Andhra Pradesh State Budget for the year 2025-26 is presented on 28th February,2025. The budget has revenue receipts of Rs. 2.18 lakh Crs (Rs.1.76 Crs 2024-25 Revised Estimates i.e., RE) revenue expenditure of Rs. 2.51 lakh Crs (Rs. 2.24 Crs 2024-25 RE) with a revenue deficit of Rs. 33,186 Crs (Rs. 48,311 2024-25 RE) which is 1.82% of the Gross State Domestic Product (GSDP).
The public debt estimated for the year 2025-26 is Rs. 24,430 Crs (Rs. 25,190 Crs 2024-25 RE). The fiscal deficit is expected to reach Rs 79,926 Crs, accounting for 4.38% of the GSDP.
Capital Expenditure
The Capital outlay for 2025-26 is estimated at Rs. 40,636 Crs (Rs. 24,073 Crs 2024-25 RE) which includes expenditure on State Development Schemes Rs. 33,197 Crs for 2025-26 (as against Rs.19,610 for 2024-25 RE) and Centrally Assisted State Development Schemes Rs.7,438 Crs for 2025-26 (as against Rs. 4,463 Crs for 2024-25 RE).
Major items (Rs. In Crs)
| 2025-26 | 2024-25 Revised Estimates | |
| Education, sports, Arts and culture | 2,810 | 1,691 |
| Health and family welfare | 2,700 | 2,214 |
| water supply, sanitation, urban development | 9,911 | 7,345 |
| other rural development programmes | 2,304 | 815 |
| Major irrigation | 14,214 | 7,585 |
| Roads and bridges | 1,968 | 1,456 |
Revenue Expenditure
Major items: (Rs. In Crs)
| 2025-26 | 2024-25 Revised Estimates | |
| Education, Sports, Art and Culture | 32,403 | 30,191 |
| Health and family welfare | 16,879 | 14,988 |
| Water supply, sanitation, housing and urban development | 11,377 | 8,498 |
| Welfare of ST, ST and other BCs | 51,821 | 38,310 |
| Social welfare and nutrition | 9,019 | 14,678 |
| Agriculture and allied activities | 13,801 | 6,071 |
| Rural Development | 15,836 | 11,258 |
| Transport | 5,433 | 5,297 |
| Energy | 13,132 | 14,465 |
Public debt
Outstanding Public debt which was Rs. 76,210 Crs in 2023-24 is expected to rise to Rs. 97,352 Crs (2024-25 RE) which is estimated to further rise to Rs. 103,657 Crs in budget 2025-26. According to the CAG (2023), total off-budget borrowings in Andhra Pradesh stood at Rs 1,18,394 Crs as on March 31, 2022. At the end of 2024-25, the outstanding liabilities are estimated to be 34.1% of GSDP. At the end of 2023-24, the state’s outstanding guarantee (guarantees i.e., given by the State government for its State PSUs and State Corporations) is estimated to be Rs 1,54,797 Crs, which is 11% of Andhra Pradesh’s GSDP in 2023-24.
AP State is heavily banking on two main projects- development of new capital city Amaravati and completion of Polavaram irrigation project, that are considered as the two eyes of the state. While the construction of government buildings and the basic infrastructure in the capital city are supported by the Union government through financial assistance, rest of the developmental activities in and surrounding the capital city are planned through PPP Model by the State government.
Polavaram irrigation project
It has been estimated that Rs 30,436.95 Crs is required for phase-1 of the project (with water storage up to 41.15 meter. On completion of phase II the project height would be 45.72 meters.) The State government had spent Rs 4,730.71 Cr before it was declared as a national project. After considering the State’s contribution, an amount of Rs 25,706 Crs is to be paid by the Centre. So, far Rs 15,146 Crs has been released. The Centre has now approved the sanction of Rs 12,157.53 Crs. The cost of drinking water, hydel power generation and rehabilitation and resettlement components are to be borne by AP State government. Close to 75% of the project works are completed the balance works are estimated to be completed by 2027.
The Centre is likely to spend Rs 28,602 Crs on (i) Visakhapatnam – Chennai, (ii) Bengaluru – Chennai and (iii) Bengaluru – Hyderabad Industrial Corridors, and AP State is hoping to get industrial nodes at Kopparthy & Orvakal, that are expected to generate jobs at a large scale.
While Polavaram is likely to be completed within the next 3 years, the development of the new capital city at Amaravati and the three industrial corridors mentioned above will give benefits to the newly formed AP State only in the long run.
According to various estimates, in the state government receipts 32 paise (32%) out of every rupee constitute open market loans and other liabilities. The tax revenue is marginally above the open market loans with 34 paise out of a rupee. Likewise, the non-tax revenue is 6%, and the grant-in-aid is 10%. The share of central taxes is 18%.
On the other hand, 18% expenditure goes towards interest and principal repayment. The government spends 18% on welfare and 11% on education. 6% on health and 5% cent on water resources. The government spends 4% each on agriculture, and municipal administration and urban development. While 3% is spent on transport, roads and buildings, 6% is spent on panchayat raj and rural development. 21% goes to others. The welfare schemes and the implementation of election promises (freebies) result in continuous revenue and fiscal deficits with mounting public debt which is estimated to rise to Rs. 103,657 Crs in budget 2025-26, posing lot of challenge in managing the state’s finances. Therefore, while pursuing the long-term projects (Amaravati capital city and Polavaram irrigation project) on one side, the state should focus on generation of additional revenues and creation of jobs in the near future on priority basis.
Promotion of MSMEs (with emphasis on agro based and food processing activities) will be an ideal choice in this regard. Rs. 300 Crs out of the budget for agricultural marketing amounting to Rs. 315 Crs has been allocated for the Price Stabilization Fund by the state in 2025-26. Instead, a robust rural supply chain can be created by leveraging on the PDS to provide forward linkages from farm to markets in order to eliminate the middlemen and provide direct market access to farmers with remunerative prices. Upgrading and extending the existing PDS infrastructure as a use and pay model (at affordable cost) to the farmers is one such option that is to be explored. The Fair Price Shops can be also used as outlets to sell the farm produce to the people directly by the farmers.
AP State has 26 districts. The government could think of developing mini hitech towns (a smaller version of the replica of hitech city of Hyderabad which is a brain child of Mr. Chandra Babu Naidu) in the district headquarters like Kakinada, Rajamundry, Chittor, Cuddapa in PPP Model, encourage NRIs from AP to set up data centres, back offices, offshore project teams so that the youth in those regions get jobs locally. Mr. Chandra Babu Naidu, CM of AP is known for encouraging innovative approaches. Let us hope that he will take such innovative measures as mentioned above, so that additional revenue generation, creation of jobs and enhancing the farmers’ incomes can happen in the near future, which is the need of the hour.
