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According to the Fiscal Responsibility and Budget Management (FRBM) permission to
increase fiscal deficit from 3% to 3.5% will not be extended to the
needy states as Telangana have already obtained the permission. According to a senior official the difficulties in increasing the deficit and borrowing limits for the state were cleared by the centre in a recent meeting. As per existing norms,
debt of a State should not exceed 25 % of the GSDP. And the interest amount payable on loans cannot go beyond 10% of the revenue. Andhra Pradesh stands as loser in both. According to the Socio-Economic Survey 2015-16, GSDP is estimated at INR 6.83 lakh crores while debts stood at
INR 1.90 lakh crores accounting for 27.88 % of GSDP. Though the Central
taxes devolution, grants and market borrowings are of similar magnitude for
both AP and Telangana, Andhra Pradesh has lost worth portion of resource after bifurcation.
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