The initiative builds on earlier success in debt restructuring, where the Naidu-led NDA government has already clawed back significant savings.
Published Dec 11, 2025 | 7:04 PM ⚊ Updated Dec 11, 2025 | 7:04 PM
Chandrababu Naidu. Credit: x.com/ncbn
Synopsis: He wanted them to renegotiate interest rates on loans carrying exorbitant rates of 11 percent to 14 percent. This comes amid the state’s economic rebound, with second-quarter growth hitting 11.28 percent for 2025-26—outpacing the national GDP growth of 8.7 percent— yet underscoring the lingering drag of a debt burden estimated at over ₹9.5 lakh crore.
In a bold move to ease the state’s mounting fiscal pressures, Andhra Pradesh Chief Minister N. Chandrababu Naidu has doubled efforts to reschedule high-interest loans inherited from the previous YSR Congress Party (YSRCP) regime.
Announcing potential annual savings would be upto ₹7,000 crore, the chief minister, at a high-level review meeting with ministers, secretaries, and department heads on Wednesday, 10 December, directed finance officials to engage aggressively with banks and financial institutions.
He wanted them to renegotiate interest rates on loans carrying exorbitant rates of 11 percent to 14 percent. This comes amid the state’s economic rebound, with second-quarter growth hitting 11.28 percent for 2025-26—outpacing the national GDP growth of 8.7 percent— yet underscoring the lingering drag of a debt burden estimated at over ₹9.5 lakh crore.
The initiative builds on earlier success in debt restructuring, where the Naidu-led NDA government has already clawed back significant savings. “Through proactive loan rescheduling and negotiations, we have saved ₹512 crore last year and nearly ₹ 1,000 crore so far this financial year,” Naidu stated during the meeting, emphasizing that these efforts are restoring fiscal discipline and public confidence.
Officials said that a comprehensive overhaul of the entire loan portfolio could yield ₹7,000 crore in annual interest reductions, freeing up resources for critical sectors like infrastructure, agriculture, and welfare schemes.
This rescheduling drive is part of a the government’s strategy to stabilize debt servicing within the current financial year (2025-26), prioritizing sustainable capital expenditure to fuel long-term growth.
The roots of this fiscal challenge trace back to the 2019-2024 YSRCP administration under former Chief Minister Y.S. Jagan Mohan Reddy, which Naidu accused of plunging Andhra Pradesh into a “severe debt trap” through reckless, high-cost borrowings.
Sources indicated that the previous regime accumulated debts totaling around ₹9.5 lakh crore, often at punitive interest rates that exacerbated the state’s liabilities.
Naidu came down on the YSRCP dispensation for bowing at high interest rates as “destructive politics,” contrasting them with his government’s “responsible governance,” which has attracted over ₹13 lakh crore in investment commitments since assuming power in June 2024.
The state’s per capita income has also risen to ₹2,66,240—marginally above the national average—signalling early signs of recovery.
The officials were tasked with mapping out the full spectrum of outstanding loans, identifying those eligible for rate reductions, and initiating talks with major lenders including public sector banks, the Reserve Bank of India (RBI), and multilateral institutions like the Asian Infrastructure Investment Bank (AIIB).
One recent example includes a decision in March 2025 to slash an AIIB loan by 50 percent for urban drinking water schemes, easing the exchequer’s burden.
However, challenges remain: The 2025-26 Budget projects public debt climbing to ₹1.02 lakh crore, with internal debt alone estimated at ₹81,956 crore, up from revised figures of ₹81,108 crore in 2024-25.
Fiscal deficit targets stand at 4.2 percent of GSDP (₹68,743 crore), though borrowing has already exceeded, reaching ₹40,150 crore by November 2025.
YSRCP leaders, including party president YS Jagan Mohan Reddy, have slammed Naidu’s narrative, accusing the TDP-led coalition of inflating debt figures in his tenure for political gain while breaking records in new borrowings—nearly ₹90,000 crore in the first nine months of their tenure, with another ₹52,000 crore planned.
“They are the ones pushing us deeper into the red with astronomical poll promises like the Super Six schemes,” Reddy alleged in a recent statement, pointing to a fiscal deficit of ₹65,418 crore as of November 2024.
Naidu, undeterred, underlined the state’s economic momentum: Q1 growth of 12.02 percent and Q2’s 11.28 percent, driven by 12.20 percent industrial expansion in mining and power at a recent review.
He credited governance overhauls for faster service delivery and rebranding Andhra Pradesh to lure investments, citing the successful CII Partnership Summit in Visakhapatnam as a “best example.”
Looking ahead, the government aims for a 17.11 percent annual GSDP growth target, with debt rescheduling seen as crucial to avoiding a vicious cycle of high servicing costs, currently devouring a significant chunk of the ₹3.22 lakh crore total budget outlay.
(Edited by Sumavarsha)
