TeaHe presented a budget of more than ₹ 3.22 lakh crore for FY2025-26 by the Andhra Pradesh government. Fiscal trends, revenue and fiscal deficit, and public debt amount suggests that the state finance has been severely emphasized. It seems that the government is staring at the difficult days ahead.
Public loans, the total amount which a government borrows to fund its expenses is estimated to increase to ₹ 1.02 lakh crore in FY2025-26. Andhra Pradesh will see a quantum jump of more than 25,000 crores in public loans in only one year. Public loan as a percentage of GSDP was ₹ 4.91 lakh crore in FY2023-24 and in 2024-25 it has increased to ₹ 5.60 lakh crore. The budget estimate (BE), as a percentage of GSDP for FY2025-26, is 6.40 lakh crores.
According to experts, the increase in public loans is largely due to “free, low tax revenue and low capital expenditure”. They say that the government has not focused on physical infrastructure and human infrastructure, such as health and education, and advise it to reduce fiscal deficit.
According to budget documents, 18% government spending leads to interest and major repayment. The government will have to pay more than 44,000 crores on interest and basic payment per year if the revenue deficit of ₹ 79,926 crore and revenue deficit of ₹ 33,185 crore is considered.
Tax revenue is not increasing to match cumbersome spending on welfare schemes. The government spends 18% on welfare, 11% on education and 6% on health.
Given the critical state of finance, it may be difficult for the government to implement its election promises. The budget document states that the government has decided to postpone the implementation of some of its major promises. The budget also provides limited scope for ambitious infrastructure projects.
For the Anandata Sukhibawa scheme, the government has allocated ₹ 6,300 crore to provide ₹ 20,000 to each farmer. For Thali’s Vandanam scheme, it has allocated 9,407 crore, under which each student in a family will receive ₹ 15,000. The government has also announced that it will revive the Aadhaar plan to support artisans, craftsmen and other traditional businesses by allocating AD 1,000 crores.
The government referred to the Godvari-Benkacherla, an ambitious intra-linking of rivers initiative with an estimated cost of more than ₹ 80,000 crore. But no funds have been allocated for this project.
The need to suppress is to increase capital expenditure for fuel development and development. In his budget speech, Finance Minister Durbula Keshav said, “Capital expenditure for the government means irrigation, spending on roads, dams etc., which gives returns in future, it is the goal of capital expenditure.” However, budget figures present a different picture. In a total outlay of ₹ 3,22,359 crore, capital expenditure is estimated only ₹ 40,635 crore and revenue expenditure is estimated to be ₹ 2,51,162 crore. To overcome the lack of resources, the government has come up with a feasibility gap funding plan with a chorus of ₹ 2,000 crore.
The Finance Minister said, “Economic growth is on track.” Nevertheless, FY2024–25 has a difference between BE and revised estimates for revenue receipts. The government estimated that revenue receipts would be ₹ 2,01,173.61 crore. RE states that the receipts, however, were 1,76,031 crore. While the BE for tax revenue was 1,09,789.18 crore, Re was again during FY2024-25 RE 94,966.53 crore. Similarly, non-tax revenue fY was again for FY2024-25 against FY 7,018.05 crore as against ₹ 10,576 crore.
At this point, restoring the financial condition of Andhra Pradesh is a difficult task for the government. The government has not indicated how this is a plan to improve the state -owned resources and bring down debt liabilities.
It is clear that the government will have to increase its revenue resources. It needs to bring down the dependence on borrowed funds for the financing of revenue/current expenditure and formulate a debt management strategy. The raised loans should be used to create money rather than to bridge revenue or fiscal deficit. The government will have to balance fiscal discipline with ambitious promises.
Published – March 13, 2025 01:30 AM IST