Andhra Pradesh Chief Minister Chandrababu Naidu said on 9 November that the state government does not have enough money to pay its staff despite a hike in its revenues in the first half of the fiscal year.
"We have no money for salaries. We are already running on a huge overdraft," Chief Minister N Chandrababu Naidu said.
The state recorded a 12.26% growth rate in the first quarter of the fiscal and is eyeing a 15% annual growth.
The state's revenue earnings rose to Rs 22,800 crore in the first half of 2016-17 financial year as against Rs 20,166 crore in corresponding period last year, a 13.05% increase. But what has become worrisome is the mounting revenue deficit which stood at Rs 6,641 crore during the first half of this fiscal.
In fact, the government estimated an overall revenue deficit of Rs 4,868 crore in 2016-17, but increased spending has widened gap.
"There is heavy pressure on government expenditure and adjustment of finances has become problematic," Finance Minister Yanamala Ramakrishnudu said.
While the state estimated its borrowings to be Rs 20,497 crore during the year, the government has already borrowed Rs 13,673 crore.
"We have reached the fiscal deficit but we are somehow pulling the cart either by borrowing or through internal adjustments," Yanamala pointed out.
Asked about the jump in state's revenues during the first half, the Finance Minister remarked "the situation is still worse".
Official sources, however, attribute the sorry state of affairs to "unmindful spending".
More than Rs 500 crore have been spent so far on the construction of the Government Transitional Headquarters (interim Secretariat) at Velagapudi and the expenditure is not complete.
Over Rs 100 crore was spent on the Chief Minister's offices and residences in Hyderabad and the capital region (including Vijayawada).