The Finance Minister of Andhra Pradesh, Mr. Buggana Rajendranath, presented the Budget for the state for the financial year 2022-23 on March 11, 2022.

Budget Highlights

  • The Gross State Domestic Product (GSDP) of Andhra Pradesh for 2022-23 (at current prices) is projected to be Rs 13,38,575 crore.  This is a growth of 11% over the revised estimates of GSDP for 2021-22 (Rs 12,01,736 crore).  In 2021-22, GSDP is estimated to grow at 18% over the previous year (at current prices).
     
  • Expenditure (excluding debt repayment) in 2022-23 is estimated to be Rs 2,39,986 crore, a 24% increase over the revised estimates of 2021-22 (Rs 1,93,548 crore).   In addition, debt of Rs 16,270 crore will be repaid by the state in 2022-23.  In 2021-22, expenditure (excluding debt repayment) is estimated to be 10% lower than the budget estimate.
     
  • Receipts (excluding borrowings) for 2022-23 are estimated to be Rs 1,91,262 crore, an increase of 23% over the revised estimates of 2021-22 (Rs 1,55,324 crore).  In 2021-22, receipts (excluding borrowings) are estimated to fall short of the budget estimate by Rs 21,923 crore (a decrease of 12%).
     
  • Fiscal deficit for 2022-23 is targeted at Rs 48,724 crore (3.64% of GSDP).   In 2021-22, as per the revised estimates, the fiscal deficit is expected to be 3.18% of GSDP, lower than the budget estimate of 3.49% of GSDP.
     
  • Revenue deficit for 2022-23 is estimated to be Rs 17,036 crore, which is 1.27% of the GSDP.  In 2021-22, the state is estimated to observe a revenue deficit of 1.63% of GSDP, as compared to a revenue deficit of 0.47% of GSDP, at the budget estimates stage.

Policy Highlights

  • Agriculture and allied activities: To address the problem of spurious seeds, fertilisers, and pesticides, 77 Agri Testing labs will be operationalised from Kharif 2022.  The cost of installing electricity meters for agricultural pump sets will be borne by the state government.  Further, Mobile Veterinary Ambulatory Clinics will be operationalised by purchasing 340 ambulances.
     
  • Education:  In phase III of the Nadu-Nedu program, infrastructure in 24,620 schools will be upgraded.  Under this program infrastructure facilities (such as furniture, fans, lights, and drinking water) in schools are upgraded.
     
  • Special Development Package: To implement development programs at the constituency level, in line with local needs and preferences, a Special Development Package Fund is being established.  Every Member of Legislative Assembly will have two crore rupees at their disposal to implement development programs.

Andhra Pradesh’s Economy

  • GSDP:  Andhra Pradesh’s GSDP (at constant prices) contracted by 2.6% in 2020-21, which is less than the growth rate of 7.2% in 2019-20.  In 2020-21, the manufacturing sector, as well as the services sector, registered a contraction.  In 2020-21 the state’s GSDP contraction was lesser than the contraction in national GDP (which registered a negative growth of 7.2% in 2020-21).  
     
  • Sectors:  In 2020-21, at current prices, agriculture, manufacturing, and services sectors contributed to 40%, 19%, and 41% of the economy.
     
  • Per capita GSDP:  The per capita GSDP of Andhra Pradesh in 2020-21 (at current prices) was Rs 1,89,930; 1% higher than the corresponding figure in 2019-20.     In 2020-21, per capita GSDP of Andhra Pradesh was higher than the national level (Rs 1,46,087 at current prices).  

Figure  1 : Growth in GSDP and sectors in Andhra Pradesh at constant (2011-12) prices 

 image

Note: These numbers are as per constant prices (2011-12) which implies that the growth rate is adjusted for inflation.
Sources: Ministry of Statistics and Programme Implementation; PRS.

Budget Estimates for 2022-23

  • Expenditure (excluding debt repayment) in 2022-23 is targeted at Rs 2,39,986 crore.  This is an increase of 24% over the revised estimate of 2021-22 (Rs 1,93,548 crore).   This expenditure is proposed to be met through receipts (excluding borrowings) of Rs 1,91,262 crore and net borrowings of Rs 48,546 crore.  Receipts (excluding borrowings) for 2022-23 are expected to register an increase of 23% over the revised estimate of 2021-22.  In 2021-22, receipts are estimated to be 12% lower than the budget estimates.
     
