Why Andhra Pradesh, Centre can’t agree on special category status

Hours after the Centre ruled out “special status” for Andhra Pradesh, the TDP pulled out its ministers from the NDA government, with its chief Chandrababu Naidu saying he has only been asking for what has been provided for in the AP Reorganisation Act.

Written by Sreenivas Janyala | Updated: March 9, 2018 7:39:39 am
TDP members demand special status for Andhra Pradesh outside Parliament TDP MPs protest at the forecourt of the Parliament demanding special status for Andhra Pradesh Thursday. (Photo: PTI)

Hours after the Centre ruled out “special status” for Andhra Pradesh, the TDP pulled out its ministers from the NDA government, with its chief Chandrababu Naidu saying he has only been asking for what has been provided for in the AP Reorganisation Act. The Indian Express explains.

Did the Andhra Pradesh Reorganisation Act, 2014, have provisions for special category status to Andhra Pradesh?

No. The Act, under which the state of Andhra Pradesh was bifurcated in 2014, doesn’t mention ‘special category’, but mentions that the Centre would help Andhra Pradesh bridge any resource gap. Under the ‘Revenue Distribution’ section, the Act states that “the Central Government may, having regard to the resources available to the successor State of Andhra Pradesh, make appropriate grants and also ensure that adequate benefits and incentives in the form of special development package are given to the backward areas of that State…”

Apart from the legislation, former Prime Minister Manmohan Singh had in the Rajya Sabha assured that Andhra Pradesh would be granted special category status. During the discussion on the AP Reorganisation Bill, Singh had on February 20, 2014, said, “Special Category Status will be extended to the successor state of Andhra Pradesh for a period of five years”.

But the BJP, which came to power at the Centre in 2014, has been saying that the 14th Finance Commission doesn’t provide for such treatment to Andhra Pradesh.

Related | Challenges of special status and problems in implementing it

What did the 14th Finance Commission recommend?

In its report submitted in December 2014, the YV Reddy-headed Fourteenth Finance Commission — a body that defines financial relations between the Centre and individual state governments — redefined the financial relationship between the Centre and the states for the five-year period ending 2019-20. The Commission did away with the ‘special category’ status for states, except for the Northeastern and three hill states. Instead, it suggested that the resource gap of each state be filled through ‘tax devolution’, urging the Centre to increase its share of tax revenues to the states from 32% to 42%. If devolution alone could not cover the revenue gap for certain states, the Commission said, the Centre could provide a revenue deficit grant to these states.

The Commission stated that Andhra Pradesh would end up as a revenue deficit state, and recommended that the Centre provide a revenue deficit grant for the period of the 14th Finance Commission.

If the special category status provision had survived and had been granted to AP, the state would have received funding for Centrally sponsored schemes (CSC) in the 90:10 ratio — with 90% of the funds coming from the Centre as against 60% for normal category states.

Read | TDP pulls out ministers from Centre, but softens stance to keep lines open

After having stated that its hands are tied legally and legislatively, on what basis is the Centre then promising AP funds “equivalent” to those under the special category status? Why does AP still insist on special status?

The Centre has stated that it is willing to provide the “monetary equivalent” of a special category state to AP but would not be able to grant it “special status” as this is restricted, by the 14th Finance Commission, to the three hill states and those in the Northeast. As an additional measure, the Centre has agreed to fund all externally aided projects in Andhra Pradesh in the 90:10 ratio.

While accepting that the Centre has provided funds for various projects including for the construction of capital city Amaravati and the Polavaram Project under the special assistance measure, the TDP says that its bid to get “special status” is an emotional and sentimental issue in the state. It claims that when the Congress promised special category status, the BJP, then in Opposition, had supported it. “The state was divided on the assurance that it would be granted special category status but the BJP is now reneging on it. The assurances and assistance under special packages don’t mean much to AP now. Telugu sentiments and emotions have been hurt and only special category status can assuage them,” said TDP MP Y S Chowdary, after resigning as Union Minister of State for Science and Technology.

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