Andhra Pradesh Placed 17th in NITI Aayog’s Fiscal Health Index 2023–24

Context: According to the ‘Fiscal Health Index 2023–24’ report released by NITI Aayog, Andhra Pradesh ranked 17th in terms of fiscal health.

In the rankings prepared by grouping 18 major states together, the top three positions were secured by Odisha, Goa, and Jharkhand.
The bottom three positions were occupied by Punjab, Andhra Pradesh, and West Bengal.
Andhra Pradesh secured the 17th position with a score of 23.1.

Index Components – Scores of Andhra Pradesh:

NITI Aayog noted that the state continues to face a persistent imbalance between its revenue and expenditure.

Andhra Pradesh’s fiscal position reflects a persistent imbalance between revenue generation and expenditure commitments, with limited progress toward fiscal consolidation despite sustained growth in developmental spending.
The State’s expenditure pattern underscores its strong emphasis on welfare and infrastructure, particularly in education, health, housing, irrigation, and energy. However, a large share of outlays continues to be absorbed by committed liabilities such as salaries, pensions, and interest payments, leaving relatively little fiscal room for discretionary and growth-enhancing investments.
While own tax revenues have shown healthy momentum, aided by buoyant GST and commodity taxes, the narrow base of non-tax revenue and its dependence on mining-related receipts expose the State to cyclical and sectoral risks.
Persistent revenue and fiscal deficits, coupled with rising liabilities and frequent deviations from FRBM targets, point to mounting fiscal stress.
The pace of debt accumulation and high refinancing needs have also raised concerns about debt sustainability, particularly given that a growing portion of borrowings is being utilised for revenue expenditure rather than capital formation.

The total developmental expenditure, comprising both revenue and capital components, increased significantly from ₹1.01 lakh crore in 2019–20 to ₹1.67 lakh crore in 2023–24, marking an overall rise of nearly 65% over the five years.
This sustained growth underscores the government’s continued emphasis on strengthening growth-oriented and welfare sectors.
Capital expenditure during the last five years has remained within the range of 4 to 9% of the GSDP, indicating consistent efforts toward asset creation and infrastructure development.
In 2023–24, Social Services accounted for the largest share of capital outlay at 52.4%, reflecting a focus on education, health, and housing, while Economic Services accounted for 44.6%, primarily driven by investments in the transport, irrigation, and energy sectors.
Around 48.59% of the total revenue expenditure in 2023–24 was devoted to committed expenses such as salaries, interest payments, and pensions.

The State’s revenue receipts are primarily driven by its own tax revenue, which accounted for around 52% of the total revenue receipts in 2023–24.
Within this, Taxes on Commodities and Services contributed the highest share at 35.5%, followed closely by the Goods and Services Tax (GST) with a 34.1 %share. The State’s own revenue has shown a healthy upward trend, registering about 48% growth over the last five years.
Non-tax revenue, on the other hand, constituted around 3 %of the total revenue receipts in 2023–24. Within this category, Non-Ferrous Mining and Metallurgical Industries emerged as the dominant contributor, accounting for 41.2 %of non-tax revenue.

Despite the fiscal consolidation mandate under the FRBM framework, Andhra Pradesh recorded a revenue deficit of ₹38,683 crore in 2023–24, translating to 2.68% of GSDP, against the target of 3% revenue deficit cap.
The fiscal deficit widened to ₹62,720 crore, breaching the prescribed ceiling of 4% of GSDP and reaching 4.35% of GSDP in 2023–24.

The total liabilities of the State Government increased by 61.1% 2019-20 to 2023-24, recording a growth of 51.01% during the last five years. The CAGR over the five years is approximately 12.7%.

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