A.P.’s revenue deficit exceeded FRBM target of 2.7% in 2024-25, says report
GS3Economy · S&T · Environment · Security· Fiscal policy, budget & taxation (GST)· Prelims + Mains·
Why in news
A report revealed that Andhra Pradesh's revenue deficit reached 3.75% of GSDP in 2024-25, exceeding the FRBM target of 2.7% and leading to increased borrowing for day-to-day expenses.
Background
The Andhra Pradesh government's revenue deficit hit 3.75% of GSDP in 2024-25. The report identified misclassifications in revenue expenditure, cash balances, and undisclosed off-budget borrowings.
Facts for Prelims
- FactAndhra Pradesh revenue deficit: 3.75% of GSDP in 2024-25
- FactFRBM target for revenue deficit: 2.7% of GSDP
- BodyFRBM: Fiscal Responsibility and Budget Management
- FactPersonal Deposit (PD) accounts: Used for routing institutional loans
For Mains
Q. Discuss the fiscal implications of exceeding revenue deficit targets and the risks associated with off-budget borrowings for state economies.
Dimensions to cover in your answer
- Debt sustainability: High interest burden from borrowing for day-to-day expenses vs capital expenditure
- Fiscal transparency: Risks of undisclosed off-budget borrowings and misclassification of revenue expenditure
- Federal fiscal discipline: Balancing state autonomy with national FRBM framework compliance
Keywords: Revenue Deficit · Fiscal Responsibility · Off-budget Borrowing · GSDP · Debt Sustainability
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