Financial Burden of Public Debt through Debt Sustainability Indicators in Andhra Pradesh and Telangana States

Abstract

The present paper explains the growth of financial burden of public debt through debt sustainability indicators in Andhra Pradesh and Telangana states. The debt sustainability is critical aspect of examining the financial burden of public debt. This debt sustainability analysis involves the assessment of the ability of the state government to repay its maturing public debt over time with some indictors such as debt to GSDP ratio, debt to revenue ratio, debt services ratio, interest payments to revenue receipts ratio, interest payments to revenue expenditure ratio and the difference between the growth of public debt and growth of revenue receipts. The analysis on outstanding public debt to GSDP ratio of Andhra Pradesh and Telangana states, it is observed that debt to GSDP ratio of AP has been fluctuated between 28.33% and 35.82% during the period of study and outstanding public debt to GSDP ratio of Telangana fluctuated between 16.11% and 25.92% during the period of study. Therefore, it is concluded that the outstanding public debt ratio to GSDP of Andhra Pradesh state is higher than Telangana state by about ten percentage points in all the years study period. The debt to revenue ratio is greater than 100 both for Telangana and Andhra Pradesh states. In the case of Andhra Pradesh the debt to revenue ratio infuses between 164.05 to 299.27 during the period of study and in the case of Telangana state the debt to revenue ratio as between infuses between 122.30 and 241.88 during the period of study there from it is inferred that financial burden of outstanding public debt in Andhra Pradesh is higher than the financial burden of outstanding public debt in Telangana.

The debt services ratio of Andhra Pradesh has been fluctuated between 11.39% and 21.65% with an increasing trend. Similarly to debt serving ratio of Telangana state has been fluctuated between 11.39 and 21.65 with an increasing trend. Further it is observed that the public debt services ratio of Andhra Pradesh is greater than the of Telangana state in the all the years of study periods therefore the financial burden of Andhra Pradesh state is higher than Telangana state during the period of study which indicates that the financial burden of public debt is greater than the Telangana specially during the COVID period. In the case of Andhra Pradesh interest payments of revenue receipts ratio as inflected between 8.73% and 17.09% with an increasing trend in the case of Telangana, interest payments to revenue receipts ratio has been inflection between 9.93% and 16.69% with a increasing trend. the differences between interest payments to revenue receipt ratio of Andhra Pradesh is greater than interest payment to revenue receipts of Telangana during the period of study excluding the year 2014-15 and 2021-22, this indicates that the financial budget of public debt in terms of interest payments is greater for Andhra Pradesh and Telangana. The differences between growth rate of outstanding public debt and total revenue Andhra Pradesh is positive up to 2020-21 and after that it is negative. In other words Andhra Pradesh state has increasing financial burden after 2020-21. In the case of Telangana state the financial burden in term of the differences between growth rate of outstanding public debt and growth rate of total revenue has no specific trend but it has fluctuation between both negative and positive direction.