New AP Govt: Managing finances will be an uphill battle for Chandrababu Naidu

Even as the Telugu Desam Party (TDP)-led NDA alliance in Andhra Pradesh continues to be in celebration mode for achieving a landslide victory in Assembly elections, financial management will be an uphill battle for the new Government.

The promises made in the NDA manifesto on the new welfare schemes, as well as the completion of pending development projects including the State capital at Amaravati and Polavaram project, will make it tough for Chandrababu Naidu to make both ends meet. 

“I don’t know how much they have borrowed... All institutions have been destroyed in the State,’‘ Naidu said in a media interaction on Wednesday before leaving for Delhi to participate in the NDA meet. 

To woo the voters and as a response to Jagan Reddy’s Navaratna welfare schemes, the TDP-JS-BJP promised `super six’ welfare schemes including creation of 20 lakh jobs to the youth over the next five years, an unemployment allowance of ₹3,000 per month, ₹15,000 per year to all the school-going students, ₹1,500 per month to all women in the age group of 19-59, three gas cylinders per household every year and free travel to women in RTC buses.

• Also read: Chandrababu Naidu’s incredible comeback

While no official figure is available on the estimated expenditure in this regard, it would surely be a huge burden on the State. 

Resuming the work on the greenfield capital project, Amaravati will be a major issue for the Government and it is to be seen how it will go about it. Another major concern for Naidu will be completion of Polavaram project in two years. TDP’s key role in formation of new NDA Government is a hope.

The insiders in the party are hinting at a possibility of Naidu seeking huge financial support from the Centre, both for the new capital and Polavaram along with pending dues from the Centre to the tune of ₹1-lakh crore over a period of time. 

• Also read: To maintain friendly relations with Andhra Pradesh: Revanth Reddy

Grim situation

The welfare schemes of Jagan Reddy’s Government during 2019-24 not only hurt the state exchequer badly, but also deprived growth of new industries/investments in the state which affected the macro-economic strength of Andhra Pradesh.

As per RBI data, the total outstanding liabilities of Andhra Pradesh Government increased from ₹2,64,338 crore in 2019 to ₹4,85,490 crore, as of March 2024. As a percentage of the gross State domestic product (GSDP), they stood at 33.5 per cent which makes further mobilisation of funds a challenge for the new Government. 

On the other hand, there has not been much increase in devolution and transfer of financial resources from the Centre to the State which had gone up by about 3 per cent from ₹91,094 crore in 2022-23 to ₹94,747 crore in 2023-24.

Wayout?

Under these circumstances, Naidu will have no option, but to look for more support from the Centre which could be linked up to his support to the Modi-led NDA Government. As suggested by the 15th Finance Commission, he could also work towards increasing the non-tax revenues of the State Government. It remains to be seen how he will perform this tightrope walk.