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Friday, December 8, 2023

Tale of two states: AP & Telangana

This article attempts to analyse the position of the economy in the States of Andhra Pradesh and Telangana post bifurcation in 2014. 

GSDP           Andhra Pradesh              Telangana       (INR lakhs, at current prices)

2014          46427201                         45188040                                      

2022        120173552                         114811470

The Gross State Domestic Price (GSDP) of Telangana increased by 31.12 per cent during the period 2011-12 to 2021-22. It is one of the highest growth rates for any state in the country. In terms of the percentage growth in GSDP, Telangana has shown the most rapid increase in its growth rate by around 17% from 2020 to the present.

During 2020-21, Telangana and Andhra Pradesh registered lowest Gross State Domestic Product (GSDP) growth rate in the last five years. However, while the country registered a negative growth rate of 2.97 per cent in 2020-21, it is heartening to note that the Telangana and Andhra Pradesh could still register a positive growth rate of 2.42 per cent and 1.58 per cent respectively.

Per capita GSDP   Andhra Pradesh             Telangana           (INR at current prices) 

 2014                        93,121                           124,057

 2022                       229,993                           303,606

Population      Andhra Pradesh               Telangana

2014                 4.99 Cr                                  3.64 Cr

2022                 5.23 Cr                                  3.78 Cr

Installed power capacity    Andhra Pradesh    Telangana   ( in MW)

2014                                          17,731.07     7,778

2022                                              25,727        18,069

Though both the states have per capita incomes that are much above the national average, Telangana has one of the highest per capita incomes in the country. Compared to Andhra Pradesh though Telangana has an advantage in terms of lesser population, the State has stepped up its power capacity significantly. The demand for power has doubled in Telangana in just six years’ time from around 100 million units in 2014 to around 200 million units in 2020. The Telangana state which was power deficit at the time of State bifurcation in 2014 has successfully managed the increase in power demand by stepping up the power generation capacity.

                   Change in the sectoral contribution to GSDP -Andhra Pradesh

 2016-17 (in %)2020-21 (in %)
Taxes on products  8.75  8.45

                   Change in the sectoral contribution to GSDP -Telangana

 2016-17 (in %)2020-21 (in %)
Taxes on products  8.83  8.46

Though due to Covid effect the share of Industry and Services have been impacted in 2020-21, both the States have registered growth in agriculture ‘s share in the GSDP. While the growth in agriculture’s share in GSDP in both AP and Telangana is primarily due to shrinkage in the share of Industry and Services, in Telangana it is further strengthened by rapid expansion in power and irrigation by significant capital investment by the State.

Whereas, AP is unable to reap the full benefits of Polavaram mega irrigation project (it is a multi-purpose major irrigation project is intended for development of a gross irrigation potential of 4,36,825 ha, generation of 960MW of hydro power, drinking water supply to a population of 28.50 lakh in 611 villages and diversion of 80 TMC of water to Krishna river basin), which got revived in 2014 and works were being executed at rapid pace but almost got stalled since 2019, mainly due to the change in the government in the State.

Revenue deficit                   2016-17                        2020-21

Andhra Pradesh               17,231 Crs                        35,541      Crs

Telangana                      (+) 1,286 Crs                        22,298  Crs  

Fiscal deficit                    2016-17                         2020-21

Andhra Pradesh              30,908 Crs                       55,168 Crs

Telangana                        35,281 Crs                        49,038 Crs 

While Telangana State had revenue surplus during 2013-14 to 2016-17, since 2019-20 it had turned into a revenue deficit state (mainly due to the Covid and elections in 2019). Now, both the States are facing not only revenue deficit and fiscal deficit but also primary deficit.

Expenditure pattern

Andhra Pradesh               2016-17   2017-18   2018-19  2019-20  2020-21

Revenue expenditure               88            88             85.5    88.65           88

Capital expenditure                  11.5         10             13.2      7.90           11

Loans and advances                    0.5           2               1.3       3.45            1

Telangana                               2016-17   2017-18   2018-19  2019-20  2020-21

Revenue expenditure              73.52         73.81     75.59        80.97         82.14

Capital expenditure                  23.36        20.67     17.63        12.55         10.61     

Loans and advances                    3.12          5.53       6.78          6.48           7.25

As can be seen from the above data on expenditure pattern, both the States have been spending more on revenue expenditure. While AP State has been spending very less on capital expenditure, the Telangana State which was initially spending relatively more in capital expenditure (23.36%) has cut short to 10.61% over a period.

Whereas, as can be seen from the following data, both the states have been borrowing more and the outstanding debt of the States Telangana and Andhra Pradesh has increased by 105% and 173% respectively during the period 2016-17 to 2020-21.

Total outstanding debt      2016-17    2017-18    2018-19    2029-20 2020-21 (INR Crs)

Telangana                            134738    165849     196963      232181     275638

Andhra Pradesh                 201314     223706     257510      301802     348246

Therefore, it is evident that both the States have been borrowing to meet their revenue expenditure since the capital expenditure is declining on one side and revenue deficit is increasing on the other side. It is also evident that the borrowed funds are not only going towards current consumption but also to meet the loan interest and principal repayment obligations.