  • In 2022-23, the state is estimated to observe a revenue deficit of Rs 17,036 crore, which is 1.27% of its GSDP.  In comparison, in 2020-21 and 2021-22, the state observed a revenue deficit of 3.6% of GSDP (Rs 35,540 crore) and 1.63% of GSDP (Rs 19,545 crore), respectively.
     
  • Fiscal deficit in 2022-23 is estimated to be 3.64% of GSDP which is within the limit of 4% of GSDP permitted by the central government in Union Budget 2022-23 (of which, 0.5% of GSDP will be made available upon undertaking power sector reforms).  In 2021-22, the state has estimated a fiscal deficit of 3.18% of GSDP, which is lower than the limit of 4.5% of GSDP permitted by the central government (of which, 0.5% of GSDP becomes available upon undertaking power sector reforms).  

Table  1 : Budget 2022-23 - Key figures (in Rs crore)

Items

2020-21

Actuals

2021-22

BE

2021-22

RE

% change from BE 21-22 to RE 21-22

2022-23

BE

% change from RE 21-22 to BE 22-23

Total Expenditure

1,87,102

2,29,779

2,08,107

-9%

2,56,257

23%

(-) Repayment of debt

13,735

15,503

14,559

-6%

16,270

12%

Net Expenditure (E)

1,73,367

2,14,276

1,93,548

-10%

2,39,986

24%

Total Receipts

1,75,635

2,27,772

2,09,759

-8%

2,56,078

22%

(-) Borrowings

57,435

50,525

54,435

8%

64,816

19%

Net Receipts (R)

1,18,199

1,77,247

1,55,324

-12%

1,91,262

23%

Fiscal Deficit (E-R)

55,167

37,030

38,224

3%

48,724

27%

as % of GSDP

5.59%

3.49%

3.18%

3.64%

Revenue Defict

35,540

5,000

19,545

291%

17,036

-13%

as % of GSDP

3.60%

0.47%

1.63%

1.27%

Primary Balance

35,150

14,290

16,227

14%

27,384

69%

as % of GSDP

3.47%

1.35%

1.35%

2.05%

Note: BE is Budget Estimates; RE is Revised Estimates.
Sources: Andhra Pradesh Budget Documents 2022-23; Andhra Pradesh Economic Survey 2021-22; PRS.

Expenditure in 2022-23

  • Revenue expenditure in 2022-23 is estimated to be Rs 2,08,261 crore, which is an increase of 20% over the revised estimate of 2021-22 (Rs 1,73,818 crore). This expenditure includes the payment of salaries, pensions, interest, and subsidies. In 2021-22, as per the revised estimates, revenue expenditure is estimated to be 5% lower than the budget estimate.
     
  • Capital outlay in 2022-23 is estimated to be Rs 30,680 crore, which is an increase of 66% over the revised estimate of 2021-22. Capital outlay comprises expenditure towards creation of assets. This includes expenditure on building schools, hospitals, and roads and bridges.     

Decreased Capital Outlay in 2021-22

The 2021-22 revised estimates for capital outlay are estimated to be 41% lower than the budget estimates (Rs 31,198 crore). Some of the sectors that have seen a decline in capital outlay in 2021-22 include: (i) Urban Development (67% lower than the budget estimates), (ii) Health and Family Welfare (61%), and (iii) Irrigation and Flood Control (41%).  Note that the state is estimating an increase of 66% in capital outlay from revised estimates of 2021-22 to 2022-23.      

Table  2 :  Expenditure budget 2022-23 (in Rs crore)

Items

2020-21 Actuals

2021-22 Budgeted

2021-22 Revised

% change from BE 2021-22 to RE 2021-22

2022-23 Budgeted

% change from RE 2021-22 to BE 2022-23

Revenue Expenditure

1,52,677

1,82,197

1,73,818

-5%

2,08,261

20%

Capital Outlay

18,975

31,198

18,529

-41%

30,680

66%

Loans given by the state

1,715

882

1,201

36%

1,046

-13%

Net Expenditure

1,73,367

2,14,276

1,93,548

-10%

2,39,986

24%

Sources: Andhra Pradesh Budget Documents 2022-23; PRS.

