On February 14, 2026, Andhra Pradesh Finance Minister Payyavula Keshav presented the state’s budget for the financial year 2026-27 in the Legislative Assembly, outlining a total outlay of ₹3,32,205 crore. This represented a modest increase from the previous year’s ₹3.22 lakh crore.
The budget emphasized wealth creation, human capital development, and sustainable growth, aligning with the long-term vision of ‘Swarna Andhra@2047’ to transform the state into a high-income economy by India’s centenary of independence.
Fiscal overview: Balancing deficits and expenditures
The budget projected a Gross State Domestic Product (GSDP) of ₹19.75 lakh crore for 2026-27, reflecting optimism in economic revival.
Revenue expenditure is estimated at ₹2,56,143 crore, accounting for the bulk of spending on welfare and operational costs, while capital expenditure saw a significant 33% hike to ₹53,915 crore, the highest in the state’s history, underscoring a shift from consumption-driven to investment-led growth.
Fiscal indicators show improvement over the revised estimates for 2025-26. The revenue deficit is pegged at ₹22,002 crore (1.11% of GSDP), down from 2.33% in the prior year, while the fiscal deficit stands at ₹75,868 crore (3.84% of GSDP), reduced from 4.57%. The primary deficit is estimated at 1.95% of GSDP.
Revenue sources remain focused on internal generation and central assistance, with debt restructuring efforts already saving ₹327 crore annually on ₹43,298 crore in loans, and plans to renegotiate an additional ₹1.2 lakh crore for further savings of ₹1,658 crore per year.
Key allocations: Welfare, education, and infrastructure
The budget allocated resources across sectors to foster inclusive growth, with a strong emphasis on social welfare components and infrastructure.
Below is a breakdown of major allocations:
Backward Classes (BC) Welfare – 51,012 crore
School and General Education – 35,000 crore
Medical and Health – 19,000 crore
Scheduled Castes (SC) Welfare – 20,644 crore
Energy – 13,934 crore
Connectivity and Logistics (Roads, Ports, Airports) – 13,546 crore
Scheduled Tribes (ST) Welfare – 9,190 crore
Irrigation (Major Projects excl. Polavaram) – 9,906 crore
Polavaram Project – 6,105 crore
Minority Welfare – 6,090 crore
Amaravati Development – 6,000 crore
Agriculture and Farmer Welfare – Annadata Sukhibhava 6,600 crore, Crop Insurance 250 crore, Price stabilization 500 crore, fisheries 260 crore
Women, Children, Differently Abled & Senior Citizens – 4,582 crore
Housing (Urban & Rural) – 5,451 crore
Jal Jeevan Mission – 4,000 crore
Swachh Bharat Mission – 1,037 crore
These allocations seem to integrate welfare with development. For instance, education receives the lion’s share to build human capital, while infrastructure investments in energy and connectivity aim to attract global trade and advanced industries.
New initiatives and reforms
A standout feature is the establishment of the AP Wealth Fund, seeded with ₹100 crore, designed to attract private equity for investments across India – the first such sovereign wealth fund at the state level. This initiative positions Andhra Pradesh as an innovator in fiscal strategy, aiming for long-term wealth generation beyond traditional revenue streams.
Other reforms include:
- Quantum Valley Initiative: Investments in digital infrastructure and quantum computing to foster deep-tech industries.
- Clean Energy Leadership: Emphasis on renewables to make the state a powerhouse in sustainable energy.
- Agricultural Modernization: Integration of agri-tech, a ₹30,000 crore horticulture hub in Rayalaseema, and free power for weavers.
- Debt Rationalization: Ongoing negotiations to reduce interest burdens and improve fiscal health.
These steps align with national goals like self-reliance and sustainability, while addressing state-specific challenges such as rural livelihoods and climate resilience.
Strengths, challenges, and potential impacts:
Analytically, this budget marks a paradigm shift from the welfare-heavy models of the past to a more balanced, infrastructure-centric framework that could accelerate Andhra Pradesh’s growth trajectory. The 33% increase in capital expenditure is a bold move, potentially yielding high multipliers in employment and private investment, especially in sectors like clean energy and logistics, which could position the state as a gateway for South India’s economic expansion.
By mapping expenditures to the Swarna Andhra@2047 vision, the government demonstrates strategic foresight, enhancing policy continuity and investor confidence.
However, challenges persist.
The reliance on central assistance (e.g., ₹6,544 crore under SASCI as of February 12, 2026) underscores vulnerabilities in own-revenue generation, which needs bolstering through tax reforms and industrial growth.
Fiscal deficits, while improving, remain elevated, and the success of initiatives like the Wealth Fund will depend on effective private sector engagement amid global economic uncertainties.
Comparatively, this budget’s capital focus contrasts with neighboring states like Telangana, which emphasized IT and urban development in its recent outlay, but Andhra’s integration of agriculture and welfare could ensure more equitable growth. If implemented effectively, it could boost GSDP growth beyond projections, reducing poverty and enhancing competitiveness. Yet, execution risks such as delays in projects like Polavaram must be mitigated through transparent governance.