* The Central Party is non-cooperative with its No. 1 ally TDP when it comes to grant-in-aid contributions.
* In stark contrast, the Central government was comparatively liberal to its ‘opponent’ YSRCP between 2019-20 and 2023-24.
[ By Raveendra Popuri ]
Amaravati: The BJP’s role in Andhra Pradesh’s ruling coalition is coming under scrutiny, as the party has emerged as a non-cooperating ally, withholding significant central grants to the TDP-led state government. Rather than fostering cooperation, the NDA government at the Center, led by the BJP, appears reluctant to release grant-in-aid to the State.
In the first five months of the financial year 2025-26, the grant-in-aid contribution from the Central government has been less than 10% of the expected funds. Up to August, the NDA government at the Center has released just Rs. 3,124 crores to the TDP-led state government, amounting to only 9.68% of the estimated Rs. 32,284 crores for the year.
This is a stark contrast to the same five-month period in 2023-24, when the Central government, also led by the BJP, had been comparatively generous in releasing grants while its political opponent, YSRCP, was in power in the state. During that period, Rs. 19,180 crores were released as grant-in-aid.
Year-wise data for central grant contributions in the first five months since 2019-20 (as shown in the chart) indicate that central releases were consistently generous when Mr. YS Jagan Mohan Reddy was the Chief Minister. However, this generosity appears to have stopped after the NDA, with the BJP as a key partner, assumed power in June 2024. In the first year (2024-25) of the NDA government in Andhra Pradesh, the Central government released just Rs. 2,639 crores in the first five months — less than one-seventh of the amount released in the previous year.
Massive Revenue Deficit
The State of Andhra Pradesh has faced constant financial stress since bifurcation. As of August 2025, the state received Rs. 61,578 crores in revenue, including central transfers (state’s share in central taxes plus grant-in-aid contributions). However, the revenue expenditure for the five-month period exceeded Rs. 1,03,214 crores, leaving a massive revenue deficit of Rs. 41,636 crores, roughly Rs. 8,327 crores per month.
Result of Underfunding
The state is compelled to borrow heavily due to insufficient revenue, including underfunding from the Center. The TDP-led state government has borrowed Rs. 55,933 crores in the first five months — more than the state’s own tax revenue and nearly equal to total tax revenue, including central transfers (Rs. 56,208 crores). Apart from these borrowings, the state frequently resorts to extra-budgetary borrowings and daily ways and means, effectively standing before the RBI almost every day to manage cash flow.
Development Derailed
Despite excessive borrowings, the state government could not allocate significant funds to capital works. Most capital receipts are diverted to revenue expenses, including welfare schemes. Capital expenditure for the first five months stood at Rs. 9,312 crores, or just 8.25% of total expenditure. Due to underfunding of development projects and diversion of funds, the desired development of Andhra Pradesh is not progressing as expected.
What About the Next Seven Months?
Will the Central government compensate for sluggish contributions in the remaining seven months? There have been financial years when funding scaled up in the latter months. For example, in 2017-18, the first five months saw grant-in-aid contributions of just Rs. 3,006 crores, similar to this year. However, subsequent releases in October, February, and March pushed total grants to Rs. 21,652 crores.
Whether the TDP-led state government under Chief Minister Chandrababu Naidu, Deputy Chief Minister Pawan Kalyan, and Proactive Minister Nara Lokesh receives a respectable amount of grants in the remaining months will depend on the “non-cooperating power” at the Center.
