Briefly 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.
In short
Bifurcation in 2014 cost Andhra Pradesh Hyderabad's revenue and service base, shifting it towards agriculture, aquaculture and coastal sectors and leaving a resource gap. With capital spending at 0.55% of GSDP, it is mobilising resources through World Bank and ADB loans, Reorganisation Act grants and better tax collection.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 320 words
Sectoral Shift
Growth in aquaculture, horticulture, and chilli production in Rayalaseema and Coastal Andhra partially compensated for industrial losses. The state leveraged its fertile lands and 974 km coastline to boost fisheries and export-oriented agriculture, reshaping its economic base.
Fiscal Deficit and Capital Expenditure
The revenue deficit quadrupled to 3.30% of GSDP, while capital expenditure plummeted to 0.55% of GSDP, severely constraining infrastructure development and economic diversification. This fiscal stress limited the state’s ability to invest in long-term growth projects.
Financial Assistance and Infrastructure
The government secured ₹15,000 crore from multilateral agencies and loans from the World Bank and Asian Development Bank, supporting key projects like the Polavaram Irrigation Project and industrial corridors. These funds helped bridge the resource gap and catalyze infrastructure expansion.
Tax Revenue Increase and Fiscal Discipline
Own tax revenue rose 28% to Rs 1,09,789 crore in 2024-25 (PRS Legislative Research). The government has focused on improving tax compliance and optimizing committed expenditures, which currently consume over 64% of revenue receipts, to enhance fiscal space for development.
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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?
- 2023What are externally aided projects ? Discuss the principles, funding and objectives of Andhra Pradesh Irrigation and Agriculture Transformation Project (APIIATP). Provide a brief note on the scope of beneficiaries with respect to the APIIATP.
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Question from the official APPSC Group-I Mains 2023 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.