

26. In the field of agriculture no country can match our progress if the efforts of our farmers are strengthened with the intelligence of our agricultural scientists. In order to realize this dream our Government has established crop resource groups for every crop and coordinated the information flow between the scientists, extension officers and farmers. The Government also realized the importance of time tested agricultural practices and launched a campaign to popularize the need to adopt these practices to get more profits from agriculture.

27. The A.P Bio- Fertilizers (Monitoring and Quality Control) Act 2005 has been enacted by the Government to regulate supply of spurious/adulterated fertilizers in the State. To study the implications of the WTO Agreement, the Government has set up a WTO Cell in the Agriculture Department.

28. Rytu Chaitanya Yatras have been organized on a large scale in order to propagate the benefits of vermi compost, the precautions to be taken in the usage of pesticides, importance of inter cropping and economy in the usage of water,.

29. Apart from preventing the water flowing into the sea through storing in reservoirs it is of utmost importance to see that the water meant for irrigation does not go waste in the fields. One of the major initiatives taken by agriculture department this year is popularizing the 'SRI' method of cultivation through demonstrations during both Kharif and Rabi seasons. The 'SRI' system of cultivation will result in increased yield, while the water requirement is considerably reduced. The Government is determined to undertake this campaign on a mission mode. During Kharif Crop 2150 demonstrations and 12242 demonstrations during Rabi crop were organized to popularize 'SRI' method at a cost of Rs.2.50 crores.

30. Farmers are being encouraged to adopt less water intensive crops instead of paddy in order to efficiently utilize the additional irrigation potential to be created under the new projects.

31. Farmers are being compelled to buy seeds every season because of the extensive use of Hybrid varieties. To supply good quality seeds to the farmers, Seed village scheme was expanded considerably in 2005-06 and a record level of certified seeds were supplied to the farmers

32. During this year 20500 farmers are being trained in Integrated Pest Management (IPM) to reduce the cost of cultivation by effective combination of bio-fertilizers and chemical fertilizers.

33. For modernizing agricultural sector, investment credit is very important. Also, if the farmer does not get the required amount of production credit or if it is not sanctioned in time, the farmer lands himself in debt trap. Besides this, if fertilizers of the required quantity or of good quality are not used, he will incur heavy losses. Timely and adequate crop loan is very important to avoid this situation. When compared to last year, the expected growth rate in crop loans this year is 29% at Rs.13,300 crores. Apart from this, an amount of Rs.3,450 crores, is expected to be disbursed as term loans. I assure this august house that in the ensuing financial year 33% growth will be achieved in the disbursement of crop loans over the previous year.

34. Animal Husbandry comes to farmer's rescue in times of drought and extreme deprivation. Presently about 24 lakh families in Andhra Pradesh are directly dependent on livestock rearing for their livelihood. Andhra Pradesh occupies 4th place in milk production, 2nd place in meat production and 1st place in the country in egg and broiler production. It is a well-known fact that the return on capital is very high for this sector. In order to strengthen the livestock research and to benefit the farmers who are dependent upon livestock sector, a separate Veterinary University namely Sri Venkateswara Veterinary University has been established. With a view to facilitate credit support to the sheep growers and to improve the economic conditions of sheep growers, Andhra Pradesh State Sheep & Goat growers Federation has been set up. Vaccine production and disease investigation units were established during 2005-06 at a cost of Rs.5 crores. During the year 6500 fertility camps were conducted to improve reproductivity in cattle and buffaloes belonging to weaker section farmers. The Government have decided to establish 85 new Veterinary Institutions and to fill up existing vacancies in Veterinary Hospitals. It is also decided to establish a wool processing and development unit in the State to benefit sheep growers of Telengana region. For 2006-07 an amount of Rs.296 crores have been allotted for Animal Husbandry Department which is 45% higher over current year's provision.

35. State Government have sanctioned 41,000 houses for the fishermen. The subsidy on HSD oil being supplied has been enhanced from Rs.3 to Rs.5.58 and the limit increased to 200 liters for motor boats and to 3000 liters for mechanized boats. Government is planning to construct two new fishing harbours and three new fish landing centers. We are also planning to establish a separate agency for tuna fishing. For the year 2006-07 an amount of Rs.915 crores is allocated to the Agriculture and Allied sectors.

