AP Budget & GSDP
Subject: Economy | Unit: AP Economy | Topic: AP Budget & GSDP
Exam: AP Group 2 (APPSC)
Introduction
Andhra Pradesh's economic trajectory since bifurcation (2 June 2014) has been remarkable. The state's GSDP tripled from Rs 5.24 lakh crore (2014-15) to Rs 18.3 lakh crore (2025-26), with a projected Rs 19.75 lakh crore in 2026-27. AP's per capita income at Rs 2,98,058 (2024-25) is 1.30 times the national average. The state registered 11.28% GSDP growth in Q2 FY 2025-26 — exceeding national GDP growth of 8.7%. Understanding AP's budget structure, revenue sources, major allocations, and fiscal health is critical for AP Group 2, as state-specific economic questions are heavily tested.
Economic Context
The bifurcation of united Andhra Pradesh on 2 June 2014 under the AP Reorganisation Act created significant challenges: loss of Hyderabad (the economic hub) to Telangana, need to build a new capital (Amaravati), inherited debt obligations, and reduced revenue base. Despite these challenges, AP has maintained strong growth. The TDP-led NDA government under CM N. Chandrababu Naidu (since June 2024) has focused on capital expenditure growth, fiscal consolidation, and infrastructure development. AP has long demanded Special Category Status to access additional central support.
Core Content
GSDP Overview
| Indicator | Value |
|---|
| GSDP 2014-15 | Rs 5.24 lakh crore |
| GSDP 2025-26 (current prices) | Rs 18.3 lakh crore (projected) |
| GSDP 2026-27 (current prices) | Rs 19,75,073 crore (12% growth) |
| GSDP tripling period | One decade (2014-15 to 2025-26) |
| Average GSDP growth rate (decade) | ~10.75% |
| Q2 FY 2025-26 growth | 11.28% (exceeding national 8.7%) |
| Future projection | Rs 27 lakh crore by 2028-29 |
Per Capita Income
| Indicator | Value |
|---|
| Per capita income (2024-25) | Rs 2,98,058 (12% increase) |
| Per capita income (2025-26) | Rs 2,94,507 |
| Growth since 2014-15 | From Rs 93,903 |
| Compared to national average | 1.30 times higher |
| Economic growth (2024-25) | 8% at constant prices |
Sector-Wise GSDP Growth
| Sector | 2014-15 | 2025-26 | Growth Factor |
|---|
| Agriculture | Rs 1.48 lakh crore | Rs 5.39 lakh crore | 3.6x |
| Industry | Rs 1.24 lakh crore | Rs 3.84 lakh crore | 3.1x |
| Services | Rs 2.15 lakh crore | ~Rs 7 lakh crore | 3.3x |
Q2 FY 2025-26: 12.20% industrial growth supported by mining and power generation.
| Item | Amount | Change |
|---|
| Total receipts (excl. borrowings) | Rs 2,18,002 crore | 24% increase over RE 2024-25 |
| Total expenditure (excl. debt repayment) | Rs 2,97,929 crore | 19% increase |
| Revenue expenditure | Rs 2.51 lakh crore | — |
| Capital expenditure | Rs 40,635 crore | — |
| Fiscal deficit | Rs 79,927 crore (4.4% of GSDP) | — |
| Revenue deficit | Rs 33,186 crore (1.8% of GSDP) | — |
| Item | Amount | Change |
|---|
| Total expenditure (excl. debt repayment) | Rs 3,10,058 crore | 12% increase |
| Revenue receipts | Rs 2,34,140 crore | 19% increase |
| Own tax revenue | Rs 1,25,846 crore | 28% increase |
| Capital outlay | Rs 48,698 crore | 47% increase (infrastructure push) |
| Fiscal deficit | Rs 75,868 crore (3.8% of GSDP) | Improving from 4.4% |
| Revenue deficit | Rs 22,003 crore (1.1% of GSDP) | Improving from 1.8% |
| Outstanding liabilities | 36% of GSDP | Within manageable limits |
Revenue Sources (2026-27)
| Source | Amount |
|---|
| State GST | Rs 45,078 crore (15% increase) |
| State Excise | Rs 30,067 crore |
| Mining non-tax revenue | Rs 5,196 crore |
| Central tax devolution | Significant share (per 15th Finance Commission) |
| Revenue deficit grants from Centre | Bridges state's revenue gap |
Major Budget Allocations
| Scheme/Sector | Allocation | Year |
|---|
| NTR Bharosa Pension | Rs 27,719 crore | 2026-27 (single largest) |
| Talliki Vandanam | Rs 9,407 crore | 2025-26 |
| Annadata Sukhibhava | Rs 6,600 crore | 2026-27 |
| Polavaram Dam | Rs 6,105 crore | 2026-27 |
| Amaravati Capital | Rs 6,000 crore | 2026-27 |
| Education | Rs 20,801 crore | 2026-27 |
| Health (medical colleges) | Rs 4,000 crore | 2026-27 |
| Rice subsidy | Rs 3,344 crore | — |
Fiscal Health Trajectory
| Indicator | 2025-26 | 2026-27 | Direction |
|---|
| Fiscal deficit (% of GSDP) | 4.4% | 3.8% | Improving |
| Revenue deficit (% of GSDP) | 1.8% | 1.1% | Improving |
| Capital outlay increase | Baseline | +47% | Major infrastructure push |
| Outstanding liabilities | — | 36% of GSDP | Manageable |
The capital outlay increase of 47% signals a deliberate shift from revenue spending to asset-creating capital expenditure.
