Losing Hyderabad affected Andhra revenues – certifies Accountant General of India

andhra finally gets some hope

Andhra finally gets some hope !!

In a major relief to cash-strapped Andhra Pradesh, the Accountant-General of India has certified that the residuary state is entitled to a payment of Rs 14,423 crore as compensation for the revenue loss it experienced due to the state bifurcation. The accountant general has submitted his report to Niti Aayog which will take a final call on the final reimbursement to AP . 

The Centre has already released Rs 2,300 crore as grant and the A-G’s calculation will clear the way for the release of the balance amount of Rs 12,123 crore. This will be a onetime payment. Though the amount is less than what the state government had sought, the finalisation of the quantum of loss AP had suffered due to losing Hyderabad to Telangana will expedite the reimbursement process. “As per our estimates, the revenue deficit is Rs 16,500 crore but the Centre asked the A-G to re-examine the accounts to finalise the exact loss. The A-G has submitted his report stating that the revenue deficit was Rs 14,423 crore for the year 2014-15,“ PV Ramesh, principal finance secretary of Andhra Pradesh, told TOI.

The Union finance ministry released Rs 2,300 crore as ad hoc financial assistance pending A-G’s report on March 30, 2015. With the A-G’s final report on hand, the Centre has to release Rs 12,123 crore to bridge the revenue gap in the first year, post bifurcation.

Andhra Pradesh government in its first budget post bifurcation, presented a huge revenue deficit of Rs 6,006 crore for 2014-15. The situation worsened when the revenue deficit saw a substantial upward revision to Rs 14,204 crore in the 2015-16 state budget. This revision largely resulted from 8.7 per cent decline in revenue receipts. “We will meet Niti Aayog officials on December 7 and chief minister N Chandrababu Naidu will meet vice-chairman Arvind Panagariya on December 9. We are making all out efforts to see that the revenue deficit is being reimbursed in full and in possibly in one go,“ Union science and technology minister for state, YS Chowdary told TOI. Naidu has already conveyed to Union finance minister Arun Jaitley about the dire need of financial assistance to tide over the financial crunch forced on the residuary state.

Sources close to the chief minister informed that they are confident of getting huge financial package after December 15, after the meeting of Naidu and Panagariya. State government has intensified its effort to get a huge financial package ahead of presentation of annual budget for 2016-17. As per the AP Reogranisation Act, the Centre has to reimburse the revenue deficit caused to AP due to bifurcation and loss of Hyderabad city .

When the state was united, it was estimated that 65 per cent of total income generated from commercial taxes and professional tax was from Hyderabad city. Of the total revenue, Hyderabad alone contributed about 35 per cent. With the loss of Hyderabad and revenue from the city , it was estimated that the AP state would experience revenue deficit for the next 10 years, according to status paper prepared by AP finance department.

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