AP Budget bets big on capex, tightens fiscal grip
Balances welfare, growth and fiscal discipline | Amaravati, clean energy, irrigation dominate spending priorities
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Amaravati: The Andhra Pradesh Government’s Budget for 2026–27, presented by Finance Minister Payyavula Keshav, marks a decisive shift towards infrastructure-led economic expansion while maintaining a clear focus on fiscal consolidation.
With total receipts and expenditure both estimated at Rs3.32 lakh crore, the Budget balances ambitious growth plans with financial stability, reinforcing investor confidence in the State’s long-term development trajectory.
Even as spending rises sharply, the Budget reflects notable progress in fiscal management. The revenue deficit has been brought down to 1.11 per cent of GSDP, a significant improvement over previous years, while the fiscal deficit stands at 3.84 per cent of GSDP and the primary deficit at 1.95 per cent. These indicators point to a steady return to sustainable public finances without compromising development priorities.
At the same time, the State’s economy continues to expand at a robust pace, with GSDP projected to reach Rs19.75 lakh crore in 2026–27, underscoring Andhra Pradesh’s position as one of India’s faster-growing regional economies.
The centrepiece of the 2026–27 Budget is a sharp increase in public capital expenditure, which has been raised to Rs53,915 crore — the highest in the State’s history. This large-scale investment is expected to accelerate economic activity across transport networks, irrigation systems, energy infrastructure, urban development and industrial corridors.
In his address, Keshav said the government has clearly positioned infrastructure as a multiplier for private investment, employment generation and long-term productivity growth. The focus, he noted, is on asset creation that strengthens the State’s economic backbone rather than consumption-led spending.
A significant portion of the capital push is being channelled into future-facing sectors. The energy sector has been allocated Rs13,934 crore, reinforcing the State’s ambition to emerge as a clean energy powerhouse. Connectivity and logistics — covering roads, ports and airports — will receive Rs13,546 crore, strengthening supply chains and export competitiveness.
The development of Amaravati as the people’s capital has been backed with Rs6,000 crore, along with substantial funding for industrial promotion, MSMEs and digital infrastructure, including the Amaravati Quantum Valley initiative. Together, these investments aim to position the State as a hub for advanced manufacturing, deep-tech industries and global trade.
Recognising the central role of agriculture in inclusive growth, the Budget allocates significant resources to irrigation, farmer income support and climate resilience. Over Rs9,900 crore has been earmarked for major irrigation projects outside Polavaram, while the Polavaram Project has received Rs6,105 crore.