36. Establishing a caring and welfare oriented Government based on Indiramma's ideology was an election promise. Smt. Indira Gandhi struggled to give shape to welfare state through her 20 point economic programme imbued with Garibi Hatao concept. Her life and work inspire us constantly and with this inspiration this Government proposes to take up Indiramma programme from the ensuing financial year. In the next 3 year period we intend to provide drinking water, sanitation facilities, bituminous roads, primary education facilities, housing for weaker sections, power connections for all the villages, pension for the old, handicapped, widows and old age weavers and nutrition for children and pregnant women. The main objective of the programme is elimination of poverty and improving quality of living among the poor in the rural and urban areas. Each year 1/3rd villages in every Mandal will be selected for implementation of this programme. Selection of villages for implementation of this programme has been completed in a democratic manner.

37. We promised in the election manifesto that we would increase the old age pension progressively. In line with this commitment during the year 2005-06 the amount was raised from Rs.75 to Rs.100 per month and 3,00,000 new pensions were sanctioned making a total of 21.97 lakh pensions with an allocation of Rs.266 crores. Inspite of this substantial increase in number, we noticed that pensions are not reaching all the eligible beneficiaries. Our Government considers that it is its humblest duty to render minimum financial assistance to all the deserving old aged, widows, weavers and the handicapped. We will ensure in next three years that no eligible person is denied this critical life support of pension. Further, we are going to increase the pension amount from Rs.100 to Rs.125 per month from next financial year. During 2006-07 this benefit would be extended to 8.47 lakh new beneficiaries in urban and rural areas under Indiramma Programme. For the year 2006-07 approximately Rs.445 crores have been allotted towards these pension schemes.
38. In order to streamline the distribution of pensions under various schemes, the Government has decided that from the next financial year all the pensions would be distributed by the Rural Development Department.


39. In recognition of the aspiration of every citizen to own a dwelling unit, the Government attaches top priority to the weaker section housing programme. This will be the main focus area in INDIRAMMA programme and it is, therefore, proposed to implement this programme to cover 1/3rd villages in each Mandal every year. In addition to providing pucca houses to the deserving families, all other civic amenities and infrastructure facilities will be provided in these villages in a phased manner. Our target is to construct 17.00 lakh houses during the next financial year. For this purpose an amount of Rs.1824 crores has been allocated which is an increase of 151% over the previous year.

40. To meet the increasing requirement of housing to the urban poor, a novel housing scheme called 'Rajiv Gruhakalpa' was taken up during the current financial year. This scheme will be implemented with redoubled vigour for the benefit of the urban population in need of affordable housing.

41. Under Indiramma Programme 257 colonies in 14 Municipal Corporations and 1245 colonies in 120 Municipalities without power facility will be electrified during 2006-07. As a part of 'BHARAT NIRMAN', 'Rajiv Gandhi Grameena Vidyudeekarana' and Indiramma, all unelectrified habitations in 8026 gram panchayats will now be electrified.

42. By synergising Bharat Nirmaan with Indiramma Programme every gram panchayat will be linked with bituminous road. An amount of Rs.500 crores has been provided in 2006-07 under 'BHARAT NIRMAN' for this purpose. We will create pleasant environment and improve quality of life in villages by providing facilities like safe drinking water, sanitation and drainage through this programme. For Rural Water Supply an amount of Rs.150 crores has been allotted under 'BHARAT NIRMAN' Programme. We will make untiring efforts to obtain required allocations from Union Government for this purpose. RURAL EMPLOYMENT GUARANTEE SCHEME

43. Due to successive famines and farm mechanization the phenomenon of mass migration from rural areas is getting accelerated. To stem this malaise, the union Government has enacted a National Rural Employment Guarantee Act - 2005 in last September by providing employment to all unemployed and underemployed persons in rural areas. Through this Act the central Government has guaranteed right to work, which is a part of the directive principles of the Constitution. In consonance with this Act the State Government has notified 'Andhra Pradesh Rural Employment Guarantee Scheme'. This Act as well as the scheme have come into effect from 2nd February, 2006.

44. As per this scheme the Government is committed to provide work for at least 100 days in a year, for every house-hold registered under the Act. If, for any reason, whatsoever, the Government is unable to provide work within 15 days from the date of request, unemployment allowance will be paid. Under this scheme equal wages will be paid to both men and women. Funds required to implement this scheme will be shared by the Central and State Governments in the ratio of 90:10

45. We are implementing this scheme during 2006-07 with an indicative outlay of Rs.900 crores in 13 districts namely Vizianagaram, Karimnagar, Nizamabad, Medak, Adilabad, Mahaboobnagar, Ranga Reddy, Khammam, Nalgonda, Chittoor, Warangal, Anantapur and Kadapa. Towards this end Rs.90 crores has been allocated as state share in the budget.

