Bengaluru, Karnataka, India, December 14, 2023 – Andhra Pradesh, boasting a population of 84.58 million, spans an area of 162,970 square kilometers (62,920 square miles), constituting 8.37% of India’s total landmass. It ranks as the 7th-largest state in India by area among the 28 states. In terms of population, Andhra Pradesh holds the 10th position. The Gross Domestic Product (GDP) for Andhra Pradesh in the fiscal year 2023-24 stands at Rs. 14.49 lakh crores, reflecting a 10% increase from the previous year’s GDP in 2022-23. In contrast to India’s overall GDP growth around 6%, Andhra Pradesh exhibits rapid growth, boasting a remarkable 16% growth rate. Noteworthy is the significant allocation of government spending towards procurement, prompting an in-depth examination of procurement expenses in the state of Andhra Pradesh.
The primary funding source for procurement is the budget, supplemented by additional funds from Public Sector Undertaking (PSU) entities. In the fiscal year 2023-24, Andhra Pradesh’s government budget amounts to Rs. 2,60,868 crores, marking a substantial 16% increase compared to the previous fiscal year’s total budget expenditure of Rs. 18,411 crores in 2022-23. Within Andhra Pradesh, 79 PSUs generate revenue through service provision, utilizing these funds for procuring goods, implementing projects, and acquiring services. Notable PSUs in the region include the Andhra Pradesh Housing Board, Andhra Pradesh State Civil Supplies Corporation Limited, and Andhra Pradesh Tourism Development Corporation Limited.
Within the comprehensive budget of Rs.2,60,868 crores, a specific allocation of Rs.49,840 crores is earmarked for committed expenditure, constituting 19.1% of the total budget. This committed expenditure by the Andhra Pradesh Government on the revenue account primarily encompasses interest payments, salaries, pensions, and subsidies. A substantial portion of the remaining 80.9% is designated for procurement, which is further supported by contributions from Public Sector Undertakings (PSUs). Assuming that procurement accounts for 10% of the Gross Domestic Product (GDP), the estimated procurement expenditure by the Andhra Pradesh government stands at approximately Rs.1.449 lakh crores.
Out of the total budget of Rs.2,60,868 crores allocated for the Andhra Pradesh government, the capital outlay for the fiscal year 2023-24 amounts to Rs.31,061 crores. The government’s capital outlay covers expenses related to equipment, machinery, land, plant, buildings, warehouses, furnishings and fittings, business vehicles, and software. Additionally, it encompasses the procurement of civil works for new infrastructure like roads, bridges, and drainage systems, as well as major projects such as dams, stadiums, airports, and harbors. Given the substantial financial requirements of these projects, the government may secure loans from institutions such as the World Bank and the Asian Development Bank. Notably, the current capital outlay represents an impressive 84% increase from the previous year.
The Andhra Pradesh state government oversees the operations of 31 departments engaged in the procurement of various goods, works, and services. Initiatives related to rural development in Andhra Pradesh fall under the purview of entities such as the Department of Local Government and the Department of Rural Development and Panchayats. Procurement activities at the local government level are managed by municipalities and district administrations. As of the year 2023, Andhra Pradesh is home to 17 municipal corporations, with the Greater Visakhapatnam Municipal Corporation (GVMC) standing out as the largest in both area and population. The state is divided into 26 districts, with Anantapur holding the distinction of being the largest district in Andhra Pradesh in terms of area.
The Andhra Pradesh government directs 19.8% of its overall budget expenditure towards the social welfare sector, serving a variety of objectives. These funds support initiatives such as the women’s helpline center, one-stop crisis center, procurement of food materials, and the acquisition of electrical equipment. Additionally, provisions are made for civil works, involving the construction and repair of buildings, roads, and Anganwadi Centers. Oversight and implementation of these expenditures are managed by entities such as the Social Welfare Department and the Social Welfare And Nutritious Meal Programme Department.
In the education sector, the Andhra Pradesh government allocates 12.6% of its total budget expenditure. This allocation encompasses various necessities, including the provision of educational kits, distribution of uniforms, and the supply of hostel items. Additionally, funds are set aside for civil works, addressing tasks like the construction and repair of school buildings. Oversight of these expenditures is within the domain of agencies such as the Department of Medical Education and Research and the Department of Higher Education.
Allocating 3.5% of its total budget expenditure to Urban Development, the Andhra Pradesh government directs these funds for various purposes. This includes the allocation for the procurement of construction materials, supply of structural components, purchase of building materials, and acquisition of construction equipment. Additionally, specific allocations are in place for civil projects, encompassing the construction and maintenance of commercial buildings, residential structures, and affordable housing. The implementation of these financial allocations is closely monitored by agencies such as the Department of Housing and the Urban Development Department.
To ensure transparency, the government is required to adopt an open tendering process for procurement, widely publishing these tenders across numerous web portals. As of December 14th, Tendersniper portal indicates over 5011 live tenders in Andhra Pradesh. Analyzing these tenders offers insights into the government’s spending priorities. The highest expenditure area in Andhra Pradesh is CC road, with 348 tenders, primarily published by the AP Municipalities, Municipal Corporation of Ananthapur and Andhra Pradesh Municipal Administration Department. The second-highest spending category is Road and Drain, with 283 tenders, mostly published by the Department of Rural Development and Panchayats and Water Supply and Sanitation. Drain takes the third spot with 225 tenders, largely advertised by the Department of Water Resources and Water Supply and Sanitation.
The Andhra Pradesh government allocates substantial funds annually, amounting to tens of thousands of crores, for the procurement of diverse goods, works, and services. This procurement is carried out through an open tendering process, where eligible vendors or suppliers can secure the tender by submitting competitive prices and strong technical proposals.
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