Presenting the 2026-27 budget, Finance Minister Payyavula Keshav on Saturday outlined a fiscal plan that reflects ongoing structural strains, with deficits narrowing on paper but debt service putting ongoing pressure on state finances.
The revenue deficit is estimated at ₹22,002 crore, which is 1.11% of the Gross State Domestic Product (GSDP), while the fiscal deficit is estimated at ₹75,868 crore, or 3.84% of GDP.
According to the budget document, the financial accounts finalized by the Accountant General of Andhra Pradesh show a revenue shortfall of ₹60,285 crore and a fiscal deficit of ₹81,362 crore, which were 3.79% and 5.11% of GSDP for the financial year (FY-2502).
The revised estimate for revenue expenditure for the fiscal year 2025–26 was ₹2,38,021 crore and for capital expenditure it was ₹39,498 crore. The revenue shortfall was around ₹41,118 crore while the fiscal deficit was around ₹80,567 crore. The revenue deficit was 2.33% and the fiscal deficit was 4.57% of GDP.
The budget emphasizes that the state economy is operating under significant structural pressure. The expenditure profile underlines the high costs of the borrowing strategy. Interest and principal repayments now consume 18 paise of every rupee spent, effectively tied with Welfare (17 paise) for the largest chunk of the budget. This parity shows that for every rupee that the government spends on direct welfare, the same amount is diverted to servicing past and current debt.
On the revenue side, while tax revenue remains the main engine of the state at 38 paise from every rupee, the second biggest pillar of the budget is open market borrowing and other liabilities which make up a substantial part of 30 paise.
Combined with the Share of Central Taxes (19 paise) and Grant-in-Aid (10 paise), it is clear that the internal non-tax revenue of the State, which contributes only 3 paise, remains a marginal factor in the total exchequer.
This reliance on market liabilities reflects the ongoing challenge of meeting the 4.19% fiscal deficit target while maintaining liquidity for day-to-day management.
Published – 14 Feb 2026 19:46 IST