Andhra Pradesh Chief Minister N. Chandrababu Naidu met Union Finance Minister Nirmala Sitharaman in New Delhi to request an additional ₹10,000 crore under the Special Assistance to States for Capital Investment (SASCI) scheme for the 2025–26 financial year. The appeal, made during Naidu’s two-day visit to the capital, also included a plea to the 16th Finance Commission for revenue deficit compensation to address the state’s persistent financial constraints stemming from its 2014 bifurcation. As reported on July 17, 2025, Naidu emphasized the urgent need for funds to complete the development of Amaravati, the state’s greenfield capital, and other critical projects like Polavaram, highlighting Andhra Pradesh’s struggle to rebuild its economy post-bifurcation.
Background: Andhra Pradesh’s Financial Challenges
The bifurcation of Andhra Pradesh in 2014, which created Telangana and left Andhra Pradesh without Hyderabad as its capital, imposed significant financial burdens. The state inherited a revenue deficit, limited industrial base, and the challenge of building a new capital, Amaravati. Chief Minister Naidu, whose Telugu Desam Party (TDP) is a key ally in the National Democratic Alliance (NDA), has repeatedly highlighted the state’s fiscal distress, exacerbated by the previous YSR Congress Party (YSRCP) government’s mismanagement. A December 2024 meeting with Prime Minister Narendra Modi revealed that revenue deficit grants meant for five years were depleted in three, with the state’s debt rising to over ₹13 lakh crore, or 39% of Gross State Domestic Product (GSDP).
Naidu’s latest appeal comes as Andhra Pradesh reports modest revenue growth. In Q1 2025–26 (April–June), the state collected ₹13,361 crore in tax revenues, a 2.02% increase year-on-year, with GST collections rising 7.10% to ₹2,598 crore in June 2025. However, committed expenditures like salaries, pensions, and debt servicing, projected at ₹55,604 crore for FY 2025–26 (25% of revenue receipts), severely limit fiscal flexibility for capital investments.
Details of Naidu’s Financial Request
During his meeting with Sitharaman, Naidu submitted a memorandum outlining Andhra Pradesh’s financial needs, focusing on:
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₹10,000 Crore Under SASCI: Naidu requested this amount under the SASCI scheme to fund various state projects, emphasizing capital investment to stimulate economic growth. The SASCI scheme, previously utilized by states like Punjab and Goa, provides interest-free loans for infrastructure development.
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Revenue Deficit Compensation: Naidu urged the 16th Finance Commission to approve Andhra Pradesh’s plea to bridge its revenue deficit, a lingering issue since bifurcation that restricts developmental aspirations.
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Amaravati Funding: The construction of Amaravati requires ₹79,280 crore, with works worth ₹44,351 crore already underway and ₹26,000 crore mobilized. Naidu requested the second tranche of funds as a grant to cover the remaining ₹26,000 crore, citing the project’s importance as a symbol of state pride and economic revival.
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Polavaram Project: Naidu expressed gratitude for central support for the Polavaram irrigation project, a critical infrastructure initiative, and sought continued assistance to ensure its completion.
Naidu also met Union Home Minister Amit Shah on July 15, 2025, reiterating the need for financial handholding to address the “ruined economy” left by the previous government, which diverted funds from 94 centrally sponsored schemes.
Political and Public Reactions
The appeal has sparked varied responses. On X, posts reflected public sentiment, with @IPR_AP stating, “CM Chandrababu Naidu Seeks Rs. 10,000 Cr for Andhra Under SASCI,” and @TheBullCharge noting the meeting’s significance for state projects. Supporters, like @np_nationpress, expressed optimism, asking, “Will Andhra CM secure Rs 10,000 crore from Centre under SASCI scheme?” Others, however, urged sustainable revenue models, with one user commenting, “While funds are important, I hope our leaders focus on creating jobs and industries.”
The opposition, particularly the Andhra Pradesh Congress Committee (APCC) led by YS Sharmila Reddy, has criticized Naidu’s approach to Amaravati, accusing him of turning it into a “real estate business” through proposed land acquisitions. Sharmila questioned the lack of progress on 33,000 acres acquired in 2015 and demanded that the Centre fund Amaravati under the AP Reorganisation Act instead of relying on state or World Bank loans.
Economic and Strategic Implications
Naidu’s request has significant implications:
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Economic Recovery: The ₹10,000 crore SASCI funds and revenue deficit compensation could alleviate fiscal strain, enabling investments in infrastructure, agriculture, and industry. However, the state’s ₹55,604 crore committed expenditures limit flexibility, necessitating prudent financial management.
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Amaravati Development: Completing Amaravati is central to Andhra Pradesh’s identity and economic aspirations. The ₹26,000 crore funding gap, if addressed, could accelerate construction, attracting investors and boosting urban development.
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Political Dynamics: As a key NDA ally, Naidu’s influence strengthens Andhra Pradesh’s bargaining power. Improved Centre-state relations post-2024 elections could expedite fund approvals.
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Regional Cooperation: Naidu’s concurrent meeting with Telangana CM Revanth Reddy and Union Jal Shakti Minister CR Patil on July 16, 2025, resolved water-sharing issues, with agreements to repair the Srisailam project and establish a technical committee for Krishna and Godavari river disputes. This cooperation enhances regional stability, complementing financial appeals.
Challenges include ensuring transparency in fund utilization, as past rejections of large aid requests (e.g., ₹20,000 crore in 2015) raised concerns about financial crunch and audit oversight. Analysts also caution that Andhra Pradesh must reduce its revenue deficit (targeted at 1.8% of GSDP) and fiscal deficit (4.4% of GSDP) through sustainable revenue models, such as industrial growth, to lessen dependence on central grants.
Path Forward
To maximize the impact of the requested funds, Andhra Pradesh and the Centre should:
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Prioritize Grant-Based Aid: Disburse the second tranche for Amaravati as a grant to reduce fiscal strain, as Naidu requested.
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Enhance Revenue Generation: Develop industrial policies to attract investors, leveraging Amaravati’s potential as a commercial hub.
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Ensure Transparency: Implement strict audits to address opposition concerns about irregularities in tenders worth ₹53,000 crore for Amaravati.
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Strengthen Centre-State Collaboration: Build on recent cooperative federalism, as seen in water-sharing agreements, to secure consistent support for Andhra Pradesh’s development.
Chief Minister N. Chandrababu Naidu’s appeal for ₹10,000 crore under SASCI and revenue deficit compensation on July 16, 2025, underscores Andhra Pradesh’s urgent need to overcome financial constraints post-bifurcation. With Amaravati’s construction requiring an additional ₹26,000 crore and the state grappling with a ₹55,604 crore committed expenditure burden, Naidu’s meetings with Union Finance Minister Nirmala Sitharaman and Home Minister Amit Shah highlight the importance of central support. As of July 17, 2025, the request, backed by Andhra Pradesh’s role as a key NDA ally, could pave the way for economic revival, provided funds are utilized transparently and complemented by sustainable revenue strategies. This effort reflects Andhra Pradesh’s determination to rebuild its economy and establish Amaravati as a beacon of progress.