46. This scheme which is being implemented in 200 Districts in the Country was launched by Hon'ble Prime Minister Dr. Manmohan Singh on 2nd February, 2006 from Bandlapally village of Anantapur district. This makes us all the more responsible to make this scheme a resounding success.

47. The impact that women make on the society is quite considerable and their services to the society - not only as mother, sister but as an economic power, is commendable. The Government is committed to improve their welfare and is funding several self help schemes in order to make them financially sound. We have taken up a revolutionary programme of extending loans to women groups with 'Pavala Vaddi'. While it was only Rs.753 crores that was given as bank loans to the women groups during 2003-04, Rs.1240 crores was disbursed during 2004-05 and Rs.2200 crores is expected to be disbursed during 2005-06. This allocation is further going to be increased to Rs.2500 crores during 2006-07.

48. The Government is committed to help all the enthusiastic women groups through extending financial assistance to them, by constantly reviewing bank assistance. Our Government would provide financial assistance to an extent of Rs.16 crores in the form of interest subsidy on the loans granted by the bankers to 1.84 lakh women groups during this year. It is also our intention to increase this subsidy amount to a level of Rs.75 crores. As a part of Indira Kranti Padham, it has been decided to give Rs.373 crores to the women self help groups through the community investment fund during this year. This would help improve the earnings of the women folk and to develop their incomes and infrastructure facilities. In this context, I feel proud to inform the august house that the percentage of recoveries on the loans given to these women groups is better than recovery on all the other loans at 95%. I am also extremely happy to say that instead of looking at their own selfish ends, these groups have proved to be agents of development by taking care of the general welfare of the society.

49. Under the Indira Kranthi Patham, Government is providing financial assistance for the disabled so as to give sustenance to them and empower them economically. So far we have extended financial assistance to an extent of Rs.9.60 crores to approximately 1.40 lakh handicapped persons. Further, we have conducted medical camps and issued 1.34 lakh certificates to them. Necessary treatment and operations have been done during this year for about 30,000 handicapped persons.

50. During this year we have collected 2.17 lakh tons of maize through these women groups and supplied to the farmers directly without the role of middlemen through Markfed at minimum support price. This intervention has enabled the farmers of the state to get a net benefit of Rs.52 to Rs.100 per ton. We are taking necessary steps to intensify this programme so that women farmers will manage this programme by themselves. Successful disbursement of pensions to old age people and widows has been another resounding achievement by these Self Help Groups. We are planning to intensify this programme, which has innumerable social benefits, during next financial year by organizing 30,000 groups with 3.6 lakh women members.

51. As an innovative approach under the 'Indira Kranti Padhakam' 4,500 people have been provided employment under LABS programme being run with the assistance of Dr. Reddy's Lab. We are targeting to provide employable skills to 15,000 persons during the year.

52. Provision of fertile land for cultivation through 'Indira Kranti Padhakam' to the asset starved families has been a significant initiative of our Government. Under this scheme, 1391 acres of land has been purchased and handed over to 1470 families so far. Depending on the necessity we will implement this programme during next financial year also.

53. In line with the increased requirement and necessities of the urban population, certain basic services like Drinking Water, Sanitation, Transportation and Health services are being improved. At the same time in order to attract business investment by providing necessary infrastructure facilities, our Government has been making constant efforts. We are committed to provide uninterrupted water supply to the towns. The per capita supply of drinking water which was 61 litres last year has been increased to 74.40 litres this year. By 2009, we would like to increase this to 100 litres. In order to meet the demand of the drinking water in the towns we took up 54 safe drinking water schemes at a cost of Rs.580 crores and wish to complete 25 such schemes during 2006-07 at a cost of Rs.358 crores. We will complete the 2nd phase of the Krishna Drinking Water Supply Scheme during 2006-07 at a cost of Rs.1082 crores.

Our State is one among the seven States selected to participate in the 2nd phase of Technical Education Quality Improvement Project (TEQIP) of Government of India and an amount of Rs. 149.67 crores has been allocated for implementation of TEQIP during 2004-07. The programme addresses the major issues like quality improvement, modernization of laboratories, faculty development, curriculum improvement etc., in engineering colleges and polytechnics.