Committed expenditure: Committed expenditure of a state typically includes expenditure on payment of salaries, pensions, and interest.  A larger proportion of the budget allocated for committed expenditure items limits the state’s flexibility to decide on other expenditure priorities such as developmental schemes and capital outlay.  In 2022-23, Andhra Pradesh is estimated to spend Rs 38,607 crore on committed expenditure items, which is 20% of its revenue receipts.  This comprises spending on interest payments (11%) and pension (9%).  Note that this figure does not include the expenditure on salaries (which is not available).  Committed expenditure (exclusive of salaries) in 2022-23 is estimated to increase by 11% over the revised estimate of 2021-22.  Interest payments are estimated to decrease by 3%, whereas pension payments are estimated to increase by 34%.

Table  3 : Committed Expenditure in 2022-23 (in Rs crore)

Items

2020-21

Actuals

2021-22

BE

2021-22

RE

% change from BE 21-22 to RE 21-22

2022-23

BE

% change from RE 21-22 to BE 22-23

Salaries

NA

NA

NA

-

NA

-

Pensions

17,470

17,844

12,932

-28%

17,267

34%

Interest Payment

20,018

22,740

21,997

-3%

21,340

-3%

Total Committed Expenditure

37,488

40,854

34,928

-14%

38,607

11%

Sources: Andhra Pradesh Budget Documents 2022-23; PRS.

Sector-wise expenditure: The sectors listed below account for 71% of the total expenditure on sectors by the state in 2022-23.  A comparison of Andhra Pradesh’s expenditure on the key sectors with that of other states is shown in Annexure 1.

Table  4 : Sector-wise expenditure under Andhra Pradesh Budget 2022-23 (in Rs crore)

 

Sectors

2020-21 Actuals

2021-22 BE

2021-22 RE

2022-23 BE

% change from RE 21-22 to
BE 22-23

Budget Provisions (2022-23)

Welfare of SC, ST, OBC, and Minorities

22,580

27,870

25,565

45,927

80%

  • Rs 1,156 crore has been allocated for Andhra Pradesh Scheduled Tribes Co-operative Finance Corporation.

Education, Sports, Arts, and Culture

24,206

27,212

25,882

30,385

17%

  • Rs 8,015 crore has been allocated towards teaching grants to Mandal Praja Parishads.
  • Rs 2,136 crore has been allocated towards Samagra Shiksha Abhiyan.

Rural Development

14,452

14,943

11,832

16,040

36%

  • Rs 5,000 crore has been allocated towards the MGNREGS.

Health and Family Welfare

9,511

14,088

13,940

15,708

13%

  • Rs 2,462 crore has been allocated towards the National Health Mission.
  • Rs 1,009 crore has been allocated for Primary Health Centres (PHCs).

Agriculture and allied activities

11,373

13,299

11,824

13,640

15%

  • Rs 3,900 crore has been allocated for the YSR Rythu Bharosa scheme. 

Social Welfare and Nutrition

7,734

11,383

8,355

10,976

31%

  • Rs 4,163 crore has been allocated for the Andhra Pradesh Scheduled Castes Corporation.

Irrigation and Flood Control

4,716

12,691

7,888

10,541

34%

  • Rs 2,366 crore has been allocated towards dam works.
  • Rs 1,256 crore has been allocated towards resettlement and rehabilitation.

Energy

6,018

6,091

11,730

9,451

-19%

  • Rs 4,500 crore has been allocated for free power supply of nine hours.

Transport

5,066

7,458

5,563

8,597

55%

  • Rs 2,173 crore has been allocated for capital outlay on roads and bridges.

Urban Development

4,644

8,330

7,647

8,495

11%

  • Rs 1,000 crore has been allocated towards Smart Cities Mission.
  • Rs 800 crore has been allocated for creation of essential infrastructure for the new capital city.

