CAG Report: AP, Telangana struggle with revenues, borrowings surge during first quarter
The CAG data paints a concerning picture for both Telugu states, with low non-tax revenues, limited central grants, and high early-year borrowings
By Sistla Dakshina Murthy
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Hyderabad/Amaravati: Both Andhra Pradesh and Telangana are facing fiscal stress as per the latest data released by the Comptroller and Auditor General (CAG) of India.
During the first quarter of the 2025ā26 financial year, the two states reported weak revenue performance and an increase in borrowings, raising concerns over their fiscal health.
Telangana's revenue collection falls short
Telanganaās own revenue in the AprilāJune quarter stood at Rs 37,221.80 crore, just 16.20% of the annual target of Rs 2,29,720.62 crore.
The shortfall was primarily due to poor performance in non-tax revenues, which amounted to only Rs 1,066.22 croreāmerely 3.37% of the budgeted ā¹31,618.77 crore.
Adding to the strain, the state received just Rs 433.77 crore in grant-in-aid and contributions from the Centre, against the expected Rs 22,782.50 crore. This represents a dismal 1.9% achievement of the target.
Revenue surplus turns to deficit
Despite projecting a revenue surplus of Rs 2,738.33 crore in its 2025ā26 budget, Telangana ended the first quarter with a revenue deficit of Rs 10,582.85 crore, reflecting a significant fiscal reversal.
Borrowings spike in Telangana
To meet expenditure needs, the state borrowed Rs 20,266.09 crore in Q1, amounting to 37.52% of the full-year borrowing limit of Rs 54,009.74 crore. This indicates a heavy reliance on debt in the early part of the fiscal year.
Andhra Pradesh mirrors the trend
Andhra Pradesh reported total revenue receipts of Rs 36,239.37 crore in the first quarter, 16.63% of the annual budgeted target of Rs 2,17,976.53 crore. Like Telangana, AP's non-tax revenue performance was lackluster at Rs 1,269.28 crore, which is 6.64% of the estimated Rs 19,119.04 crore.
Grant-in-aid receipts from the Centre were also lower than expected. The state received Rs 1,465.09 crore out of a targeted Rs 32,284.40 crore, accounting for just 4.54% of the budgeted amount.
Fiscal deficit builds up in AP
Andhra Pradesh had projected a fiscal deficit of Rs 44,928.78 crore for the year. By the end of Q1, the deficit had already reached Rs 27,667.39 crore, over 61% of the total estimate indicating a rapidly widening gap between income and expenditure.
Mounting pressure on state finances
The CAG data paints a concerning picture for both Telugu states, with low non-tax revenues, limited central grants, and high early-year borrowings contributing to growing fiscal pressure.
As the financial year progresses, both Andhra Pradesh and Telangana may face increasing challenges in maintaining fiscal discipline unless revenue mobilisation improves significantly.