54. In order to redress the grievances of urban citizens, Hon'ble Chief Minister had undertaken the 'Rajiv Nagarabata Programme'. Under this program so far 316 assurances given by the Hon'ble Chief Minister have been fulfilled. For providing better civic amenities, improvement of slums and welfare of poor, Indiramma Programme will be implemented in urban areas during 2006-07. Under this scheme not only services like dwelling houses, drinking water, sanitation, street lighting, etc., would be improved but also old age pension, education, nutrition facilities will be provided. Necessary matching share will be extended by the Government to the central schemes like Jawahar Lal Nehru National Urban Renewal Mission (JNNURM), Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) and Integrated Housing and Slum Development Programme (IHSDP). In order to improve employment opportunities in urban areas, we are implementing 'UPADHI' scheme. Further, we have extended the "Pavala Vaddi" scheme to Urban Self Help Groups.

55. We have been sparing no effort to make Hyderabad as a model city for the local population and to make it a favoured destination for investors, to induce rapid economic growth. Ensuring uninterrupted water supply, scientific disposal of waste material, construction of storm water drains are all part of our efforts to create "Happy Hyderabad". I am also happy to inform this august house that the first phase works of outer ring road are going to be started soon with an outlay of Rs. 500 crores. We have also taken steps to construct 54 kilometers length of mass rapid transport system in three prominent bus routes and to construct flyovers to avoid traffic woes at important junctions.

56. While an amount of Rs.1418 crores was allocated for the urban development in the year 2005-06, an outlay of Rs.1898 crores is proposed for next financial year showing an increase of 34 % over last year.

57. The only way for overall development of the state is to ensure that elementary education is made available to all children. Economic development of individuals and the development of the state depends on the literacy level prevailing in the society. Our literacy rate is recorded at 61.1% in 2001 census, making A.P. the least literate state in South India. It is the aim of this Government to increase the literacy level to 95%. Lack of schooling facilities and inadequate monitoring of the functioning of existing schools has resulted in the present status. Keeping these factors in view, the Government has drawn up long term action plan to improve literacy levels in the state, giving priority to backward and tribal regions.

58. During this financial year, 244 upper primary schools have been upgraded as high schools in order to provide high school facilities in the rural areas. 17,000 new teachers have been recruited during the current year. Around 1,65,000 children are enrolled in schools in Badi Bata Programme. 1,85,000 children are re-admitted in schools through bridge courses. Under Sarva Siksha Abhiyan Programme 366 new upper primary schools are started. 253 primary schools are upgraded as upper primary schools. We have started a project with an outlay of Rs.302 crores to provide accommodation and other amenities in Government high schools. This project will be implemented in a period of three years.

59. It is also decided to spend Rs.317 crores during 2006-07 for organizing midday meal scheme more effectively so that its benefits are available to every child. In order to protect child health, we have decided to implement a health insurance scheme with an outlay of Rs.4.48 crores in 2006-07. We have started 94 'Kasturiba Gandhi Gurukula Vidyalayas' through Andhra Pradesh Residential Education Institutions Society (A.P.R.E.I.S.) to ensure gender equality in education and to improve literacy among girls. We have planned to build permanent buildings for these Vidyalayas during 2006-07.

60. We propose to start 65 primary schools in school less habitations during 2006-07. 251 primary schools will be converted as upper primary schools. We are targeting to re-enroll 3 lakh children who have dropped out of schools during next financial year by starting new Residential Bridge Courses and Non-Residential Bridge Courses under Education Guarantee Scheme. An amount of Rs.5,463 cores is allocated for School Education in financial year 2006-07.

61. During the current financial year 27 new Junior colleges are sanctioned in interior and tribal Mandals. Additional accommodation and other amenities for 388 Junior Colleges are sanctioned at a cost of Rs.43 crores. An amount of Rs.7.5 crores was released under 'Prathibha Awards' scheme to benefit meritorious students. The Government have also decided to set up 3 new Universities at Nizamabad, Rajahmundry and Kadapa in the next financial year in order to improve higher education facilities in backward districts and to fulfill academic aspirations of people in three regions of the state. Technical Education Quality Improvement Programme (TEQIP) is being implemented in select engineering colleges with financial assistance from Central Government and World Bank. This program aims at achieving higher levels of excellence in technical education by providing modern equipment, faculty development and curriculum development in 12 engineering colleges at a cost of Rs.150 crores. Technical Education department has established SONET (Society for Networking for Excellence in Technical Education) to share innovative teaching practices. This would encourage, sharing of modern facilities like Video Conferencing, Digital Library and Class Room Lectures by experts throughout the state to benefit engineering colleges.

