Andhra Pradesh Budget Analysis 2019-2020
The Finance Minister, Mr. Buggana Rajendranath, presented the budget for Andhra Pradesh for financial year 2019-20 on July 12, 2019.
Previously, the interim budget for the year was presented in February 2019.
Budget Highlights
● The Gross State Domestic Product (GSDP) of Andhra Pradesh for 2019-20 (at current prices) is estimated to be Rs 10,80,657 crore[1].
This is 17.6% higher than the revised estimate for 2018-19.
● Total expenditure for 2019-20 is estimated to be Rs 2,27,975 crore, a 40.6% increase over the revised estimate of 2018-19. In 2018-19,
as per the revised figures, there is an estimated decrease of Rs 28,929 crore (15.1%) of expenditure over the budgeted estimate.
● Total receipts (excluding borrowings) for 2019-20 are estimated to be Rs 1,79,297 crore, an increase of 56% as compared to the
revised estimate of 2018-19. Borrowings are estimated to be Rs 46,921 crore, an increase of 22.7% over the revised estimate of 2018-19.
● Revenue deficit for 2019-20 is targeted at Rs 1,779 crore, or 0.16% of the Gross State Domestic Product (GSDP). Fiscal deficit is
targeted at Rs 35,261 crore (3.26% of GSDP).
● Sectors such as energy (247%), welfare of SC, ST, OBC and minorities (157%), and agriculture and allied activities (135%) saw the
highest increase in allocations in 2019-20.
Policy Highlights
● YSR Rythu Bharosa: Farm investment support of Rs 12,500 per year will be provided to farmers, including tenant farmers. Rs 8,750
crore has been allocated for the scheme in 2019-20.
● Jagananna Ammavodi: Rs 15,000 will be provided to every mother for sending her children to school. The scheme will cover children
from class I to XII. Rs 6,456 crore has been allocated for the scheme.
● Jagananna Vidya Deevena: 100% fee reimbursement will be provided to SC, ST, BC, minorities, Kapu, EBC, and differently abled
students, along with a maintenance support of Rs 20,000 per year to each student. Rs 4,962 crore has been allocated for the scheme in
2019-20.
Andhra Pradesh’s Economy Figure 1: Growth in GSDP and sectors in Andhra
Pradesh (year-on-year)
● GSDP: The growth rate
of Andhra Pradesh’s
GSDP (at current prices)
has marginally
decreased from 15.4%
in 2016-17 to 15.3% in
2018-19.
● Sectors: In 2018-19,
the sectors of
agriculture,
manufacturing, and
services respectively
contributed 34%, 23%, Note: As per CSO, agriculture here includes mining and
and 43% of the Gross quarrying. SRE: Second Revised Estimate. FRE: First
State Value Added by Revised Estimate. AE: Advanced Estimate. All
all sectors. Between numbers are as per current prices.
2017-18 and 2018-19,
these sectors grew by Sources: Andhra Pradesh Socio Economic Survey 2018-
12.4%, 18.1%, and 19; PRS.
16.1%, respectively.
● Unemployment:
According to the
Periodic Labour Force
Survey (2017-18), the
unemployment rate in
Andhra Pradesh in
2017-18 was 4.5%, as
compared to 6.1% in the
country.
Budget Estimates for 2019-20
● The total expenditure in 2019-20 is targeted at Rs 2,27,975 crore. This is 40.6% higher than the revised estimate of 2018-19. This
expenditure is proposed to be met through receipts (other than borrowings) of Rs 1,79,297 crore and borrowings of Rs 46,921 crore. In
2019-20, receipts (other than borrowings) are expected to be 56% higher than the revised estimate of 2018-19.
