The Andhra story: Growing populism vs rising debt

Ahead of the Assembly polls, the state's economic health is in focus as it has consistently breached the fiscal deficit in eight of the last 10 years since Telangana's formation. INDIVJAL DHASMANA explains

- INDIVJAL DHASMANA

I In the lead-up to the May 13 elections for a 175-member Assembly, Andhra Pradesh's fiscal health is under scrutiny. The state that enjoyed a revenue surplus for at least five consecutive years until Telangana's formation in 2014-15 has since struggled to balance its books.

The revenue deficit, or the excess of current expenditure over current receipts, hit 3.3 per cent of Andhra's gross state domestic product (GSDP) in 2022-23. It was projected to shrink to 2.2 per cent in the Revised Estimate for 2023-24, marking the twilight of the YSR Congress Party's (YSRCP's) current rule. The Covid-19 pandemic exacerbated the deficit, pushing it to 3.6 per cent of GSDP in 2020-21.

Under the previous Telugu Desam Party (TDP) administration, the revenue deficit was relatively contained, never exceeding 2.5 per cent of GSDP. However, this period did not face a crisis akin to Covid-19, which strained most states' revenues.

The upcoming Assembly elections see the YSRCP government, led by YS Jagan Mohan Reddy, challenged by the National Democratic Alliance (NDA), comprising the TDP, Bharatiya Janata Party (BJP), and Jana Sena Party. The Congress-led INDIA bloc is also vying for power.

Since 2014-15, Andhra Pradesh's revenue balance has been in deficit, with revenue expenditure constituting 80-96 per cent of total expenditure in six of the past 10 years.

This leaves little room for capital outlay, which may have never exceeded 12.2 per cent of total expenditure under either the TDP or YSRCP government.