62. The Technical Education department has introduced 8 new courses in the polytechnic colleges in the State, which cater to the skill requirement in emerging fields like Bio-Technology, Fashion Technology, Tourism etc. The new courses ensure abundant employment opportunities to the youth belonging to the State.

63. An amount of Rs.1,448 crores is allocated for Higher and Technical Education departments in financial year 2006-07

64. The Government has initiated several schemes for providing access to primary health care facilities in rural areas. We are committed to provide affordable health care to the entire population in the State through provision of increased allocations to the health sector during 2006-07.

65. The Government is committed to combat the menacing spread of AIDS by organizing sustained awareness campaigns. AASHA campaign which was taken up in July 2005 has successfully raised the awareness level of the vulnerable groups about the dangers of the disease. The Government is geared up to provide the necessary facilities for treating approximately 50,000 people who need anti-retroviral therapy. Government have started 620 PPTCT centers and 205 voluntary counseling centers in order to provide access to diagnostic and treatment facilities for the affected population. My appeal to the Hon'ble members is to join the coalition and campaign against the spread of HIV/AIDS.

66. The Government have decided to make state-of-the art diagnostic facilities available free of cost to the poorest of the poor in all Government hospitals in a phased manner. Private entrepreneurs will be encouraged to set up and operate these facilities. The cost of diagnostic tests for poor patients will be met by the Government. However, facilities will be open to others as well at highly competitive and reasonable rates.

67. In order to improve the primary health care facilities and usher in reforms in the health sector, Government is implementing a Health Sector Reform Action Programme with DFID assistance. For this an amount of Rs.150 crores is provided in the budget for 2006-07. To cater to the medical needs of the poor people, we will introduce new health insurance scheme and implement it from the next financial year. An amount of Rs.20 crores has been allocated for this purpose.

68. To save the lives of young children afflicted with heart ailments our Government has started a scheme of extending free treatment to them. So far 3839 children have been given treatment under this scheme spending Rs.7.4 crores. We are determined to continue and strengthen this programme by providing Rs.8 crores in the next financial year.

69. For the year 2006-07 an amount of Rs.2113 crores have been allocated for Health, Medical and Family welfare Department

70. The scheme of providing house sites to weaker sections whose annual income is below Rs.11,000/- through acquisition of private land is one of the important welfare measures undertaken by the Government. During 2005-06, 1,06,283 house sites have been distributed up to the end of December, 2005. An action plan is prepared under "Indiramma" progrmme to provide house sites to the houseless poor in 8,026 Grama Panchayats during 2006-07. An amount of Rs.400 crores is allotted for acquisition and development of land for house sites in rural areas and Rs. 100 crores in urban areas for the population below poverty line.

71. We could improve the pass percentage of students of SC hostels to 74.41% by improving the hostel facilities and by increasing monthly scholarship to them. This is more than the state average of 72.40% achieved in 2005.

72. The APSCCFC Ltd, has prepared an action-plan for the year 2005-06 to cover 1,54,687 beneficiaries with an outlay of Rs.238.12 crores. Against the target, 66.61% has been sanctioned as on 31-12-2005.

73. Government has permitted the APSWREIS to take financial assistance to a tune of Rs.193.00 crores from the HUDCO for construction of 85 permanent Residential School Complexes at Rs.2.00 crores per school. An amount of Rs.1,553 crores is provided in BE 2006-07 for Social Welfare Department

74. The present Government has taken a policy decision that no eligible ST child be denied a hostel seat. As a result 18,184 ST children have been admitted in hostels during the year 2005-06. With a long term objective of equipping ST children to qualify for admission in IITs, 3 schools of excellence and 3 colleges of excellence have been started under the guidance of Sri Chukka Ramaiah, renowned educationist. For the first time in the country all the Primitive Tribal Groups in the state are being brought under an Insurance Coverage. In the first phase, 12,000 Chenchu families have been covered under this scheme.

