AP finances under stress, says CAG report
Revenue deficit breaches FRBM limit; heavy reliance on RBI advances raises fiscal concerns
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Amaravati: The financial position of the Government of Andhra Pradesh has become precarious, according to the latest report of the Comptroller and Auditor General (CAG) tabled in the State Assembly on Friday.
The report noted that during 2024–25 the State relied heavily on short-term liquidity support from the Reserve Bank of India (RBI). Andhra Pradesh availed Rs42,004 crore under the Special Drawing Facility for 71 days, paying Rs188.82 crore in interest. It also accessed Rs73,897 crore through Ways and Means Advances (WMA) for 179 days, paying Rs82.30 crore as interest, and used overdraft facilities of Rs56,631 crore for 107 days, incurring Rs32 crore in interest.
The State maintained the minimum cash balance with the RBI without resorting to WMA for only eight days during the entire year. These facilities, Special Drawing Facility, WMA and overdraft, are extended by the RBI when a State’s cash balance falls below the agreed minimum level of Rs1.94 crore.
The report further highlighted that Andhra Pradesh’s revenue deficit exceeded the Fiscal Responsibility and Budget Management (FRBM) target of 2.7% of Gross State Domestic Product (GSDP), remaining at 3.75% in 2024–25. This forced the State to borrow even for routine expenditure, adding to its interest burden. The fiscal deficit stood at 5.05% against the mandated ceiling of 4%, pushing total borrowings to Rs81,071 crore and limiting the State’s ability to invest in capital expenditure.
Tax revenue fell short of budget estimates by Rs18,748 crore, though collections improved under State GST, State Excise and the State’s share of Union taxes. Non-tax revenue was lower by Rs4,603 crore, mainly due to reduced receipts from dividends, interest, forestry and mining sectors.
Grants-in-aid from the Union government declined by Rs14,514 crore, largely due to lower allocations under centrally sponsored schemes and Finance Commission grants.
Although borrowings during the year amounted to Rs87,773 crore, only 24%—Rs21,173 crore—was spent on capital expenditure, raising concerns over the productive use of borrowed funds.
