Andhra’s’ budget deficit is the legacy of their own making

  • April 28, 2015 10:18 am

By: J R Janumpalli

Before demerger of state, Andhras were saying that if A.P. was divided, Telangana will not survive as a state, alleging that Telangana is dependent on Andhra for its economy. But it is proved wrong. Actually Residual A.P. is on the receiving end. It is staring at a massive deficit budget. TS has emerged as a state with a balanced revenue and expenditure and is presently comfortable in spending for the state’s administration and development. Whereas, the residual A.P. is reeling under deficit budget and resorting to overdraft from RBI. And looking for special assistance from the center, proffering the deficit card. The Finance commission has provided to adjust its deficit over a period of 5 years. The center also rustled up some 15000 cr, special assistance. The assistance to TS is tweaked to help Andhra. Yet A.P. is not happy. It is demanding for special financial status. There is also said to be a curious move for special autonomy to the state in some quarters.

It is, of course, between the Center and A.P. to settle for whatever financial assistance A.P. is eligible to get. But A.P. raising the bogey of bifurcation of the state as the cause of their deficit and trying to give an impression that the TS is benefited at the cost of Andhra is not true. It is a complete travesty of truth. As a matter of fact Andhra region was deficit since 1952 and continued to be so after merger with Telangana from 1956 to 2014. Its deficit is the legacy of its partisan spending of Telangana revenue surplus in Andhra region. Andhra administration has done it continuously in all the 58 years of the merged state.

It is alleged by Andhras that they have created a large revenue base for Hyderabad and the lack of Hyderabad revenue is creating the deficit to them. Hyderabad city was providing lion’s share of revenue to the state both in Nizam’s dominion, Hyderabad state and united A.P. It is no surprise, as it is the same case with all the metropolitan city capitals like Madras, Bombay, Calcutta and Bangalore. Moreover, the peculiarity of united A.P. is that the percapita revenue in Telangana was much more than that of Andhra. The Dhar commission 1945-48; State reorganization Commission(SRC) 1955-56; Kumar Lalith commission 1956 to 68; Rosaiah’s statement in the Assembly for 2003-2007; budgets of both the states for 2014-15; 14th Financial commission projections for 2015-2020 — all their estimations/findings will vouchsafe the fact. The percapita revenue excess of Telangana was ranging from 38.94 to 106.21% over Andhra.

The case of Andhra and Telangana was different from other states reorganization. It was a merger of two states. Andhra was suffering from deficit finance from 1952 to 1956. Andhra, wanted to get merged primarily with Telangana for its revenue surplus and first class city capital of Hyderabad. In all the 58 years the Telangana region was revenue surplus and Hyderabad, was contributing more revenue to state like before. Andhras were in the merged state only for 58 years. Whereas Andhras were in Madras state for more than 150 years with more than 30% population in Madras city. Likewise Gujaratis were in Bomaby for a few centuries. The new Andhra and Gujarat states could not get their old capitals of Madras and Bombay respectively. There was no contention for the revenue of the capital there. In such a scenario Andhras claiming that they are the reason for large revenue of Hyderabad in just 58 years is an absurdity. Hyderabad is 400 years old and was 4th largest city in India in 1950’s.

Let us now examine for veracity, the available statistics in the matter. The following table (source: Goutham Pingle, New Indian Express) shows the excess of per capita revenue of Telangana over Andhra since 1945, including the projections for 2015-16 to 2019-20 by FC. It ranges from 38.94 to 106.21%. Even if we take the figures of 14th Finance Commission projections for the period from 2015-16 t0 2019-20 based on the statistics and financial history of the united state in the past it comes to 38.94%.

(14th Finance Commission Estimates)
Now if we analyse the Financial Commission figures given above, we will understand the following. The pre- devolution revenue of the 5 year period of A.P. is 78815 cr and TS is 78251 cr on an average per year. Though the population as per 2011 census is 4.94 cr for Andhra and 3.53 cr for TS, the revenue is almost equal. But there is a big variance in the expenditure. The average expenditure for Andhra is 117375 cr and for TS it is 73856 cronly. It indicates 48.92% more expenditure in Andhra. The average deficit for Andhra is 38360 cr. per year where as TS earns surplus for all the 5 years with an average surplus of 4394 cr.

In per capita terms the expenditure in Andhra is 118800 as against the revenue of 79772 per person. In TS it is 104613 expenditure as against a revenue of 110837 per person. The average deficit of 38,360 cr per year is entirely on account of Andhra, as TS has a 4394 cr. surplus. Therefore it is a double whammy for Telangana both from the point of gross and per capita revenue collection and expenditure for all the 58 years. It clearly indicates that the entire deficit is due to excessive expenditure in Andhra.

In such circumstances holding bifurcation as the reason for their deficit or as a great injustice to them is an unsubstantiated claim. It has no merit whatsoever. The bifurcation did not do any injustice to Andhra. It has only paved the way for the full enjoyment of its revenue by the deliberately impoverished Telangana in all the years of coexistence with Andhra. It is only a hard earned justice to Telangana after a 58 year struggle, albeit a pyrrhic one with a humongous loss of revenue.

If the exploitation of Telangana is stopped, after a huge loss of revenue and resources in all walks of life by demerger, how can it become an injustice to Andhra? Telangana was against the merger in the beginning itself. It was protesting time again on the use of surplus revenue from Telangana. In 1970 in the aftermath of 1969 agitation it was estimated that from 1956 to 1968 at least 65 cr surplus revenue of Telangana is spent in Andhra region. And it was agreed to spend that amount in Telangana in the subsequent years to make good the loss and also not to spend surplus Telangana revenue any morein Andhra. They have never implemented the agreements, like many such agreements, and continued the spending of Telangana revenue in Andhra without any qualms. Thus they were used to depend on the spending of Telangana revenue in Andhra for all the 58 years creating a permanent deficit budget in Andhra region.

Now because of the bifurcation of accounts of residual A.P. and TS by the 14th Finance Commission the truth of the matter is brought out so succinctly. The difference of availability of funds to the two states also explains the situation very clearly. In such a scenario, it is absurd for Andhras to blame TS and whine for their deficit. They have got in to this unenviable situation because of their avarice of eating in to the revenue of Telangana continuously for all the 58 years of the united state, despite opposition to it. Their opposing formation of TS tooth and nail is also for the same reason.

Thus, their deficit budget is the legacy of their past and their profligate use of Telangana revenue. The responsibility is theirs entirely. Ironically, it translates to the saying ‘ulta chor, kotwal ko dantna’, if they are trying to blame TS for their greed and impropriety.

Connect with us