VIJAYAWADA: A sharp fiscal contrast separates 2023-24 and 2024-25 in Andhra Pradesh, two financial years governed by different regimes.
The State’s fiscal deficit jumps from Rs 62,720 crore (RE) to Rs 68,743 crore (BE), the highest borrowing requirement it has ever projected.
Meanwhile, the revenue deficit narrows from Rs 38,683 crore to Rs 34,743 crore, signalling an effort to tighten routine spending or bank on stronger revenue flows.
Yet, AP remains one of India’s most revenue-stressed States, with its deficit still the second-largest, according to the Reserve Bank of India’s Handbook of Statistics on State Government Finances.
The broader trend indicates that this is not a one-off fluctuation, but rather part of a deeper structural pattern. AP’s fiscal deficit has more than doubled since bifurcation, rising from Rs 31,747 crore in 2014-15 to a projected Rs 68,743 crore in 2024-25.
A brief dip in 2021-22, when the deficit fell to Rs 25,013 crore, stands out as the only year of sharp compression in an otherwise steadily widening gap. Subsequent years saw the deficit rebound, underscoring the persistence of fiscal pressure.
The revenue deficit trajectory is even more telling. AP has not recorded a single revenue-surplus year since 2014.
The deficit, which was Rs 24,193 crore in 2014-15, expanded to Rs 43,488 crore in 2022-23 (Actuals) before easing marginally in the last two years.
The State continues to borrow heavily for routine expenditure — salaries, pensions, subsidies, and welfare — leaving limited room for capital creation.
Long-term revenue expenditure trends explain much of this imbalance.
AP’s revenue spending has tripled over two decades, rising from Rs 31,307 crore in 2004-05 to Rs 1,10,374 crore in 2013-14, with continued expansion thereafter.
This sustained rise has kept the State locked in a structural revenue deficit.
Comparisons with other States highlight the scale of the challenge. While larger States such as Maharashtra, Tamil Nadu, Uttar Pradesh and Karnataka report higher fiscal deficits in absolute terms, AP’s deficit has grown faster relative to its economic size.
Its revenue deficit of Rs 34,743 crore is the second-highest in India, far exceeding those of Karnataka, Kerala and West Bengal. Telangana and Gujarat, meanwhile, continue to post revenue surpluses.
AP’s pension bill more than doubles over past one decade
The fiscal gap between Andhra Pradesh and Telangana has widened steadily. In 2024-25, AP’s fiscal deficit stands at Rs 68,743 crore as against Telangana’s Rs 49,255 crore, while the revenue deficit gap is even sharper.
AP reports Rs 34,743 crore, compared to Telangana’s near-balanced Rs 297 crore. AP’s revenue deficit alone exceeds the combined surpluses of Telangana and Gujarat.
Andhra Pradesh’s pension bill has more than doubled over the past decade, underscoring the State’s rising committed expenditure burden. Pension outgo increased from Rs 9,972 crore in 2014-15 to Rs 22,584 crore in 2022-23 (Actuals), before easing slightly to Rs 21,696 crore in 2023-24 (RE), and stabilising at Rs 21,808 crore in 2024-25 (BE).
RBI’s Handbook of Statistics on State Government Finances shows pension liabilities remain structurally high, driven by a growing retiree base, and long-term obligations that continue to strain revenue expenditure.
Capital receipts rise sharply
Capital receipts, by contrast, have swung sharply. They rose from Rs 2,79,456 crore in 2014-15 to Rs 6,16,958 crore in 2019-20, and peaked at Rs 7,26,016 crore in 2020-21 during the Covid-19 pandemic borrowing surge.
Receipts then dropped to Rs 2,94,253 crore in 2021-22, rebounded in 2022-23, and slipped again in 2023-24, before a steep fall to Rs 2,71,045 crore projected for 2024-25, signalling tighter inflows under the new administration.
Capital expenditure shows a contrasting revival.
After dipping for three years, and hitting Rs 24,587 crore in 2022-23, it jumped to Rs 41,107 crore in 2023-24 (RE), and is budgeted at Rs 58,510 crore in 2024-25, indicating a renewed push for capital creation despite shrinking receipts.
Debt burden intensifies
Andhra Pradesh’s debt burden continues to intensify, with outstanding liabilities rising from Rs 4.31 lakh crore in 2023-24 to Rs 4.94 lakh crore in 2024-25, an increase of over Rs 62,000 crore in a single year.
The 14.4% jump is among the steepest for any major State, reflecting AP’s growing dependence on market borrowings, and the widening gap between its revenue and expenditure commitments. A Study of Budgets shows that AP’s liabilities have expanded faster than most of large States over the past decade, climbing from Rs 1.96 lakh crore in 2013-14 to Rs 4.94 lakh crore in 2023-24, a rise of more than 152%.
The debt trajectory reveals three phases, including a moderate post-bifurcation increase, a sharp climb between 2018 and 2021, and an accelerated surge thereafter, driven mainly by higher State Development Loan (SDL) borrowings. SDLs alone have grown from Rs 1.11 lakh crore in 2014 to Rs 3.66 lakh crore in 2024.
In percentage terms, AP’s debt growth has outpaced Karnataka and Tamil Nadu, even though those States carry larger absolute liabilities. Kerala has also seen a steep rise, but AP’s post-2019 acceleration is more pronounced. Telangana, despite rapid growth from a lower base, remains below AP in total liabilities.
Market borrowings
Andhra Pradesh’s reliance on market borrowings has intensified, with gross SDL mobilisation rising from Rs 57,478 crore in 2022-23 to Rs 68,400 crore in 2023-24, according to RBI’s State Finances: A Study of Budgets. The nearly Rs 11,000-crore jump places AP among the most aggressive borrowers in the country, even as repayments have climbed to their highest level in a decade. The borrowing pattern shows a steepening curve. A steady rise after bifurcation, a sharp escalation between 2018 and 2021, and an accelerated surge thereafter. Gross SDLs grew from Rs 22,800 crore in 2017-18 to Rs 42,415 crore in 2019-20, crossed Rs 50,000 crore in 2020-21, and reached their highest level since bifurcation in 2023-24.
Repayments have risen, touching Rs 22,412 crore in 2023-24, AP’s borrowing curve is steeper. Karnataka and TN raise larger amounts but with more stable year-on-year rise; TG’s borrowings remain below AP’s; Kerala’s repayments have risen without a comparable spike in gross SDLs.
