BackAndhra Pradesh fails to get special status
The government will extend a special package instead for five years; move sparks protests by opposition in assembly
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Hyderabad: The central government on Thursday offered a special five-year assistance package to Andhra Pradesh to compensate it for the loss of revenue resulting from the carving out of Telangana in 2014.
The centre’s denial of a much-anticipated special category status that would have meant far greater incentives sparked protests by opposition members in the state assembly.
Central government funding for externally aided projects will be offered over the next five years as part of the special assistance package.
“The central government has agreed to give a special assistance measure to the government of Andhra Pradesh for five years, which would make up for the additional central share the state might have received during these years, that is, 2015-16 to 2019-20, as envisaged in the then PM’s statement dated 20.2.2014," the statement added.
In February 2014, Former prime minister Manmohan Singh promised special status category for Andhra Pradesh, which was carved up to create Telangana. Hyderabad, the capital and economic hub, moved to Telangana, resulting in loss of revenue to Andhra Pradesh. Hyderabad will, however, serve as joint capital of the two Telugu-speaking states until 2024.
Finance minister Arun Jaitley on Wednesday hinted that Andhra Pradesh would be denied the special category status, citing recommendations of the 14th Finance Commission that increased central assistance to states. The commission increased states’ share of central taxes from 32% to 42%. It also recommended providing post-devolution revenue deficit grants for states where devolution alone could not cover the gap.
As part of the package, the centre will also fully fund the Polavaram irrigation project, which was declared a national project on 1 April 2014.
The government announced two fiscal incentives including an accelerated depreciation and investment allowance for Andhra Pradesh to attract industry in the backward regions identified by the state.
Jaitley also promised to bridge a revenue deficit of ₹ 22,113 crore that has resulted from the bifurcation and provide financial assistance to develop backward regions of the state. Chief minister N. Chandrababu Naidu welcomed the special assistance package and said it should be “backed by legal framework and time-bound implementation".
The centre’s denial of special category status drew flak from opposition parties. A special session of the assembly called to ratify the goods and services tax (GST) amendment bill on Thursday was disrupted by opposition members demanding a discussion on special category status. The assembly eventually passed the GST bill without discussion amid uproar.
To press its demand, the opposition YSR Congress Party (YSRCP) called for a strike in Andhra Pradesh on 10 September. YSRCP leader Y.S. Jagan Mohan Reddy sought Naidu’s resignation, saying he had failed the state on this count.
“The special assistance nowhere comes close to the benefits enjoyed by a special category state which gets 90% of funding in form of grants for centrally sponsored schemes and other tax incentives," said Rajesh Chakrabarti, executive vice-president, research and policy at Wadhwani Foundation.
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