75. In the next financial year, in addition to the continuation of the above programme, we are committed to provide roads, power and such other basic facilities to the unserved tribal areas on top priority basis. Rs.656 crores is allotted to tribal welfare in the budget for 2006-07

76. We have provided Rs.80 crores for scholarships to Backward classes students in the financial year 2005-06. However, in view of increase in the number of students aspiring for scholarships, we are increasing the budget allocation to Rs.120 crores for the next year. During 2005-06 we have taken up construction of 308 hostel buildings and completed 154 of them. Construction of another 96 hostel buildings and 8 Gurukula School Buildings is under progress.

77. During the year 2005-06, a new scheme called 'Rajiv Abhyudaya Yojana' has been launched to assist 2.15 lakh BC artisans / BC occupational groups to improve their skills. Government have released Rs.5 crores in the current year to help 21,000 beneficiaries under this scheme. The scheme is being continued in 2006-07 and Rs.5 crores have been allotted for this purpose. An amount of Rs.391 crores is allocated in the budget for 2006-07 for the welfare of Backward Classes

78. The Minorities Cooperative Finance Corporation has extended financial assistance to 1,46,000 beneficiaries under various ongoing schemes during 2005-06. We have established a regional centre for Educational Development of Minorities at Visakhapatnam, which imparts free coaching for various competitive examinations to students belonging to minorities. For the benefit of minority students we have decided to establish a hostel in every district. The budget allocation of 49 crores in 2005-06 has been increased to Rs.69.60 crores in 2006-07 to the Minorities Welfare Department, towards granting scholarships to the minority students and for other welfare programmes.


79. We are extending financial assistance and training to youth to encourage entrepreneurial skills and self employment. Under the 'Rajiv Yuvashakti' scheme we have targeted 60,000 units for one lakh beneficiaries at a project cost of Rs.600 crores. So far 49,293 units have been accorded administrative approvals. We propose to extend financial assistance for establishing small scale units like cement bricks manufacturing, concrete mix plant, centering units etc. in the construction sector to build synergy with house construction under Indiramma. In order to improve the employable skills of the youth, training programmes have been taken up to train 60,000 people at a cost of Rs.12.00 crores during 2005-06. A provision of Rs.140 crores is made for Rajiv Yuvashakti in the next financial year.

80. Our Government is striving to improve the employment generation in the private sector. We have upgraded select Industrial Training Institutes as centers of excellence for producing multi skilled work force of International standard at a cost of Rs.8 crores. We have established Overseas Manpower Company of Andhra Pradesh (OMCAP) in December to bring together overseas employers and job aspirants in Andhra Pradesh.

81. As part of IT Promotional activity and showcasing the State as an attractive destination in the country with very high visibility for grand recall and for locating the industries, the state has participated in several national and international events viz., NASSCOM Annual event and GITEX Dubai-2005 Exhibition. GITEX Exhibition-2006 has been conducted in Hyderabad in January 2006 wherein, the participation and response of the IT Companies is highly encouraging. Employment opportunities were provided to 1.27 lakh youth so far in IT Sector.


82. Government is determined to continue efforts to project Andhra Pradesh as the most convenient and favourable investment destination for domestic and international investors and accordingly, several initiatives have been taken up towards this objective. We have conducted 'Pravasa Bharatiya Divas' in Hyderabad in January 2006, opened an exclusive Andhra Pradesh Pavilion at the India International Trade Fair - 2005. Further, we are going to conduct India International Trade Fair-2006 in Hyderabad this year.

83. We have formulated new 'Industrial Investment Promotion Policy 2005-10' in June 2005, to encourage flow of investments into our state and strengthen entrepreneurial skills of the youth. One of the important features of the policy is to grant investment subsidy up to 15% of the capital investment limited to Rs.15 lakhs, to those who start small scale and tiny industries. Along with investment subsidy we propose to give partial concessions in Registration Fee, Stamp Duty and power charges and 3% interest subsidy on the loans taken for setting up the industry. Under this policy several incentives are given not only to the small scale industries but also to other category of industries. Most importantly, it has been decided to give Rs.50 crores power subsidy to newly established industries and Rs.25 crores power subsidy to Ferro Alloys industry and other sectors. We have declared several incentives and enacted a law for facilitating developmental activities in Special Economic Zones.

84. During the current financial year, upto December 2005, 982 small scale industries have been started with an investment of Rs.175.49 crores providing employment to 12,390 people.


