Explain the major sources of budgetary resources for Andhra Pradesh. What are the key challenges the state…

Question

Explain the major sources of budgetary resources for Andhra Pradesh. What are the key challenges the state faces in mobilising adequate financial resources?

Ghissu Editorial · Accepted Answer

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.

**Introduction**

Andhra Pradesh⟦2⟧⟦1⟧’s fiscal resources underpin its growth ambitions and welfare⟦3⟧ schemes like the NTR Bharosa pension scheme⟦4⟧ and Polavaram project, but rising deficits and revenue mobilisation issues threaten fiscal sustainability.

**Key Budgetary Resources**

1. **Own Tax Revenue Growth**: Constituting about 6.4% of GSDP, own tax revenue rose 28% in 2026-27, reflecting improved collection capacity.  
2. **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.  
3. **Mineral Revenue Shortfalls**: Mineral royalties are underutilised, with only 84% of targets met due to policy delays⟦5⟧, as detailed in Andhra Pradesh Mining Revenue reports.

**Challenges in Resource Mobilisation**

1. **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.  
2. **Declining Capital Expenditure**: Capital spending dropped to a five-year low of 0.55% of GSDP, constraining infrastructure investments critical for growth.  
3. **Tax Collection Inefficiencies**: The 2021-22 CAG audit revealed ₹1,806 crore revenue loss due to tax and land department lapses, undermining resource mobilisation.  
4. **Dependence on Central Grants**: Political uncertainty over special financial packages post-2014 bifurcation affects budget predictability.

**Way Forward**

1. **Strengthen Tax Administration**: Use technology and audits to plug revenue leakages.  
2. **Prioritise Capital Projects**: Efficiently implement projects like Polavaram to boost economic returns.  
3. **Diversify Revenue Sources**: Explore user fees and asset monetisation to reduce grant dependence.  
4. **Enhance Fiscal Transparency**: Regulate off-budget borrowings to maintain debt sustainability.

**Conclusion**

Addressing revenue deficits, improving tax compliance, and boosting capital expenditure are key for Andhra Pradesh’s fiscal sustainability and inclusive growth.

Model answer

ఈ ప్రశ్నను ప్రాక్టీస్ చేయండి

ఆంధ్రప్రదేశ్‌లో వనరుల సమీకరణ20 questions

Ghissu