% of total expenditure on all sectors

64%

67%

68%

71%

 

 

Sources: Andhra Pradesh Budget Documents 2022-23; PRS.

Receipts in 2022-23

  • Total revenue receipts for 2022-23 are estimated to be Rs 1,91,225 crore, an increase of 24% over the revised estimate of 2021-22.  Of this, Rs 1,02,143 crore (53%) will be raised by the state through its own resources, and Rs 89,083 crore (47%) will come from the centre.  Resources from the centre will be in the form of state’s share in central taxes (17% of revenue receipts) and grants (29% of revenue receipts).
     
  • Devolution:  In 2022-23, the state estimates to receive Rs 33,050 crore in the form of share in central taxes, an increase of 28% over the revised estimates of 2021-22.
     
  • State’s own tax revenue:  Total own tax revenue of Andhra Pradesh is estimated to be Rs 91,050 crore in 2022-23, an increase of 24% over the revised estimate of 2021-22.  Andhra Pradesh’s own tax revenue as a percentage of GSDP is estimated to rise from 5.7% of GSDP in 2020-21 (as per actuals) to 6.8% of GSDP in 2022-23 (as per budget estimate).  In 2021-22, while GSDP estimate has been revised down by 14%, no change is estimated in state’s own tax revenue or any of its components as presented in Table 6 (leading to own tax to GSDP ratio rising from 4.6% at the budget stage to 5.2% at the revised stage).
     
  • State’s non-tax revenue: In 2022-23, the state is estimated to earn Rs 11,093 crore in the form of state’s own non-tax revenue, a 103% increase over the revised estimates of 2021-22.  In 2021-22, state’s own non-tax revenue is estimated to register a decrease of 23% over the previous year.

Table  5 : Break-up of the state government’s receipts (in Rs crore)

Sources

2020-21

Actuals

2021-22

BE

2021-22

RE

% change from BE 21-22 to RE 21-22

2022-23

BE

% change from RE 21-22 to BE 22-23

State's Own Tax

57,428

85,281

73,690

-14%

91,050

24%

State's Own Non-Tax

3,395

7,050

5,451

-23%

11,093

103%

Share in Central Taxes

24,441

26,935

31,499

17%

33,050

28%

Grants-in-aid from Centre

31,872

57,931

43,632

-25%

56,033

24%

Revenue Receipts

1,17,136

1,77,196

1,54,273

-13%

1,91,225

24%

Non-debt Capital Receipts

1,063

50

1,051

1996%

37

-96%

Net Receipts

1,18,199

1,77,247

1,55,324

-12%

1,91,262

23%

Note: BE is Budget Estimates; RE is Revised Estimates.  
Sources: Andhra Pradesh Budget Documents 2022-23; PRS.

  • In 2022-23, SGST is estimated to be the largest source of own tax revenue (32%). SGST revenue in 2022-23 is estimated at Rs 29,025 crore, which is a 25% increase over the revised estimates of 2021-22.  In 2021-22, SGST collections are estimated to be Rs 23,225 crore, which is 25% lesser than the projected amount during the budget estimates stage for 2021-22 (Rs 31,000 crore).
     
  • In 2022-23, revenue from Sales Tax/VAT is expected to increase by 21% respectively, over the revised estimates of 2021-22 (Table 6).     Note that in 2021-22, the state has estimated to collect Rs 19 crore as taxes and duties on electricity.     This is merely 2% of the of the amount projected during the budget estimates stage.  

GST Compensation ends in June 2022

When the GST was introduced in 2017, the central government guaranteed states a 14% compounded annual growth in their GST revenue for five years.  Any shortfall in a state’s GST revenue from this level is covered by the Centre by providing compensation grants to the state.  This guarantee ends in June 2022.  During 2018-22, Andhra Pradesh has relied on GST compensation grants to achieve the guaranteed SGST revenue level.  In 2021-22, Andhra Pradesh is estimated to receive Rs 4,500 crore in the form of GST compensation grants, which is about 4% of its own tax revenue.     Hence, beyond June 2022, Andhra Pradesh might see a decline in the level of revenue receipts.

