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Public Finances 
This  chapter  offers  an  insight  into  the  breakup  of  the receipts and expenditures of the state. It helps us explore the 
effect the economic growth of the state has on its revenues and the facets of expenditure and state debts.  
 
Key​:  AP  -  Andhra  Pradesh,  FY  -  Financial  Year,  GST  -  Goods  and  Service  Tax,  GSDP  -  Gross  State  Domestic 
Product. 

State Revenues  
  Own Tax  Own Non-Tax  Central Transfer 

2018-19  58,107   4,396  53,003 

2019-20  57,619  3,324  50,957 

The Revenue data is given in crore Rs.   
 
1. 68%  of  the  Central  Transfers  2019-20,  constitute  transfers  from  ​devolution  of  funds  ​according  to  the  14th 
Finance Commission and ​30% Grants in aid​from the centre . 
2. The  major  components  of  Own  Tax  Revenues are Sales Tax - 37%, GST - 35%, Excise Duty - 11%, Stamp Duty 
- 9% and others - 7%. 
3. AP’s Own Tax Revenue as a percentage of GSDP stands at 6.5%  
4. Growth  in  Own  Tax  Revenues  is  at  par  with  economic  growth  (GSDP  growth  rate),  suggesting  a  strong 
ability to generate own tax revenue as the economy grows​. 

State Expenditure 
  2018-19  2019-20 

Revenue Expenditure  1,28,570  1,37,595 

Capital Outlays  19,976  12,845 

Total Expenditure  1,50,390  1,55,796 

The expenditure data is given in crore Rs. 

 
1. Developmental Expenditure a​ccounts for ​65% of the Total Budgeted Expenditure​. 
2. 52%​of AP’s​ Revenue Receipts​are reserved for committed expenditure which includes expenditure on 
payment of salaries, pensions, and interest payments. 
3. 30%​of AP’s R​ evenue Receipts​have been used for ​debt repayments ​(interests + principal) in the 2015-20 
period. 
4. Outstanding liabilities as a percentage of GSDP​stands at​ 28.46% i​n 2019-20.  
 
 

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Deficit 
  2018-19  2019-20 

Revenue Deficit  13,899  26,549 

Fiscal Deficit  35,441  40,396 

The data is given in crore Rs. 
 
1. Andhra Pradesh has reported a revenue deficit for the periods of both 13th and 14th Finance Commissions.  
2. Fiscal Deficit stands at 3.7% of GSDP which is higher than the Finance Commission recommendations of 
maintaining Fiscal Deficit within 3% of GSDP and a relaxation of 0.5% on meeting some debt/interest 
conditions.  
3. Off-budget financing, such as borrowings by PSUs or SPVs based on guarantees of the state government also 
pose a fiscal risk. Outstanding government guarantee as a percentage of GSDP at the end of 2017-18 stands at 
4.4% for the state of AP. 

Conclusion 
AP’s fiscal deficit stands higher than that recommended by the Finance Commission, this stress in our state budget 
is caused due to:  
1. Loan waiver schemes which have the additional disadvantage of destroying the credit culture among the 
citizens. 
2. Increasing adoption of Income Support Schemes like YSR Rythu Bharosa, Jagananna Amma Vodi, 
Jagananna Vidya Deevena, and YSR Vahana Mitra. However noble the intent, such schemes stress the 
finances of the state. 
3. Impact of UDAY Scheme: Outstanding UDAY liabilities stand at 0.8% of GSDP of AP. 
4. Provisions for assistance in the development of the State that have been made in the Andhra Pradesh 
Reorganisation Act 2014 have not been fully upheld by the Government of India. 
Any shortfall in the revenues of the state directly impacts the expenditure on Capital Outlays, resulting in AP 
being unable to meet the developmental targets in specific sectors.  

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