Andhra Pradesh Chief Minister Chandrababu Naidu calls for strengthening the local bodies financially

Andhra Pradesh Chief Minister N. Chandrababu Naidu has emphasised the need to strengthen the local bodies by combining the Central and State financial assistance with enhanced self-generated revenues.

Addressing the members of the 5th State Finance Commission on Wednesday at the Secretariat, Mr. Naidu directed officials to identify the local bodies with low per capita income so that targeted financial support could be extended to them.

Funds from the MGNREGS and other schemes should be consolidated annually to assess the needs of the panchayats, he said. “If the requirements are identified, it becomes easier to design policies for effective support and strengthening of the local institutions,” he observed.

Mr. Naidu urged the local bodies to pursue revenue-generation opportunities, while ensuring accountability in fund utilisation. Auditing of the panchayat and urban local body accounts should be completed by the end of every financial year, he said.

Deputy Chief Minister K. Pawan Kalyan called for a thorough review of property tax collections and arrears from 2019 to 2024. He instructed the officials to bring all tax records online, and also suggested a comprehensive study of poultry-related issues in the villages to ensure farmer-friendly policies.

Mr. Pawan Kalyan also stressed on completing the classification process within a set timeframe and emphasised the need for necessary legislative amendments. He also stressed on digitising the panchayat records and bringing property tax details online for better accountability.

The State Finance Commission presented its recommendations for the 2025–29 period, focusing on both financial and non-financial measures to strengthen the rural and urban local bodies.

Resource gap

The 5th State Finance Commission noted that Andhra Pradesh faced financial challenges, with salaries, pensions, and interest payments exceeding the State’s own revenues by 111% in 2023–24. It projected a resource gap of ₹7,033 crore for the Panchayati Raj institutions and ₹2,016 crore for the Urban Local Bodies between 2025–26 and 2029–30. It also flagged a large gap between property tax demand and actual collections.

The commission highlighted that the previous government had left behind unpaid electricity bills of ₹5,851.58 crore for the gram panchayats as of June 2024. While the Central Finance Commission grants remained the largest funding source, the property tax collections also contribute significantly. The State spends ₹393.77 crore annually on salaries for panchayat staff and ₹1,672.45 crore for the municipal staff.

The meeting was attended by Finance Commission Chairperson Ratnakumari, members Prasad Rao and Kriparao, along with senior officials from the Finance, Panchayati Raj, and Municipal departments.