Table  6 :   Major sources of state’s own-tax revenue (in Rs crore)

Taxes

2020-21

Actuals

2021-22

BE

2021-22

RE

% change from BE 21-22 to RE 21-22

2022-23

BE

% change from RE 21-22 to BE 22-23

State GST

18,871

31,000

23,225

-25%

29,025

25%

Sales Tax/ VAT

17,800

24,500

23,465

-4%

28,481

21%

State Excise

11,575

15,000

14,500

-3%

16,500

14%

Stamps Duty and Registration Fees

5,603

8,000

7,500

-6%

9,500

27%

Taxes on Vehicles

2,966

5,000

4,100

-18%

6,000

46%

Taxes and Duties on Electricity

13

1,008

19

-98%

1,011

5323%

GST Compensation Grants

3,527

-

4,500

-

3,800

-16%

GST Compensation Loans

2,311

 

2,609

 

2,500

-4%

Sources: Andhra Pradesh Budget Documents 2022-23; PRS.

Deficits and Debt Targets for 2022-23

The Andhra Pradesh Fiscal Responsibility and Budget Management (FRBM) Act, 2006 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit, and fiscal deficit of the state government.

Revenue Balance:   It is the difference between revenue expenditure and revenue receipts.  A revenue deficit implies that the government needs to borrow to finance its expenses which do not increase its assets or reduce its liabilities.  In 2022-23, Andhra Pradesh is estimated to observe a revenue deficit of Rs 17,036 crore, which is 1.27% of the GSDP.  In comparison, in 2020-21 and 2021-22, the state is to observe a revenue deficit of 3.60% of GSDP (Rs 35,540 crore) and 1.63% of GSDP (Rs 19,545 crore), respectively.  

Fiscal deficit:  It 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 of the state government.  In 2022-23, the fiscal deficit is estimated to be Rs 48,724 crore (3.64% of GSDP).  It is within the limit of 4% of GSDP permitted by the central government in 2022-23 as per the Union Budget (of which, 0.5% of GSDP will be made available upon undertaking power sector reforms).

As per the revised estimates, in 2021-22, the fiscal deficit of the state is expected to be 3.18 % of GSDP, which is lower than the budget estimate of 3.49% of GSDP.  This is lower than the 4.5% limit permitted by the central government for 2021-22 (of which, 0.5% of GSDP becomes available upon undertaking power sector reforms).  

Outstanding liabilities:  Outstanding liabilities is the accumulation of total borrowings at the end of a financial year.  It also includes any liabilities on public account.  At the end of March 2023, the outstanding liabilities of the state are estimated to be 32.79% of the GSDP.

Figure  2 : Revenue and Fiscal Balance (% of GSDP) 

image

 Note: RE: Revised Estimates; BE: Budget Estimates. A positive figure means a surplus, a negative figure means a deficit.  
Sources: Andhra Pradesh Budget Documents 2022-23; PRS.   

Figure  3 : Outstanding Liabilities (% of GSDP)

image

Note: RE: Revised Estimates; BE: Budget Estimates.
Sources: Andhra Pradesh Budget Documents 2022-23; PRS.  

 

Outstanding Government Guarantees: Outstanding liabilities of states do not include a few other liabilities that are contingent in nature, which states may have to honour in certain cases.  State governments guarantee the borrowings of State Public Sector Enterprises (SPSEs) from financial institutions.  As of December 2021, the state’s outstanding government guarantees was Rs 1,17,503 crore.   Of this the government guarantees of the power sector was Rs 27,217 crore.   

Annexure 1:  Comparison of states’ expenditure on key sectors

The graphs below compare Andhra Pradesh’s expenditure on six key sectors as a proportion of its total expenditure on all sectors.  The average for a sector indicates the average expenditure in that sector by 30 states (including Andhra Pradesh) as per their budget estimates of 2021-22. [1]

