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Journalism of Courage
Fitch Ratings says in a new report that the targets of Andhra Pradesh8217;s budget for the fiscal year to March 2013 are optimistic,in spite of their budgetary achievements in the previous year. However,the agency does not expect major slippage from the budget targets.
Given the current economic slowdown in India,the government8217;s assumptions about revenue and expenditure are ambitious,says Siva Subramanian,Analyst in Fitch8217;s International Public Finance team.
The latest budget projects that Andhra Pradesh8217;s current balance will increase to INR44.4bn 0.5 of state GSDP in FY13 based on a 21.7 growth in the state8217;s own revenue and a 16.5 growth in current expenditure. However,even factoring in realistic revenue growth for FY13 based on present economic conditions,Fitch estimates that FY13 may end with a current balance at 0.45 of GSDP,which in the agency8217;s view is not a significant slippage from the budgeted 0.5 of GSDP.
Based on nominal growth in excess of interest rate on debt,a worse-than-expected fiscal deficit does not pose a threat to the state8217;s debt sustainability,says Devendra Kumar Pant,Director,in Fitch8217;s International Public Finance team.
Based on Andhra Pradesh8217;s advance estimate of its GSDP for the fiscal year ending March 2012,the state will miss its Eleventh Plan average GSDP growth target of 9.5 and is likely to achieve an average growth of 7.8. Economic growth in FY12 is estimated to have slowed to 6.8 from 9.2 in FY11,causing the current balance to shrink to INR7.8bn 0.12 of GSDP from INR12.3bn 0.47.