85. Liberalization of quota regime in Handloom sector has resulted in stiff international competition. In order to cope with this situation and to streamline our handloom industry, we have prepared plans for establishing five Integrated Textile Parks in the state. We have signed a Memorandum of Understanding with BRANDIX of Sri Lanka to establish a park in the Special Economic Zone at Visakhapatnam in 1000 acres. On account of this project it is estimated that an investment of Rs.2,200 crores and employment opportunities for 60,000 people would be generated over the next 5 years.

86. To encourage Handloom Sector, Government has decided to purchase livery required for the different Government departments only from APCO. During 2005-06 so far, livery worth of Rs. 32 crores was procured form APCO as against Rs.17.89 crores procured during 2003-04. Government is also planning to procure livery worth of Rs. 67 crores from APCO during 2006-07 by revising the procurement prices.

87. Our Government gives utmost importance to the welfare of the Handloom workers. We have sanctioned 15,000 units at a cost of Rs.40,000 each in 2005-06 for weavers to construct workshops and dwelling houses at one place. Under the Integrated Handloom Training Project, 1800 beneficiaries have been trained in the improvement of their work skills during the current year. Our Government endeavours to continue 'Mahatma Gandhi Bunkar Bhima Yojana Padhakam' for weavers, Pension for disabled weavers and such other welfare schemes. It has been decided to extend pension benefit to 21000 new old age weavers during 2006-07. The state of Andhra Pradesh will remain in the annals of history as the first state to extend pension benefit scheme to all weavers who have crossed 50 years of age. For the development of the Handloom sector we have allotted Rs.99.00 crores in the budget for 2006-07.


88. Economic development of any state depends on the infrastructure facilities it offers. In order to speed up the process of economic development in the state, we are developing high quality infrastructure facilities like Roads, Buildings, Ports and Transportation

89. We have developed high density corridors with assistance under A.P. Economic Restructuring Project and Central Road Fund. We have converted 6058 kilometers of rural roads into black topped roads. Further, with the aid of NABARD 188 bridges have been constructed. Under RIDF proposals have been sent to NABARD for taking up 505 road works costing Rs.638 crores. Out of these, permission has been granted for taking up 250 works worth Rs.291 crores. We will complete these works quickly. To develop the roads in Urban Areas, we took up 454 works worth Rs.420 crores with the assistance of HUDCO. We have also reformed the process of tendering. Tenders above Rs.10 lakhs worth are being processed through e-procurement system. We will be implementing State Highways Project - II with the assistance of World Bank with an outlay of Rs.159 crores during 2006-07.

90. Gangavaram port with a cargo handling capacity of 32,000 tons and Krishnapatnam Port Phase-I will be completed and made operational by December 2007. It is proposed to construct a railway line of 114 kilometers from Obulavaripalli in Kadapa District to Krishnapatnam.


91. Heavy rains during the current year have given a fillip to both the agricultural as well as the power sector. In order to pass on the benefit of lower cost of production of power consequent to increased hydro electric power generation, our Government has adjusted the fuel surcharge imposed on the power consumption bills of the domestic consumers for the period from December 2004 to November 2005, due to which consumers have benefited to an extent of Rs.179 crores.

92. Further, we were able to reduce the transmission losses to 21.16% on account of improved power transmission and distribution. Power sector of Andhra Pradesh was rated number one in the country by CRISIL for the year 2004-05, which proves the efficient management of our power sector. As a result of this efficient power transmission and distribution system we could reduce the power subsidy from Rs.1600 crores during the current year to Rs.1405 crores in 2006-07.

93. Singareni Collieries Limited has earned Rs.62.22 crores of profit by the end of December, through its excellent performance and won the 'GOLDEN PEACOCK ENVIRONMENT MANAGEMENT' award from World Environment Forum, and also the NATIONAL FLYASH UTILISATION' award from the Union Government.


94. We are encouraging investments in infrastructure facilities needed to establish star hotels, amusement parks, entertainment centres etc., to increase the pace of growth in the Tourism sector which is one of the fastest growing sectors of the economy. By organizing the 'Kalachakra' festival which is considered as an auspicious event by the Buddhists at Amaravathi, the state has become an important piligrim destination for all Buddhists. Our Government is also giving due importance to the rural tourism sector and to its development. The recently taken up Konaseema Rural Tourism Project with 5 house boats has bagged national best tourism project award. Apart from this, we have also taken up the Bhavani Island Project and Suryalanka Beach Resort Project with an outlay of Rs.6.20 crores during the year.


