As reported by livemint, the YS Jaganmohan Reddy-led Andhra Pradesh government in India is looking into the possibility of raising new capital for the financially struggling state through the introduction of a lottery.

The move follows on from the financial uncertainty caused by the COVID-19 pandemic as well as the limited options that states have to raise taxes after the introduction of the goods and services tax (GST) in 2017.

Furthermore, due to the prolonged COVID-enforced lockdown, the collections of state taxes have also been impacted, with an anonymous source telling livemint: “There is a genuine need to raise resources.”

The possibility of using lotteries is not the first attempt that the YSR government has considered as a means to raise revenues, with the authority having previously raised alcohol prices by roughly 75% during the lockdown in order to offset its revenue shortfalls. 

The Andhra Pradesh government, which is yet to officially comment, has also explored further potential financial solutions such as transferring the assets of state power generation companies (gencos) and distribution companies (discoms) to the Andhra Pradesh Power Finance Corp with the aim of raising competitive rates. 

States have relied heavily on borrowing money from the markets to combat the hardships brought about by the COVID-19 crisis. With this being said, a borrowing ceiling has now been hit.

Mekapati Goutham Reddy,  information technology and industries minister for the state, was quoted by livemint: “Financial guidelines need to be rewritten given the present scenario. Like the FRBM Act, or limitations on borrowing by states. The government should not be worried about inflation and new rules need to be looked at.”

State governments across the country continue to look for ways to boost revenues and have implemented a range of measures, including raising taxes on fuel and liquor. The Andhra Pradesh government also reportedly plans to decentralize the capital between Amaravati, Visakhapatnam and Kurnool.