Table 1: Budget 2019-20 - Key figures (in Rs crore)
Items 2017-18 2018-19 2018-19 % 2019-20 %
Actuals Budgeted Revised change Budgeted change
from BE from
2018-19 RE
to RE of 2018-
2018-19 19 to
BE
2019-
20
Total 1,46,944 1,91,064 1,62,134 -15.1% 2,27,975 40.6%
Expenditure
A. Receipts 1,05,113 1,56,007 1,14,962 -26.3% 1,79,297 56.0%
(except
borrowings)
B. 28,433 33,461 38,246 14.3% 46,921 22.7%
Borrowings
Total 1,33,546 1,89,468 1,53,207 -19.1% 2,26,218 47.7%
Receipts
(A+B)
Revenue -16,152 5,235 -11,655 -322.6% -1,779 -84.7%
Deficit (-)/
Surplus (+)
As % of -2.01% 0.60% -1.27% -0.16%
GSDP
Fiscal -32,373 -24,205 -33,619 38.9% -35,261 4.9%
Deficit (-)/
Surplus (+)
As % of -4.03% -2.78% -3.66% -3.26%
GSDP
Primary -18,526 -9,128 -19,315 111.6% -18,017 -6.7%
Deficit (-)/
Surplus (+)
As % of -2.30% -1.05% -2.10% -1.67%
GSDP
Notes: BE is Budget Estimate; RE is Revised Estimate.
Sources: GSDP values have been calculated using total liabilities as a percentage of GSDP figures given in Andhra Pradesh Budget in Brief
2019-20; PRS.
Expenditure in 2019-20
● Capital expenditure for 2019-20 is proposed to be Rs 47,499 crore, which is an increase of 32.7% over the revised estimate of 2018-19.
Capital expenditure includes expenditure affecting the assets and liabilities of the state, such as: (i) capital outlay, i.e. expenditure which
leads to creation of assets (such as bridges and hospitals), and (ii) repayment and grant of loans by the state government.
● Andhra Pradesh’s capital outlay for 2019-20 is estimated to be Rs 32,293 crore, which is 58.3% higher than the revised estimate of 2018-
19. The revised figure for 2018-19 is estimated to be 28.9% lower than the budgeted estimate made for that year.
● Revenue expenditure for 2019-20 is proposed to be Rs 1,80,476 crore, which is an increase of 42.9% over the revised estimate of 2018-
19. This expenditure includes payment of salaries, pensions, and interest, among others. Revenue expenditure accounts for 79% of the
total expenditure proposed for 2019-20.
Table 2: Expenditure budget 2019-20 (in Rs crore)
Item 2017-18 2018-19 2018-19 % 2019-20 %
Actuals Budgeted Revised change Budgeted change
from from
BE RE
2018- 2018-
19 to 19 to
RE BE
2018- 2019-
19 20
Capital 25,730 40,792 35,795 -12.2% 47,499 32.7%
Expenditure
of which 13,491 28,678 20,398 -28.9% 32,293 58.3%
Capital
Outlay
Revenue 1,21,214 1,50,272 1,26,339 -15.9% 1,80,476 42.9%
Expenditure
Total 1,46,944 1,91,064 1,62,134 -15.1% 2,27,975 40.6%
Expenditure
A. Debt 9,451 10,851 13,539 24.8% 13,417 -0.9%
Repayment
B. Interest 13,847 15,077 14,304 -5.1% 17,244 20.6%
Payments
Debt 23,298 25,928 27,842 7.4% 30,661 10.1%
Servicing
(A+B)
Note: Capital outlay denotes expenditure which leads to creation of assets.
Sources: Andhra Pradesh Annual Financial Statement 2019-20 (July 2019); PRS.
Sector expenditure in 2019-20
The sectors listed below account for 70% of the total budgeted expenditure of Andhra Pradesh in 2019-20. A comparison of Andhra Pradesh’s
expenditure on key sectors with that by other states is given in the Annexure.
Table 3: Sector-wise expenditure for Andhra Pradesh Budget 2019-20 (Rs crore)
Sector 2017-18 2018-19 2018-19 2019-20 % Budget provisions
change for 2019-20
Actuals Budgeted Revised Budgeted from
RE
2018-
19 to
BE
2019-
20
Education 20,017 26,510 19,587 33,410 71% ● Rs 6,456
crore has
been
allocated to
the
Jagananna
Ammavodi
programme.
