Stalemate continues between Telangana and Andhra Pradesh over apportionment of ₹8,929 crore debt

Stalemate over the apportionment of public debt pertaining to the externally aided projects (EAP) in the erstwhile united Andhra Pradesh between Telangana and Andhra Pradesh continues as the two States are firm on their respective stances on the issue.

15 EAP with loans amounting to ₹8,929 crore

There were 15 externally aided projects under implementation in the combined State with 23 loans total amounting to ₹8,929 crore. Of these, two loans pertained to projects entirely in Andhra Pradesh, nine for projects in Telangana and 12 loans for projects in both the States (in variable ratios), according to the categorisation made by the principal accountants general of the two States.

For instance, four projects – Hussainsagar Lake and Catchment area development; Transmission System Modernisation and Strengthening; Hyderabad Ring Road Project and Krishnapatnam Super Critical Power Station, all involving ₹4,265 crore , have been placed under Category A. Andhra Pradesh government contended that the loans be apportioned on location basis and hence, its share of ₹4,265 crore is ₹1,335 crore of Krishnapatnam Power Station which is located in Andhra Pradesh while the remaining ₹2,929 crore should be borne by Telangana.

Andhra Pradesh further proposed division of loans amounting to ₹3,755 crore pertaining to nine EAPs on utilisation basis with its share being ₹1,892 crore.

Loans bearing formula

The Department of Economic Affairs, during the meeting convened by Union Home Ministry in February [2025], conveyed that loans in respect of projects entirely in one State are to be borne by the respective State and the loans in respect of projects in both the States are to be borne in variable ratios as per the recommendations of the principal accountants general of the two States.

However, this formula has been objected to by the Telangana government which is firm that all the loans should be apportioned on population ratio as per Section 54(1) of APR Act, 2014. The State government said that there is no different mode of apportionment provided under Act. The principal accountant generals could only recommend the amount to be apportioned, which should be under the provisions of the Act.

Moreover, the Telangana government’s views were not taken before arriving at the formula for calculation of the debt payment. The money was adjusted from the consolidated fund of Telangana to the consolidated fund of Andhra Pradesh. Due to the erroneous claim of Andhra Pradesh Government, the excess liability on Telangana government could be around ₹1,449.75 crore, a senior official told The Hindu.