  • Education:  Andhra Pradesh has allocated 12.7% of its total expenditure for education in 2022-23.  This is lower than the average allocation (15.2%) for education by all states (as per 2021-22 Budget Estimates).
  • Health:  Andhra Pradesh has allocated 6.6% of its total expenditure on health, which is higher than the average allocation for health by states (6%).\
  • Agriculture:  The state has allocated 5.7% of its total expenditure towards agriculture and allied activities.  This is lower than the average allocation for agriculture by states (6.2%).
  • Rural development:  Andhra Pradesh has allocated 6.7% of its expenditure on rural development.  This is higher than the average allocation for rural development by states (5.7%).
  • Police:  Andhra Pradesh has allocated 2.9% of its total expenditure on police, which is lower than the average expenditure on police by states (4.3%).
  • Roads and bridges:  Andhra Pradesh has allocated 1.9% of its total expenditure on roads and bridges, which is significantly lower than the average allocation by states (4.7%).

image

image

image

image

image

image

Note: 2020-21, 2021-22 (BE), 2021-22 (RE), and 2022-23 (BE) figures are for Andhra Pradesh.

Sources: Andhra Pradesh Budget Documents 2022-23; various state budgets; PRS.

Annexure 2:   Comparison of 2020-21 Budget Estimates and Actuals

The following tables compare the actuals of 2020-21 with budget estimates for that year.

Table  7 : Overview of Receipts and Expenditure (in Rs crore)

Particular

2020-21 BE

2021-22 Actuals

% change from BE to Actuals

Net Receipts (1+2)

1,62,558

1,18,199

-27%

1.  Revenue Receipts (a+b+c+d)

1,61,958

1,17,136

-28%

a.  Own Tax Revenue

70,679

57,428

-19%

b.  Own Non-Tax Revenue

5,866

3,395

-42%

c.  Share in central taxes

32,238

31,872

-1%

d.  Grants-in-aid from the Centre

53,175

31,872

-40%

Of which GST compensation grants

-

3,527

#DIV/0!

2.  Non-Debt Capital Receipts

600

1,063

77%

3.  Borrowings

60,258

57,435

-5%

Of which GST compensation loan

-

2,311

-

Net Expenditure (4+5+6)

2,10,854

1,73,367

-18%

4.  Revenue Expenditure

1,80,393

1,52,677

-15%

5.  Capital Outlay

29,908

18,975

-37%

6.  Loans and Advances

554

1,715

210%

7.  Debt Repayment

13,935

13,735

-1%

Revenue Balance

-18,434

-35,540

93%

Revenue Deficit (as % of GSDP)

1.82%

3.60%

-

Fiscal Deficit

48,296

55,167

14%

Fiscal Deficit (as % of GSDP)

4.78%

5.59%

-

Note: A negative revenue balance indicates a deficit.  BE: Budget Estimates.
Source: Andhra Pradesh Budget Documents of various years; PRS.

Table  8 : Key Components of State's Own Tax Revenue (in Rs crore)

Sector

2020-21 BE

2020-21 Actuals

% change from BE to Actuals

SGST

25,604

18,871

-26%

Sales Tax/VAT

25,743

11,575

-55%

Taxes on Vehicles

4,463

2,966

-34%

Stamps Duty and Registration Fees

6,337

5,603

-12%

Taxes and Duties on Electricity

13

13

-5%

State Excise Duty

7,931

17,800

124%

Source: Andhra Pradesh Budget Documents of various years; PRS.

Table  9 : Allocation towards Key Sectors (in Rs crore)

Sector

2020-21 BE

2020-21 Actuals

% change from BE to Actuals

Water Supply and Sanitation

1,779

328

-82%

Housing

4,608

1,192

-74%

Irrigation and Flood Control

11,359

4,716

-58%

Welfare of SC, ST, OBC, and Minorities

41,430

22,580

-45%

Urban Development

7,014

4,644

-34%

Social Welfare and Nutrition

10,794

7,734

-28%

Transport

6,250

5,066

-19%

of which Roads and Bridges

2,804

2,014

-28%

Health and Family Welfare

11,673

9,511

-19%

Agriculture and allied activities

13,563

11,373

-16%

Energy

6,795

6,018

-11%

Education, Sports, Arts, and Culture

25,517

24,206

-5%

Rural Development

13,545

14,452

7%

Police

5,300

5,979

13%

Source: Andhra Pradesh Budget Documents of various years; PRS.

 

[1]  The 30 states include the Union Territory of Delhi and Union Territory of Jammu and Kashmir.

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