The proportion of revenue receipts and total budgetary receipts as percentage of GSDP increased during the period 2002-2007 and declined during 2008-14. Explain the factors contributed for such trend.
In short
Receipts rose as a share of GSDP in 2002-2007 as growth near 8%, a wider service tax base, Twelfth Finance Commission grants and Andhra Pradesh's Hyderabad boom and 2005 VAT lifted revenue. They fell in 2008-14 with the global financial crisis, rising committed spending and the 2009-14 statehood agitation.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 238 words
Strong Economic Growth and Tax Expansion
GDP growth averaged 8%, boosting tax revenues; service tax rate increased from 5% to 12%, coverage expanded from 52 to 98 services, raising receipts.
Fiscal Reforms and Grants
Twelfth Finance Commission enhanced non-plan grants; improved tax administration increased buoyancy; undivided Andhra Pradesh’s Hyderabad-led boom and the 2005 switch to VAT expanded its tax base.
Global Financial Crisis and Fiscal Deficits
The 2008 slowdown reduced tax collections; rising pensions and interest payments crowded out capital expenditure; in Andhra Pradesh the 2009-14 statehood agitation disrupted economic activity.
Slower Tax Buoyancy and Disinvestment
Corporate tax growth slowed amid uncertainty; disinvestment and loan recoveries slowed, lowering non-debt capital receipts.
Growth-Deficit Dynamics and Debt Sustainability
Growth outpaced borrowing costs in 2002-07, improving fiscal health; this gap narrowed in 2008-14, increasing fiscal stress.
Revenue Deficit Impact
Persistent deficits limited capital expenditure, affecting future revenue potential.
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Resource mobilization in Andhra Pradesh20 questions
Asked in 8 of 8 sittings since 2008
Most tested: Andhra Pradesh’s revenue sources, central transfers, and resource allocation/resource gap after bifurcation.
- 2025Explain the major sources of budgetary resources for Andhra Pradesh. What are the key challenges the state faces in mobilising adequate financial resources?
- 2023Briefly discuss the impact of bifurcation on the economy of Andhra Pradesh with respect to sectoral changes and resource gap. Provide a brief note on the steps taken by the Government of Andhra Pradesh to mobilize resources.
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Question from the official APPSC Group-I Mains 2016 paper. Answer written by Ghissu's engine and checked against our editorial standards. Found an error? Tell us and we correct it within 48 hours.