AP unveils Rs.3.32-L cr Budget for 2026-27
Amaravati: Finance Minister Payyavula Keshav on Saturday presented in the Legislative Assembly the state's largest-ever budget of Rs 3,32,205 crore for 2026-27, balancing ambitious capital investment with a significant reduction in the revenue deficit.
However, the Finance Minister has indicated that the state is financially "yet to come out of the woods," following the "mess" created by the previous YSRCP regime. The budget size is up by Rs 10,000 crore from FY26, with an estimated revenue expenditure of Rs 2.56 lakh crore and capital expenditure of nearly Rs 54,000 crore.
The most striking headline number is the projected revenue deficit, which is set to narrow dramatically from Rs. 41,118 crore (2.33 per cent of GSDP) in the revised estimates of 2025-26 to Rs. 22,002 crore - just 1.11 per cent of GSDP- in 2026-27. The fiscal deficit is also expected to ease to Rs. 75,868 crore (3.84 per cent of GSDP) from 4.57 per cent in the previous year. Capital expenditure, the productive investment component, rises 36.5 per cent to Rs. 53,915 crore, reflecting a strong push for asset creation.
Presenting the budget for the third consecutive year, the Finance Minister framed the document as a recovery story from the Rs. 9.74 lakh crore in liabilities inherited from the erstwhile YSRCP government. He cited active debt management -- Rs. 43,298 crore in high-cost loans already renegotiated from rates as high as 12.3 per cent to below 9 per cent, saving a total of Rs. 327 crore annually -- with plans to renegotiate another Rs. 1.2 lakh crore expected to save a further Rs. 1,658 crore per year.
Thanking Prime Minister Narendra Modi for initiating the process to introduce legislation to accord statutory status to the greenfield capital city of Amaravati, the Finance Minister said administrative sanction was given for 97 works worth Rs 57,868 crore there.
As per the budget figures, the state government is expected to raise Rs 76,000 crore through open market loans and Rs 19,000 crore from the Centre.
The investment narrative dominated the Finance Minister’s speech. Andhra Pradesh has attracted 1.19 lakh investment proposals worth Rs. 9.68 lakh crore since June 2024, with 5.41 lakh jobs potential. The Global Partnership Summit 2025 yielded commitments totaling Rs. 13.25 lakh crore across 610 MoUs. The centre-piece of the investment story is Google's US $ 15 billion (Rs. 1.35 lakh crore) AI-powered Data Centre in Visakhapatnam -- the largest single FDI in India.
A Bank of Baroda report cited in the speech credited AP with cornering 25 per cent of the country's total proposed investments in 2025-26, despite having only 4.2 per cent of India's population.
Sectorally, school education leads allocations at Rs. 32,308 crore. Panchayati Raj and Rural Development gets Rs. 22,942 crore, Health Rs. 19,306 crore, Water resources Rs. 18,224 crore for irrigation including Polavaram (91 per cent diaphragm wall completion) and the Handri-Neeva project, and Municipal Administration Rs. 14,539 crore for urban infrastructure and Amaravati capital works (97 projects worth Rs. 57,868 crore sanctioned). Energy receives Rs. 13,934 crore, with renewable energy allotments totalling Rs. 2.88 lakh crore covering 15.56 GW Solar and 4.86 GW Wind capacity.
Welfare commitments are substantial. Pensions worth over Rs. 58,000 crore have been disbursed in 19 months. The Deepam 2.0 scheme has credited Rs. 2,897 crore to 1.08 crore women for free LPG cylinders. Under Annadata Sukhibhava, Rs. 6,660 crore was released to 46.86 lakh farmer families. Paddy procurement set a national benchmark: Rs. 9,740 crore was transferred to farmers' accounts in a single 24-hour window, with Rs. 5,833 crore (55 per cent) paid within 8 hours.
The Rayalaseema Global Horticulture Hub targeting expansion of horticulture from 8.41 to 14.41 lakh hectares by 2030 with Rs. 30,000 crore proposals submitted and the Visakhapatnam Economic Region covering 10 districts with 41 high-impact projects and Rs. 28,000 crore in proposals are the two flagship regional development initiatives announced. "From the financial standpoint, we are yet to come out of the woods. Things are not all that rosy. I still have my times of struggle while sorting the financial mess left behind by the previous regime. But our intentions are uncompromising," Keshav remarked, while unveiling the new initiatives.
The budget also unveiled an AP Wealth Fund with a seed corpus of Rs. 100 crore, free power from April 2026 for handlooms (200 units) and powerlooms (500 units), 750 electric buses for 11 cities, 100 new courts in Phase-I, and an initial Rs. 60 crore for Godavari Pushkaram preparations. Andhra Pradesh's GSDP grew at 11.75 per cent in 2024-25, the Finance Minister stated, adding that it signified bouncing back from the 10.3 per cent average of the previous five years.
