Sun Mar 02 03:11:17 UTC 2025: ## Andhra Pradesh’s Budget Reveals Soaring Public Debt

**Vijayawada, March 2, 2025** – The Andhra Pradesh government’s budget for the 2025-26 fiscal year, presented on February 28th, paints a concerning picture of the state’s finances. A projected ₹1.02 lakh crore increase in public debt, bringing the total to ₹1.03 lakh crore, has sparked alarm among experts. This represents a significant jump from ₹76,209 crore in 2023-24 and surpasses the revised estimate of ₹97,352 crore for 2024-25.

The total outlay for the budget is ₹3,22,359 lakh crore. Experts attribute the rising debt to a combination of factors including increased spending on welfare schemes (“freebies”), insufficient tax revenue, and low capital expenditure. The resulting fiscal deficit is estimated at ₹79,926 crore, and the revenue deficit at ₹33,185 crore. Annual interest and principal repayments alone are projected to exceed ₹44,000 crore.

K.S. Chalam, Chairman of the Institute for Economic and Social Justice, described the state’s financial situation as “alarming.” Similarly, V. Anji Reddy of Acharya Nagarjuna University highlighted the mismatch between burgeoning welfare spending and stagnant tax revenues. S. Mahendra Dev, Chairman of the Institute of Development Studies-Andhra Pradesh, linked the debt surge to the “freebies” distributed over the past five years and stressed the need for increased revenue and investment in infrastructure to stimulate growth.

The budget reveals that internal debt is projected to reach ₹81,956 crore in 2025-26, while loans and advances from the central government are estimated at ₹21,700 crore. Professor Mahendra Dev emphasized the need for central government assistance to address the crisis.

Public debt as a percentage of the Gross State Domestic Product (GSDP) is also projected to rise sharply, from ₹4.91 lakh crore in 2023-24 to ₹6.40 lakh crore in 2025-26. A significant portion of the state’s revenue (32%) comes from open market loans, slightly less than tax revenue (34%). The budget allocates 18% of expenditure to interest and principal repayment, 18% to welfare, and a relatively small percentage to crucial sectors like health (6%) and education (11%).

Experts recommend that the government prioritize investments in health and education infrastructure and boost capital expenditure to stimulate economic growth and mitigate the escalating debt burden. The situation underscores the need for fiscal prudence and strategic resource allocation to address Andhra Pradesh’s growing financial challenges.

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