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Angry Naidu may seek rollback of Sinha's 'anti-poor' price hikes

Our Correspondent in Hyderabad

BUDGET 2000

Andhra Pradesh Chief Minister N Chandrababu Naidu is sore over the hike in the prices of fertilisers and the issue price of rice under the Public Distribution System proposed in Budget 2000.

Naidu would dash off letters to Prime Minister Atal Bihari Vajpayee and Finance Minister Yashwant Sinha himself to stay the hikes, it is learnt.

The price-hikes are expected to place an additional burden of Rs 5.20 billion on Andhra Pradesh alone.

Naidu-led Telugu Desam Party supports the National Democratic Alliance government at the Centre from outside. He dubbed the budget as "anti-poor" and said that "the increase in the issue price of rice by 25 per cent would burden the state exchequer by Rs 4 billion and deal a lethal blow to the poor."

He also strongly condemned the increase in urea price by Rs 30.50 per bag, which would be "back-breaking to the farmers already affected severely due to untimely rains and drought."

He pointed out that the increase in the prices of P&K fertilisers from 7 to 15 per cent would place an additional burden of Rs 1.20 billion on the farming community in the state.

Incidentally, Naidu's strong reaction late Tuesday was, in fact, in sharp contrast to his earlier "reaction" terming the Budget as moderately good and positive in approach.

The twin reactions from Naidu were the result of an official faux pas. As the Chief Minister was away for electioneering in connection with the municipal polls slated for March 9 in the state, the task of reacting to the Budget was assigned to the officials.

After first issuing a media release on the Chief Minister's reactions to the Budget, wherein he hailed certain measures announced by Yashwant Sinha, the officials released that the Budget did deal a severe blow to the state government, which is already in a deep financial crisis, with mounting revenue and fiscal deficits.

Consequently, the officials changed tack, sought to withdraw the earlier media release and substitute it with another one. Thus, from offering bouquets to Sinha, Naidu ended up throwing brickbats at him, though for "genuine reasons". The initial euphoria proved to be short-lived, as the harsh realities dawned later.

Naidu's Telugu Desam Party was also caught on the wrong foot, with its representatives speaking in double voices. While the Telugu Desam Parliamentary Party leader K Yerran Naidu, speaking in Delhi, reacted sharply to the hike in the prices of fertilisers and the issue price of rice under PDS, the Rajya Sabha member and party spokesman P Prabhakar Reddy told the media in Hyderabad that the TDP welcomed the Budget proposals as progressive and pro-development.

The hike in the issue price of rice for the PDS is expected to push up the state government's outlay on the subsidised rice scheme to Rs 15.30 billion or so in the ensuing financial year 2000-2001, from the Rs 11.30 billion earmarked for the scheme in the current year's Budget.

Andhra Pradesh requires 2.16 million tonnes of rice per annum for distribution to 11.3 million white card-holders (poor families) at the subsidised price of Rs 3.50 per kg.

Till now, the Food Corporation of India's issue price for rice is Rs 3.50 per kg for Below the Poverty Line (BPL) families and Rs 9.05 per kg for Above the Poverty Line (APL) families.

With the hike effective from April 1, 2000, the issue price of rice under the PDS would go up to Rs 6 for BPL category and Rs 12 for the APL category.

The burden on the state is all the more heavy, since the Central government has been supplying rice under the BPL category to only 5 million families in the State, as per the recommendations of the Lakdawala Committee on the poverty estimates in the states, even as the subsidised rice scheme in Andhra Pradesh covers more than double the number of "poor" families.

There are other issues, too, on which Naidu is not happy with the NDA government's Budget for the ensuing year. His complaint is that adequate fiscal incentives and policy support measures have not been provided to the states which have taken up reforms in a big way.

"States taking up innovative schemes, power sector reforms and people's empowerment programmes, besides following financial discipline, should have been properly rewarded through a package of measures in the Union Budget," he pointed out in the media statement.

Another sore point for Naidu was that Sinha has ignored his longstanding plea for increasing the share of states in Central tax revenue to 50 per cent subsuming flows currently coming under tax shares, centrally sponsored schemes, plan grants and grants under Article 275(1) of the Constitution.

Sinha was also silent on the alternative scheme of devolution recommended by the Tenth Finance Commission.

The delay on the part of the Central government to enact the Constitution amendment bill on alternative scheme of devolution has deprived the states of an increased share in gross tax revenue of the Central government.

Naidu is sore that the surcharge on the income tax and additional cess on petrol would give additional revenue to the Central government without any share to the states.

"The Central government should have taken measures for revenue increase shareable with the states," he pointed out.

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