Explain the major sources of budgetary resources for Andhra Pradesh. What are the key challenges the state faces in mobilising adequate financial resources?
In short
Andhra Pradesh's resources are own tax revenue (about 6.4% of GSDP), central transfers, non-tax and mineral revenue, and borrowings, including off-budget borrowing through PSUs. Its challenges include a revenue deficit that quadrupled in 2022-23, committed spending above 64% of revenue receipts and capital expenditure of just 0.55% of GSDP.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 273 words
Own Tax Revenue Growth
Constituting about 6.4% of GSDP, own tax revenue rose 28% in 2026-27, reflecting improved collection capacity.
Central Transfers and Grants
The state depends heavily on central transfers, including revenue deficit grants, but faces uncertainty due to unresolved Special Category Status demands post-bifurcation.
Mineral Revenue Shortfalls
Mineral royalties are underutilised, with only 84% of targets met due to policy delays5, as detailed in Andhra Pradesh Mining Revenue reports.
Rising Revenue Deficit
The revenue deficit quadrupled in 2022-23, driven by committed expenditures like pensions under schemes such as NTR Bharosa, consuming over 64% of revenue receipts.
Declining Capital Expenditure
Capital spending dropped to a five-year low of 0.55% of GSDP, constraining infrastructure investments critical for growth.
Tax Collection Inefficiencies
The 2021-22 CAG audit revealed ₹1,806 crore revenue loss due to tax and land department lapses, undermining resource mobilisation.
Dependence on Central Grants
Political uncertainty over special financial packages post-2014 bifurcation affects budget predictability.
Strengthen Tax Administration
Use technology and audits to plug revenue leakages.
Prioritise Capital Projects
Efficiently implement projects like Polavaram to boost economic returns.
Diversify Revenue Sources
Explore user fees and asset monetisation to reduce grant dependence.
Enhance Fiscal Transparency
Regulate off-budget borrowings to maintain debt sustainability.
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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.
- 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.
- 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 2025 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.