● Rs 1,500
crore has
been
allocated for
modernisatio
n of
infrastructur
e in schools.
● Rs 1,158
crore has
been
allocated to
Samagra
Shiksha
scheme.
Social 15,469 19,969 22,779 27,461 21% ● Rs 15,747
Welfare and crore has
Nutrition been
allocated to
YSR
Pension
Kanuka
programme.
● Rs 3,000
crore has
been
allocated for
providing
subsidy on
rice.
● Rs 1,430
crore has
been
allocated to
Integrated
Child
Developmen
t Services.
Agriculture 7,569 8,420 8,766 20,558 135% ● Rs 8,750
and allied crore has
activities been
allocated to
YSR Rythu
Bharosa
programme.
● Rs 1,163
crore has
been
allocated to
YSR PM
Fasal Bima
Yojana.
● Rs 3,000
crore has
been
allocated to
Price
Stabilisation
Fund for
farm risk
mitigation.
Welfare of 10,423 13,688 5,479 14,088 157% ● Rs 4,962
SC, ST, OBC crore has
and been
minorities allocated to
Jagananna
Vidya
Deevena
scheme.
Irrigation 8,877 16,594 13,991 12,712 -9% ● Rs 210 crore
and flood has been
control allocated to
lift irrigation
works.
● Rs 161 crore
has been
allocated to
Neeru
Chettu, an
interdepartm
ental
coordinating
portal.
Water 8,781 13,390 10,451 12,296 18% ● Rs 2,105
Supply, crore has
Sanitation, been
Housing, and allocated to
Urban PM Awas
Yojana, Rs
Development
1,356 crore
to weaker
section
housing
programmes
, and Rs
1,000 crore
to YSR
Urban
Housing
programme.
● Rs 500 crore
has been
allocated for
creation of
essential
infrastructur
e for new
capital.
● Rs 648 crore
has been
allocated to
YSR interest
free loans to
urban self-
help groups.
Health and 6,389 8,758 7,398 11,610 57% ● Rs 1,732
Family crore has
Welfare been
allocated to
National
Health
Mission.
● Rs 1,740
crore has
been
allocated to
Arogyasri.
● Rs 1,500 has
been
allocated for
infrastructur
e facilities at
hospitals.
Rural 8,859 12,068 7,640 10,672 40% ● Rs 3,626
Development crore has
been
allocated to
MGNREGA
programme.
Energy 3,440 3,255 1,910 6,623 247% ● Rs 4,525
crore has
been
allocated to
YSR nine
hours free
power
supply
programme.
Police 4,696 5,738 5,243 5,798 11% ● Rs 575 crore
has been
allocated to
Andhra
Pradesh
special
police units.
Transport 1,928 4,100 1,979 4,267 116% ● Rs 500 crore
has been
allocated for
reimburseme
nt of
concessions
provided by
APSRTC to
citizens.
% of total 66% 69% 65% 70%
expenditure
Sources: Andhra Pradesh Budget Speech 2019-20, July 2019; Andhra Pradesh Annual Financial Statement 2019-20, July 2019; Andhra Pradesh
Demand for Grants 2019-20, July 2019: PRS.
Receipts in 2019-20
In 2019-20, Andhra Pradesh is expected to borrow Rs 46,921 crore to meet its expenditure requirements, which is 22.7% higher than the
revised estimates of 2018-19. In 2018-19, the borrowings of the state are expected to be 14.3% higher than the amount budgeted for the
year.
● The total revenue receipts for 2019-20 are estimated to be Rs 1,78,697 crore, an increase of 55.8% over the revised estimate of 2018-19.
Of this, Rs 82,793 crore (46% of the revenue receipts) will be raised by the state through its own resources, and Rs 95,905 crore (54% of
the revenue receipts) will be devolved by the centre in the form of grants and the state’s share in central taxes. In 2019-20, grants-in-aid
of Rs 61,072 crore are expected from the centre. This is an increase of 213.9% over the revised estimate of 2018-19.