95. During 2005-06 we have established 14 new mini SAP academies. In the year 2006-07, we will establish another 2 academies at Vijayanagaram and Karamchedu. During 2005-06 we have extended financial help to 65 sportsmen connected with different sports and Cash prizes to another 52 sports persons. Also during the year we have conducted in our state 20 National Level Tournaments and International Tournaments in the fields of Kabaddi, Volleyball etc. Our state has bagged 31 gold, 37 silver and 29 bronze medals in various sport events during the current year. During 2006-07 an amount of Rs.30 crores has been allotted for the development of the sports sector.


96. Our Government have decided to revive and continue various arts like Burrakatha, Harikatha, Jammulakatha, Pravachanam and such other art forms, which symbolize the ancient tradition in all the temples. In the first place, they will be introduced in temples at Annavaram, Vijayawada, Srisailam and 23 other prominent temples. Apart from remodeling and modernizing the Ravindrabharathi at a cost of Rs.1.25 crores, mini Ravindrabharathis will be constructed at Warangal, Miryalaguda, Suryapeta, Nalgonda and Hyderabad, with the assistance from Government of India. We are also extending financial help to an extent of Rs.500 per month to all those dedicated artists who are in a pitiable condition during the twilight of their career.


97. Our Government has also passed the Fiscal Responsibility and Budget Management (FRBM) Act 2005, to ensure prudence in fiscal management and fiscal stability through progressive reduction in fiscal deficit and elimination of revenue deficit as well as the conduct of fiscal policy in a Medium Term Fiscal Framework (MTFF). As required under the FRBM Act, I have placed before this house a review of the trends in receipts and expenditure in relation to budget estimates for the first two quarters of the current financial year. In fact the moment we took over the governance, we have been making efforts to reduce revenue deficit. The revenue deficit of Rs.2961.64 crores during 2003-04 has been reduced to Rs.2557.83 crores in 2004-05. As percentage to GSDP the Revenue Deficit decreased from 1.61 % in 2003-04 to 1.26 % in 2004-05.

98. As part of the States' Debt Consolidation and Relief Facility (DCRF), the state Government needs to develop its own Fiscal Correction Path for the TFC period i.e., 2005-06 to 2009-10. Accordingly, we have drawn up our Fiscal Correction Path, which entails reduction of fiscal deficit from 3.6% in 2005-06 to 2.6% in 2008-09 and reaching revenue surplus by that year.

99. The state Government has effectively managed its cash balances, which is reflected by comfortable cash position during the year, and as evidenced by the fact that the state had not resorted to any "Ways & Means" advances during the past two years. The State Government's efficient fiscal management is recognized in the financial markets, as reflected by the successful mobilization of funds through RBI at very low rates of interest, which is a mark of strength of state Government's sound financial position.

100. Further, fiscal accountability has been strengthened with respect to various accountability norms and timely preparation of accounts and quick response to audit. There is a substantial improvement in internal audit practices and external audit compliance. Effective internal control mechanism is being put in place
ACCOUNTS 2004-05

101. The final accounts of 2004-05 show a revenue deficit of Rs. 2557.83 crores. After taking into account the transactions on capital as well as public debt and public account, the year closed with a positive balance of Rs. 286.15 crores.


102. Transactions as per the revised estimates of 2005-06 indicate a revenue deficit of Rs.1117.95 crores against the budgeted revenue deficit of Rs.1401.38 crores. The overall transactions of the year are estimated to result in a net deficit of Rs.350.18 crores. After taking into account the opening positive balance of Rs.286.15 crores the year-end balance is estimated to be negative Rs.64.03 crores.


103. For the financial year 2006-07 it is programmed for an expenditure of Rs.40,624.24 crores under non-plan and Rs. 22,903.50 crores under Plan. This will result in a revenue deficit of Rs.995.84 crores, which would be 0.40 percent of GSDP. The fiscal deficit is estimated to be Rs.8147.20 crores, which would be 3.25 percent of GSDP. After taking into account the overall transactions of the year, we will have a net deficit of Rs.30.29 crores. The financial year 2006-07 is expected to end with a negative balance of Rs.94.32 crores.

104. Sir, with these words, I now commend the Budget to the House for approval

//Jai Hind//