AP Used Only 24 per Cent of Borrowings for Asset Creation

Vijayawada: Andhra Pradesh’s state finances appear to be under mounting strain with rising borrowings, weak capital spending and revenue shortfalls, according to the Accounts at a Glance 2024–25 released by the Comptroller and Auditor General (CAG).

The report reveals that the state borrowed Rs 87,773 crore during the financial year, but spent only Rs 21,173 crore — about 24 per cent — on capital expenditure, raising concern about the limited use of borrowed funds for creating long-term assets.

While borrowings are typically expected to finance infrastructure and development projects, a large portion of the funds appears to have gone towards meeting routine expenditure.

The state’s capital expenditure stood at Rs 16,141 crore, sharply lower than the budget estimate of Rs 45,382 crore, indicating a shortfall of over Rs 29,000 crore. Capital spending, crucial for infrastructure and economic growth, amounted to just about one per cent of the state’s gross state domestic product (GSDP), estimated at Rs 16,06,109 crore.

At the same time, revenue receipts also fell short of expectations. The state recorded total receipts of Rs 2,49,191 crore, compared with a budget estimate of Rs 2,69,928 crore, leaving a gap of more than Rs 20,700 crore.

Tax revenue, the backbone of the state’s finances, stood at Rs 1,41,515 crore, significantly below the budgeted Rs 1,60,264 crore. Non-tax revenue performed even worse, with collections of Rs 5,972 crore against an estimate of Rs 10,576 crore.

The report also highlights the growing burden of committed expenditure. The government spent Rs 41,899 crore on salaries, Rs 26,952 crore on pensions, and Rs 31,321 crore on interest payments, leaving limited fiscal space for development spending.

Meanwhile, the state’s liabilities continue to climb. Public debt and other liabilities increased by Rs 81,071 crore during the year, registering a 16.68 per cent rise compared with the previous year.

Cash management also appeared tight, with the state frequently resorting to short-term borrowing from the RBI. The government availed Rs 42,004 crore through Special Drawing Facility, Rs 73,897 crore under Ways and Means Advances, and Rs 56,631 crore through overdrafts during the year.

The report also flagged accounting irregularities, including Rs 2,677 crore in misclassified expenditure and thousands of crores pending adjustment under various accounts.