● Non-tax revenue: Andhra Pradesh is estimated to generate Rs 7,355 crore through non-tax sources in 2019-20. This is an increase of
67.5% (Rs 2,963 crore) over the revised estimate of 2018-19.
Table 4: Break up of state government receipts in 2019-20 (Rs crore)
Items 2017-18 2018-19 2018-19 % 2019-20 %
Actuals Budgeted Revised change Budgeted change
from from
BE RE
2018- 2018-
19 to 19 to
RE of BE
2018- 2019-
19 20
State's Own 49,813 65,535 58,125 -11.3% 75,438 29.8%
Tax
State's Own 3,814 5,347 4,391 -17.9% 7,355 67.5%
Non-Tax
Share in 28,675 33,930 32,711 -3.6% 34,833 6.5%
Central
Taxes
Grants-in- 22,761 50,696 19,457 -61.6% 61,072 213.9%
aid from
Centre
Total 1,05,062 1,55,507 1,14,684 -26.3% 1,78,697 55.8%
Revenue
Receipts
Borrowings 28,433 33,461 38,246 14.3% 46,921 22.7%
Other 51 500 277 -44.5% 600 116.3%
receipts
Total 28,484 33,961 38,523 13.4% 47,521 23.4%
Capital
Receipts
Total 1,33,546 1,89,468 1,53,207 -19.1% 2,26,218 47.7%
Receipts
Sources: Andhra Pradesh Budget Documents 2019-20; PRS.
● Tax Revenue: Total own tax revenue of Andhra Pradesh is estimated to be Rs 75,438 crore in 2019-20 (42% of the revenue receipts).
This is 29.8%% higher than the revised estimate of 2018-19. In 2018-19, own tax revenue is expected to be Rs 58,125 crore, which is
11.3% lower than the budgeted estimate.
● The own tax to GSDP ratio is targeted at 7% in 2019-20, which is significantly higher than the revised estimate of 6.3% in 2018-19. This
implies that growth in collection of taxes is expected to be higher than the growth in the economy.
Figure 2: Composition of the state’s tax revenue ● Sales Tax and VAT (on items
in 2019-20 (Budget Estimates) such as petroleum products) is the
largest component of tax revenue
of the state. It is expected to
generate Rs 28,000 crore in 2019-
20. This is an increase of 27.8%
from the revised estimate of 2018-
19.
● State Goods and Services Tax
(SGST) is expected to generate Rs
27,000 crore. This is an increase
of 31% over the revised estimate
of 2018-19. In most of the other
states, SGST is the largest
component of tax revenue of the
state.
● In 2019-20, the state is expected
to generate Rs 8,518 crore from
the levy of state excise. This an
increase of 36.9% over the revised
estimate of 2018-19. Further, in
Sources: Andhra Pradesh Budget in Brief 2019-20; 2019-20, the state is expected to
PRS. generate Rs 6,600 crore from
stamp duty and registration fees
and Rs 4,000 crore from taxes on
vehicles.
Deficits, Debts and FRBM Targets for 2019-20
The Andhra Pradesh Fiscal Responsibility and Budget Management Act, 2005 provides annual targets to progressively reduce the outstanding
liabilities, revenue deficit, and fiscal deficit of the state government.
Debt Servicing
In 2019-20, Andhra Pradesh is expected to spend Rs 30,661 crore on servicing its debt, which is 13% of its estimated expenditure. This
expenditure includes Rs 13,417 crore towards repayment of loans, and Rs 17,244 crore towards interest payments.
In 2019-20, the expenditure on repayment of loans is expected to decrease by 0.9% over the revised estimate of 2018-19.
Revenue deficit: This is the excess of revenue expenditure over revenue receipts. A revenue deficit implies that the government needs to
borrow in order to finance its expenses which do not create capital assets.
