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Chief Minister Dr.Y.S.Rajasekhara Reddy Speech at
Thirteenth Finance Commission
meeting
on 20.7.2009
Hon’ble Dr.Kelkar, Chairman, Dr.Indira Rajaraman,
Prof.Atul Sarma and Dr.Sanjiv Misra, distinguished members and
officials of the Thirteenth Finance Commission, my colleagues in the
Council of Ministers and senior officers,
I deem it a privilege to extend you all a warm
welcome, on behalf of the people of Andhra Pradesh. The spirit of
co-operative federalism has been guiding the fiscal relations between
the Centre and the States, despite differences in perceptions on a
number of issues. Finance Commissions have played a major role in
nurturing this spirit and in resolving contentious issues. Andhra
Pradesh has always looked at the institution of the Finance Commission
with great reverence and hope.
Many changes have taken place since the
appointment of this Commission. The impact of the global meltdown,
though not as severe as in most developed economies, has imposed an
external constraint to the growth of our economy, which was well on
its way to a higher growth trajectory. The enactment of fiscal
responsibility legislations by the Centre and the States ushered in an
era of rule based management of public finances. The considerable
improvement in public finances in the last four to five years,
facilitated by the higher growth of the economy, is now under threat.
As part of the fiscal stimulus, there is a relaxation of FRBM
targets. The State is already feeling the pressure on its finances,
mainly on account of deceleration in the growth of its revenues and
capital flows. The Thirteenth Finance Commission has a very difficult
task on hand in taking forward the fiscal reforms further at this
critical juncture. We are confident that under the able guidance of
Dr.Kelker, the Commission would address the problems of States
adequately.
To give you a brief background of the economic
growth of our State since its formation on 1.11.1956, I would like to
begin by quoting Sri B.P.R.Vittal, a Member of the 10th Finance
Commission and a distinguished Civil Servant from our State. I quote
“The State was born with a congenital defect.
It combined the less developed areas of the former States of Madras
and
Hyderabad. The princely State of Hyderabad itself has the lowest
indices for human development in the South. In fact, A.P., at its
formation was well behind the all
India
averages in respect of many parameters like per capita income,
economic growth, human development, per capita power consumption, farm
yields, literacy rates, population growth rates, per capita motor
vehicles, number of villages electrified and life expectancy etc.”
Unquote
The successive Governments have, however, played
a very significant role in building a modern, vibrant and dynamic
economy for the State of
Andhra
Pradesh, ensuring growth with social justice in line with the broad
economic policies pursued by the successive Governments at the
Centre. During the first three decades, the Governments in the State
have implemented many large and medium multi-purpose irrigation
projects. Through a conscious effort, a very well diversified local
technocrat entrepreneurial base was created. Many large industries
were established both in the public and private sectors. We are
leaders in sectors like Cement, Paper and bulk drugs, while having
sizable presence in other sectors like fertilizers, steel, power
equipment manufacturing, agro-processing, foundries and forging and
the software.
Thanks to all the above initiatives, despite the
initial handicaps and disadvantages, AP has caught up with other major
states in terms of economic and social indicators and for the period
1981-91, AP’s average annual economic growth rate at 6% was indeed
higher than the national average. Agriculture grew at more than
4.5%. But, in post reforms period, more particularly during
1995-2004, the economic growth remained stagnant at 5.7%, lower than
the national average for that period. The average annual growth rate
in agriculture and allied activities fell substantially to 2.13%.
There was unprecedented distress in agriculture and rural sector. For
the first time, the State started witnessing suicides among farmers
and other rural artisans. The fiscal position of the State too
suffered heavily during this period. A State which had a cumulative
Revenue Surplus of Rs.128 crores at the end of 38 years after its
formation as on 31.3.1994, had suffered a cumulative revenue deficit
of Rs.22,000 crores as on 31.3.2004, leading the State into what
appeared to be an irretrievable debt trap, with the asset/liability
ratio of the State declining to 63:100 from 101:100 as on 31.3.1994.
The declining economic growth rate coupled with considerable fall in
the real incomes of about 80% of State’s population led to an
unprecedented spurt in the extremist activities in the State.
When we took over the reigns of the State on
14th May, 2004, the immediate tasks before the Government were
restoration of confidence among the farmers; restoration of confidence
among the investors and lenders by reversing the trend of revenue
deficits. The other major problem was about the extremist activities,
which we believed could be eliminated only by increasing the economic
growth rate.
The first thing that our Government did in 2004
was to implement a large number of programmes to immediately reach out
to the farmers and other rural artisans who were in serious distress.
These included waiver of the power dues of farmers, supply of seven
hours free power to farmers, reschedulement of loans and interest,
reduction in the rate of interest on crop loans, expanding the rural
credit network etc.
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