Fiscal stress worsens in the first quarter of this financial year

The CAG uploaded the Monthly Key Indicators for the first quarter of this financial year and these figures very clearly suggest a precarious outlook for the financial stability of the State Government, Public finance management, particularly in a State such as AP, which has been adversely impacted by the State reorganization is a challenging task. Only the right quantum of Government expenditure in necessary areas of welfare and development can trigger private consumption and investment, thereby promoting a virtuous cycle.

Due to rampant corruption prevalent, the State revenues from different categories have demonstrated dismal growth on a year-on-year basis. The growth was subdued amongst all the categories of Government revenues, resulting in a lacklustre both in State Government’s own tax revenues and State Government’s non-tax revenues during the first quarter of the financial year 2025-26.

It is quite apparent that, the economic buoyancy of the State is lost, as evident from the abysmally low growth across some categories of State Government revenues and negative growth in others.

Goods and Service Tax and Sales Tax reflect consumption and is evident from the figures released by the CAG, the GST revenues and Sales Tax revenues were lower during the first three months of this financial year when compared with the corresponding period last year, the year-on-year growth during which, was already subdued.

On a year-on-year basis, during the first quarter of this financial year, the State’s own revenues have grown by only 3.47% and revenues receipts as whole, that includes receipts from Government of India, grew at 6.14% and it is only debt increase, that took place at an alarming pace of 15.61%, in these first three months of FY 2025-26 alone. Therefore, the reliance on sources other than the State Government’s own revenues for meeting Government expenditure is evident from this.