Andhra Pradesh suffered a severe fiscal crisis during 2024-25 in the first year of the current Telugu Desam Party-led coalition government, as evidenced by huge revenue and fiscal deficit, sharp decline in capital expenditure and worsening debt sustainability, the Comptroller and Auditor General of India (CAG) revealed in its report, which was submitted to the state assembly on Friday.
According to the report, the revenue deficit, which refers to the gap between revenue receipts and revenue expenditures, rose to $60,285 crore in 2024-25, vs $38,683 crore in the previous financial year.
Likewise, the fiscal deficit, which is the gap between total revenues (excluding loans) and total spending, which was $62,720 crore at the end of 2023-24, rising sharply to $81,071 Crores.
“In fact, the 2024-2025 annual budget projected a revenue shortfall of $34,743 crores and a financial deficit of $Rs 68,743 crore. But both numbers increased abnormally.”
The CAG noted that the state’s revenue deficit for 2024-25 was 3.75% of the Gross State Domestic Product (GSDP), far exceeding the Fiscal Responsibility and Budget Management (FRBM) target of 2.7% of GSDP. Likewise, the fiscal deficit reached 5.05%, against the established ceiling of 4%.
This has forced the country to borrow even to cover daily expenses, greatly increasing the interest burden. During 2024-25, Andhra Pradesh government has benefited $Special drawing facility of Rs 42,004 crore from RBI for 71 days has been disbursed $188.82 crores as interest; $Rs 73,897 crore as ways and means advanced for 179 days and paid $82.30 Crores as interest and $Rs 56,631 crore overdraft for 107 days and paid $32 crores as interest.
Minimum cash balance $“The state government has kept Rs 1.94 lakh crore with the RBI for just eight days without availing any ways and means to come forward,” the CAG report said.
She pointed out that during the years 2024-2025, the state’s total receipts amounted to only $2,49,191 crore against the budget estimate of Rs $2,69,928 crore, a decrease of approx $20,000 Crores. This includes shortages $18,748 crore in tax collection and $Rs 4,603 crore in non-tax revenue.
The CAG also noted that during 2024-25, the state government indulged in loans worth $87,773 crores, but it was only spent $21,173 crore on capital expenditure, which is just 24%. “The government is supposed to borrow money primarily to create capital or assets, with the aim of generating long-term income streams from these investments,” the report said. “But it has not undertaken any capital asset creation.”
In fact, loans increased by 16.08% in 2024-25 compared to the previous year, reflecting increased reliance on external financing. “But capital expenditure recorded a decline of 12% during the same period, indicating a reduced focus on creating long-term assets. This shows a lack of financial discipline and long-term financial sustainability,” the advisory group said.
The report also indicated that the government failed to spend large sums of money on various departments despite allocating budgetary allocations for them.
The CAG also expressed concern over the alarming public debt and other liabilities of the country, which showed a net increase of $81,071 crore (16.68%) compared to previous year due to increase in new long-term market loans. In addition to raising loans directly, state governments have also provided guarantee for loans raised by statutory firms, corporates, government institutions, cooperative societies, etc. from the market and financial institutions for implementing various schemes and programmes. “But the state government has not disclosed the size or source of these extra-budgetary loans (OBBs) in its budget,” the CAG said.
