This state spends 95% of its total earnings on salaries and pensions; its coffers are running dry

Andhra Pradesh: One state in the country is currently grappling with a financial crisis—Andhra Pradesh. According to reports, 95 percent of the state's revenue is being spent solely on salaries and pensions, depleting its treasury.

Andhra Pradesh Expenditure on Salaries and Pensions: The cost of salaries and pensions for government employees is becoming a major issue for Andhra Pradesh. A state government report indicates that in the 2025-26 fiscal year, Andhra Pradesh spent over 95% of its own revenue on employee salaries and pensions. During this period, approximately ₹1.05 lakh crore was spent on expenses related to the workforce.

Around 10 to 12 lakh people are directly or indirectly associated with government departments, state-owned companies, corporations, and various other levels of administration in Andhra Pradesh. Additionally, there are approximately 3.59 lakh pensioners in the state. The expenditure incurred on all of them places a heavy burden on the state budget.

Higher expenditure compared to other states

According to the report, Andhra Pradesh's expenditure on salaries and pensions is significantly higher than that of other South Indian states. Karnataka spends less than one-third of its own revenue on employees. This figure stands at around 44% for Telangana, 49% for Tamil Nadu, and approximately 68% for Kerala.

At the time of the state's bifurcation in 2014, Andhra Pradesh's employee-related expenditure was about 66% of its revenue. In the 2014-15 fiscal year, ₹25,094 crore was spent on salaries. Subsequently, this expenditure rose steadily, reaching approximately 116% of the state's revenue in the 2019-20 fiscal year—meaning the cost exceeded the revenue itself. In the 2023-24 fiscal year, ₹92,147 crore was paid to employees as salaries.

Government attributes this to the previous administration's legacy.

Chief Minister N. Chandrababu Naidu has described this as a major financial crisis inherited from the previous government. They argue that such massive expenditure leaves the state with limited funds for development and essential schemes. However, the incumbent government claims to have reduced this expenditure by approximately 13–14% over the past two years.

Rising Debt Burden

According to government data, Andhra Pradesh’s total debt and repayment liabilities stood at approximately ₹3.75 lakh crore in March 2019; by May 2024, this figure had risen to ₹9.74 lakh crore. The government states that efforts are now underway to improve the state's financial health by settling outstanding dues, securing increased assistance from the Centre, and executing major projects.