The budget estimates a revenue deficit of Rs 1,779 crore (or 0.2% of GSDP) in 2019-20. This is 322.6% lower than the revised estimates of
2018-19. This implies that revenue receipts are expected to be lower than the revenue expenditure, resulting in a deficit. The 14th Finance
Commission had recommended that states should eliminate revenue deficits. The 2019-20 estimates for Andhra Pradesh suggest that the state
will not be able to meet this target of eliminating revenue deficit. The budget estimate of 2018-19 had projected a revenue surplus of Rs 5,235
crore. The revised estimate has changed this projection to a revenue deficit of Rs 11,655 crore.
Fiscal deficit: This is the excess of total expenditure over total receipts. This gap is filled by borrowings by the government, and leads to an
increase in total liabilities. In 2019-20, Andhra Pradesh’s fiscal deficit is estimated to be Rs 35,261 crore, which is 3.3% of the GSDP. The
estimate is higher than the 3% limit prescribed by the 14thFinance Commission. Note that, in 2018-19, fiscal deficit increased by 38.9% from Rs
24,205 crore (2.8% of GSDP), as per the budgeted estimate, to Rs 33,619 crore (3.7% of GSDP), as per the revised estimate.
Outstanding liabilities: This is the accumulation of borrowings taken by the state government over the years. In 2019-20, Andhra Pradesh’s
outstanding liabilities are expected to be at 27% of the GSDP.
Table 5: Budget estimates for deficits for Andhra Pradesh in 2019-20 (% of GSDP)
Year Revenue Fiscal Outstanding
Liabilities
Deficit (-)/Surplus (+) Deficit (-)/Surplus (+)
2017- -2.0% -4.0% 27.8%
18
2018- -1.3% -3.7% 28.2%
19
(RE)
2019- -0.2% -3.3% 27.0%
20
(BE)
Sources: Budget in Brief; Andhra Pradesh Budget Documents, July 2019; PRS.
Figures 3 and 4 show the trend in deficits and outstanding liabilities targets from 2017-18 to 2019-20.
Figure 3: Revenue and Fiscal Deficit Figure 4: Outstanding liabilities (as % of
GSDP)
(as % of GSDP)
Sources: Andhra Pradesh Budget Documents;
Sources: Andhra Pradesh Budget Documents; PRS.
PRS.
Annexure
The graphs below compare Andhra Pradesh’s expenditure on six key sectors as a proportion of its total budget, with 26 other states.[2]
● Education: Andhra Pradesh has allocated 15.7% of its expenditure on education in 2019-20. This is slightly lower than the average
allocation to education by other states (using 2018-19 BE) (15.9%).
● Health: Andhra Pradesh has allocated 5.5% of its expenditure on health, which is higher than the average expenditure by other states
(4.5%).
● Agriculture and allied activities: The state has allocated 9.7% of its total budget towards agriculture and allied activities. This is
significantly higher than the average allocation by other states (6.5%).
● Energy: Andhra Pradesh has allocated 3.1% of its expenditure on energy. This is significantly lower than the average expenditure
(5.2%) by other states.
● Roads and bridges: Andhra Pradesh has allocated 1.6% of its total expenditure on roads and bridges, which is significantly lower than
the average expenditure by other states (4.3%).
● Police: Andhra Pradesh has allocated 2.7% of its total expenditure on police, which is lower than the average expenditure by other states
(3.9%).
Note: 2017-18, 2018-19 (BE), 2018-19 (RE), and 2019-20 (BE) figures are for Andhra Pradesh.
Source: Annual Financial Statement of Andhra Pradesh 2019-20, July 2019; various state budgets; PRS.
[1] GSDP values have been calculated using total liabilities as a percentage of GSDP figures given in the Budget in Brief 2019-20 document of
Andhra Pradesh.
[2] The 26 other states include all states except Arunachal Pradesh, Manipur, and Meghalaya. It also includes the Union Territory of Delhi.