Social welfare and HDI

Though, both the States have been spending money on social welfare, the real long-term investment towards health and education is not very significant unlike the States Kerala or even Tamil Nadu whose HDI rankings (2019) are 1 and 11 respectively. The HDI rankings of Telangana and Andhra Pradesh are 22 and 27 respectively. However, the Health Index of Niti Aayog for 2021 has ranked Andhra Pradesh and Telangana at 2 and 10 respectively, which indicates AP has been making considerable investment in health.

Natural resources

Telangana region has 45% of the forest reserves in the hitherto undivided state up to 2014 and has 20% of the coal deposits of the country apart from rich mineral belt in the northern regions of Adilabad, Khammam, Karimnagar and Warangal, that are mostly untapped. Andhra Pradesh has a vast coastline of over 1,000 KMs, forest reserves spanning around 23% of the geographical area of the State, several mineral deposits in the Rayalaseema region. Godavari and Krishna rivers flow though the States of Telangana and Andhra Pradesh, providing main source of irrigation and drinking water to the people. Therefore, both the States have vast scope for developing infrastructure on a large scale to convert the natural resources into financial assets, which will boost the GSDP and States’ per capita income. 

Unfortunately, the governments in both the States are pruning down the capital expenditure and spending more on revenue expenditure by resorting to borrowings.

As per the provisions of AP Reorganisation Act, 2014 (APRA, 2014) passed by the Parliament the following major infrastructure is expected to be created in Andhra Pradesh.

A new major port at Dugarajapatnam, an integrated steel plant in YSR District, a greenfield crude oil refinery and petrochemical complex, Vizag-Chennai Industrial Corridor along the lines of Delhi-Mumbai Industrial Corridor, establishing a new railway zone, metro rail facility in Visakhapatnam and Vijayawada-Guntur-Tenali Metropolitan Urban Development Authority. It is ironical that instead of getting a new steel plant in YSR District as per the AP Reorganisation Act, the state is now on the verge of losing its existing Vizag steel plant! 

Even though, the APRA, 2014 passed by the Parliament provides for Hyderabad as the common capital for both Telangana and Andhra Pradesh for a period of 10 years, and 8 years have lapsed, AP State’s newly formed capital at Amaravati is yet to get materialised due to various political reasons. 

Similarly, Telangana state must get the following major infrastructure projects- Bayyaram steel plant, Kazipet railway coach factory, Tribal University under the APRA, 2014.

Distribution of several properties of the undivided state of Andhra Pradesh between Telangana and Andhra Pradesh post bifurcation as per the Schedule 9 and 10 of APRA, 2014 is still a work in progress even though 8 years have passed post bifurcation of the States.

The political narrative in the country has changed drastically during the last decade and all political parties are heavily depending on political strategists and consultants to come to power, retain the power and regain the power. As a result, populist schemes have assumed the forefront and the growth and development of the economy have taken the back seat. The newly formed Telangana and Andhra Pradesh are no exception in this regard. Neither the both State governments nor the Union government have bothered to ensure the implementation of the key provisions of the APRA, 2014 and instead resorted to the blame game by playing to the gallery.  

Added to the above woes, Andhra Pradesh and Telangana States’ individual share of taxes devolved by the centre out of 100 has come down from 4.305 to 4.047 and from 2.437 to 2.102 respectively from 2021 (will continue up to 2026) consequent to the recommendations of 15th Finance Commission.

While the unscientific and irrational bifurcation of the erstwhile Andhra Pradesh into Telangana and Andhra Pradesh has done more harm to Andhra Pradesh State, non-implementation of the major provisions of APSR Act, 2014 by the Union government has affected both the States, i.e., Andhra Pradesh and Telangana. 

The only way out is for the parliament to amend the Act to incorporate specific timelines for implementation of various provisions of the Act and designate a nodal agency for coordination and resolution of differences between the state and the centre. Hope some sense will prevail on the law makers and they will take the required remedial measures at an early date.


  1. State Finances Audit Reports (Andhra Pradesh) for the year ended 31 st March, 2021 by CAG.
  2. State Finances Audit Reports (Telangana) for the year ended 31 st March, 2021 by CAG.
  3. Andhra Pradesh Reorganisation Act, 2014.

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Dr. B.N.V. Parthasarathi
Dr. B.N.V. Parthasarathi
Ex- Senior Banker, Financial and Management Consultant and Visiting faculty at premier B Schools and Universities. Areas of Specialization & Teaching interests - Banking, Finance, Entrepreneurship, Economics, Global Business & Behavioural Sciences. Qualification- M.Com., M.B.A., A.I.I.B.F., PhD. Experience- 25 years of banking and 16 years of teaching, research and consulting. 200 plus national and international publications on various topics like- banking, global trade, economy, public finance, public policy and spirituality. One book in English “In Search of Eternal Truth”, two books in Telugu and 38 short stories 50 articles and 2 novels published in Telugu. Email id: [email protected]


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