Tale of two states: Bihar, Andhra Pradesh carry a high debt legacy

Bihar joins AP in taking fiscal stress in recent years, but lags far behind the southern state in prosperity

Bihar and Andhra Pradesh, the two states demanding special-category status or special economic packages on account of their ruling parties’ heft in the central government, run high debt as a proportion of their gross state domestic product (GSDP) even as their level of prosperity differs.

For instance, sovereign debt constituted 39 per cent of the GSDP of Bihar in 2022-23, while it was projected to be 32.4 per cent in the Revised Estimates (RE) of Andhra Pradesh.
 

Both states have projected their debt to constitute at least 33 per cent of their respective GSDP for 2023-24 (Budget Estimates).
 

If one