Andhra Pradesh Chief Minister N. Chandrababu Naidu met Finance Minister Nirmala Sitharaman on Friday to discuss the state’s financial challenges and request federal support.
According to a Bloomberg report, Naidu is demanding over Rs 1 trillion ( USD 12 billion) in support, placing additional strain on the federal budget at a time when the government is striving to reduce debt. Naidu, who leads the Telugu Desam Party (TDP) and plays a crucial role in Narendra Modi’s coalition government, also met Modi on Thursday to outline his state’s financial requirements.
The requested aid package is intended to support various projects, including the construction of Andhra Pradesh’s new capital, Amaravati, and other vital infrastructure initiatives. Bloomberg while citing sources stated that Naidu is seeking a substantial portion of the funds from this year’s national budget.
Modi has agreed in principle to provide the financial support, sources said, although the demands will inevitably add pressure on the national budget. The federal government, under the leadership of Sitharaman, is committed to narrowing the budget deficit to 5.1 per cent of GDP by March 2025. Credit rating agencies like S&P Global Ratings are closely monitoring India’s fiscal outlook to determine whether an upgrade to the country’s debt rating is warranted.
“Any kind of special grant given to states, owing to political compulsions, would reduce the flexibility for the federal government to spend in other areas,” remarked Madhavi Arora, an economist at Emkay Global Financial Services to Bloomberg. “It constrains their overall fiscal math for budget balancing, but we will have to see how the aid flows.”
The state’s public debt has surged from 31.02 per cent to 33.32 per cent of its Gross State Domestic Product (GSDP) in recent years. As a critical ally in Modi’s National Democratic Alliance (NDA), the TDP’s 16 Lok Sabha MPs hold significant sway, making Naidu’s support vital for the BJP-led government’s stability.