Historical Context
| Event | Detail |
|---|
| Bifurcation date | 2 June 2014 (AP Reorganisation Act 2014) |
| Loss of Hyderabad | Economic hub went to Telangana |
| New capital | Amaravati designated; construction resumed under TDP (2024) |
| Polavaram Project | National project on Godavari River — critical for irrigation and water security |
| Special Category Status | Long-standing demand after bifurcation; not yet granted |
| 15th Finance Commission | Determines AP's share of central taxes and grants |
AP Connection
This chapter IS the AP Connection. Every fact here is AP-specific and directly testable in AP Group 2 exams.
Key exam-ready facts:
- GSDP tripled in a decade
- Per capita income is 1.30 times national average
- Q2 FY 2025-26 growth (11.28%) exceeded national (8.7%)
- NTR Bharosa Pension (Rs 27,719 crore) is the single largest welfare allocation
- Capital outlay increased 47% in 2026-27 budget
- Fiscal deficit improving from 4.4% to 3.8%
- Bifurcation on 2 June 2014; Amaravati is the new capital
- Polavaram will irrigate 7.2 lakh acres
Key Points Summary
- AP bifurcated on 2 June 2014 under AP Reorganisation Act; lost Hyderabad to Telangana
- GSDP tripled from Rs 5.24 lakh crore (2014-15) to Rs 18.3 lakh crore (2025-26)
- GSDP 2026-27: Rs 19,75,073 crore at 12% growth
- Per capita income (2024-25): Rs 2,98,058 — 1.30 times national average
- Q2 FY 2025-26: 11.28% GSDP growth, exceeding national 8.7%
- Agriculture expanded 3.6x; Industry 3.1x; Services 3.3x since 2014-15
- Budget 2026-27 total expenditure: Rs 3,10,058 crore (12% increase)
- Capital outlay Rs 48,698 crore — 47% increase (infrastructure push)
- Fiscal deficit improving: 4.4% (2025-26) to 3.8% (2026-27) of GSDP
- Revenue deficit improving: 1.8% to 1.1% of GSDP
- Outstanding liabilities: 36% of GSDP — manageable
- NTR Bharosa Pension: Rs 27,719 crore — single largest allocation
- State GST: Rs 45,078 crore; State Excise: Rs 30,067 crore
- Polavaram: Rs 6,105 crore allocation; will irrigate 7.2 lakh acres
- Amaravati capital: Rs 6,000 crore allocation
- AP receives tax devolution per 15th Finance Commission
- Special Category Status demanded but not granted post-bifurcation
Exam Strategy
| Question Pattern | Frequency | Focus Area |
|---|
| GSDP figures | Very High | Current GSDP, growth rate, tripling |
| Per capita income comparison | Very High | Amount, comparison with national average |
| Budget allocations | Very High | NTR Bharosa (largest), Polavaram, Amaravati |
| Fiscal deficit/revenue deficit | High | Current figures, improvement direction |
| Bifurcation facts | High | Date (2 June 2014), consequences, Special Category Status |
| Revenue sources | Medium | State GST, Excise, central devolution |
| Capital outlay growth | Medium | 47% increase, significance |
| Polavaram project details | High | National project, allocation, irrigation coverage |
Key Terms Glossary
| Term | Meaning | Telugu |
|---|
| GSDP | Gross State Domestic Product | స్థూల రాష్ట్ర దేశీయ ఉత్పత్తి |
| Per Capita Income | Average income per person in state | తలసరి ఆదాయం |
| Fiscal Deficit | Total borrowing requirement of state | ద్రవ్యలోటు |
| Revenue Deficit | Revenue expenditure minus revenue receipts | రాబడి లోటు |
| Capital Outlay | Government spending that creates assets | మూలధన వ్యయం |
| State GST (SGST) | State's share of GST on intra-state supply | రాష్ట్ర GST |
| State Excise | Tax on liquor and alcohol | రాష్ట్ర ఎక్సైజ్ |
| Bifurcation | Division of united AP into AP and Telangana | విభజన |
| Special Category Status | Central government designation for additional support | ప్రత్యేక హోదా |
| Amaravati | AP's new capital city | అమరావతి |
| Polavaram | National irrigation project on Godavari | పోలవరం |
| Tax Devolution | Centre's share of taxes transferred to states | పన్ను బదిలీ |
| 15th Finance Commission | Determines Centre-state revenue sharing | 15వ ఆర్థిక సంఘం |
| GSDP Growth Rate | Annual increase in state's economic output | GSDP వృద్ధి రేటు |
| Outstanding Liabilities | Total accumulated debt of state | బాకీ బాధ్యతలు |