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Informist, Friday, Feb. 28, 2025

By Priyasmita Dutta 

NEW DELHI – Andhra Pradesh Finance Minister Payyavula Keshav presented the state's Budget for 2025-26 (Apr-Mar) in the Legislative Assembly Friday, seeking to deliver on the promises made at the time of the 2024 assembly elections against the backdrop of "financial destruction" caused by the previous regime. "It is a challenging task to rebuild Andhra Pradesh in this difficult time," Keshav said in his second Budget speech. Keshav projected Andhra Pradesh's gross state domestic product growing 13.63% in FY26, with the fiscal deficit at 4.38% of GSDP. 

"The target is to consistently achieve GSDP growth rate of 15% plus, increase per capita income, eradicate poverty, and take the fruits of development to the most underprivileged sections," Keshav said while detailing the government's focus areas. The revised estimate for GSDP growth in FY25 is 12.94%, as against 8.60% in FY24. Fiscal deficit, on the other hand, is estimated to be 4.57% in FY25, higher than 4.41% a year ago. 

The state has not adhered to the Centre's fiscal deficit limit of 3.5% of GSDP since FY23. In FY22, it was at 2.21% of GSDP. 

The state's market borrowing in FY26 is projected to be INR 804.57 billion, only 2.4% higher than the revised estimate for FY25 at INR 786.08 billion. The revised estimate for market borrowing in FY25 is INR 76.08 billion higher than the earlier estimate. As per the Budget documents, Andhra Pradesh's public debt is projected at 35% of GSDP next year, unchanged from last year. In his speech, Keshav cited NITI Aayog's state finances study which said Andhra Pradesh's debt sustainability has reached zero. "This means that ours was the only state which was no longer in a position to take on any more loans."

The total expenditure for FY26 is projected at INR 3.22 trillion, up 17.1% on year. Of this, revenue expenditure for FY26 is pegged at INR 2.51 trillion, up 12.1% on year. This includes the expenditure on salaries, pensions, interest, grants, and subsidies. The capital expenditure for FY26 is projected at INR 406.36 trillion, sharply higher by 68.8% on year. 

On the expenses front, the Andhra Pradesh government focussed its spending on four major sectors, starting with social inclusivity and empowerment, for which the government has earmarked INR 1.42 trillion next year. Under this head, the state allocated INR 275.18 billion for its flagship NTR Bharosa Pension scheme. Chief Minister N. Chandrababu Naidu had on Jul. 1, 2024 launched the scheme to provide pensions to all the financially unstable citizens of Andhra Pradesh, especially the elderly, widows, and disabled citizens. Keshav also allocated INR 557.30 billion for economic and technological advancements in FY26, of which INR 136 billion will go towards energy sector.

A key takeaway from the new government's second Budget was the announcement to start the Amaravati project on a grand scale. "Our aim is to develop Amaravati not only as a city, but also as a growth engine leading the development of the state," Keshav said. Resources for the plan, however will not come from the state's budgetary resources, but through the Centre with World Bank, Asian Development Bank and HUDCO lending for it. In the Union Budget for FY25, Finance Minister Nirmala Sitharaman had announced a INR 150 billion special financial assistance for Andhra Pradesh through multilateral agencies to facilitate the state's development plan for a new capital.

On the revenue side, Keshav, who also holds the portfolio of planning, commercial taxes and legislativve affairs, projected the revenue receipts for FY26 at INR 2.18 trillion, 23.9% higher than the revised estimate for FY25. The state's own tax revenue is seen growing 14.8% on year to INR 1.09 trillion, while the state's non-tax revenue is seen growing nearly three-fold to INR 191.19 billion. 

Transfer from the Union government to Andhra Pradesh in FY26 is projected at INR 575.66 billion, while grants are projected at INR 322.84 billion.  End

Edited by Tanima Banerjee

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