The fact that Andhra Pradesh is experiencing a financial crunch is nothing new. This situation has been made all the more apparent with no organization in the country coming forward to lend money to the state.
According to the latest reports, the Debt to GDP ratio of Andhra Pradesh is at 34.6%. The 14th Finance Commission of India has said that this ratio should be limited to 25% at all times for the betterment of the state. However, the significant difference of AP’s ratio to the limit ratio is very much worrying.
States like Maharashtra, Tamil Nadu, Gujarat and Karnataka are managing to maintain their Debt to GDP ratio exactly near the limit. The Debt to GDP ratio of the state of Telangana is at 21.4%, well below the limit, whereas that of Andhra Pradesh’s is 13.2% higher.
Even large states like Uttar Pradesh (28.8%), West Bengal (33.3%) and Rajasthan (33.1%) have a ratio much lesser than that of Andhra Pradesh’s. Kerala (30.1%) too has a comparatively lower ratio than that of AP’s.
Andhra Pradesh will have to pay a total of 12.6% of its total income as interest by the financial year of 2021, and will have to pay 22.5% of its income as debts. The government of Andhra Pradesh promised a lot of things to the people, which cost about Rs. 49,442 Crores. Andhra Pradesh is now 6th, in the list of states with the highest Debt-GDP ration, whereas Telangana is in the 14th position.
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