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‘Broken promise’, funds crunch: Why Andhra CM N Chandrababu Naidu is angry

Leaders of the TDP and BJP have been trading accusations over central assistance since the Union Budget was presented, with the former alleging that Andhra Pradesh had been ignored. The Indian Express explains the reason why ties between TDP and BJP are under strain — what Andhra wants, and the context of those demands.

Written by Sreenivas Janyala | Updated: February 23, 2018 9:31:35 am
andhra pradesh, chandrababu nadu, pm narendra modi, andhra cm, tdp, bjp, andhra assembly elections, andhra special status, indian express The TDP says hopes raised by Chandrababu Naidu’s meeting with Prime Minister Narendra Modi were dashed by the Budget announcements. (Express Archive)

Leaders of the TDP and BJP have been trading accusations over central assistance since the Union Budget was presented, with the former alleging that Andhra Pradesh had been ignored. Chief Minister N Chandrababu Naidu this week threatened to bring a no-confidence motion against the Centre in Parliament to demand “justice”, albeit as a “last resort”. Naidu repeated his grievance that the “provisions of the AP Reorganisation Act, 2014, and the promises made by the then Prime Minister Manmohan Singh… have not been implemented”. He referred to Special Category Status as Andhra’s “right”, and said that the BJP was “not budging” only because it has a “total majority” in Parliament.

What has put the TDP’s ties with the BJP under strain?

State’s revenue deficit

According to officials, AP faced a revenue deficit of Rs 16,000 crore in 2014-15, Rs 4,598 crore in 2016-17, and almost a similar amount in 2017-18. In 2018-19, the deficit is estimated to be Rs 416 crore. The deficit arose after the state’s bifurcation in 2014, and AP wants the Centre to compensate for its losses.

The TDP recalls that former Prime Minister Manmohan Singh had assured Rajya Sabha on February 20, 2014, that any resource gap that the successor state of AP might face would be made good in the Union Budget for 2014-15. However, the Finance Ministry said AP had included Rs 10,000 crore it gave as farm loan waivers in its revenue deficit calculation. The Centre finally agreed to give Rs 7,500 crore as compensation, but has so far paid only about Rs 4,000 crore. Also, even as negotiations on the rest of the amount are under way, the Centre has now said it owes only Rs 138.39 crore, officials in the state said.

The Polavaram project

The TDP argues that since Polavaram has been declared a national project, the Centre should bear its entire cost, including the cost of land acquisition and rehabilitation, which comes to around Rs 33,000 crore. According to TDP MP K Rammohan Naidu, about Rs 7,500 crore have been spent on the project, of which the Centre gave Rs 4,500 crore. He said the state had borrowed Rs 3,000 crore, and was paying an interest of Rs 300 crore every year. The Centre had lost interest in the project, alleged Rammohan Naidu, who was part of a delegation that met Finance Minister Arun Jaitley. BJP MP K Hari Babu said the Centre has so far released Rs 4,662.28 crore for Polavaram.

Construction of Amaravati

Andhra says it needs “hand-holding” for a few years as it builds a capital from scratch. The Centre has so far given Rs 2,500 crore, including Rs 500 crore to the Guntur and Vijayawada Municipal Corporations to lay out drainage systems. The remaining amount is meant for building the secretariat, Assembly, Raj Bhavan and High Court. AP has built a temporary secretariat at Velagapudi, and has approved designs for permanent buildings in Amaravati. Naidu wants the Centre to allocate funds for the entire capital region, which is estimated to cost Rs 33,000 crore.

Visakhapatnam railway zone

TDP leaders say establishing a new railway zone would bring a lot of investment and jobs to the region. They say this had been promised in the AP Reorganisation Act, but the Centre is dragging its feet because of Odisha’s opposition. “Bhubaneswar fears its importance as the East Coast Railway headquarters may be diminished if a new zone is created,” Rammohan Naidu said.

Building central institutions

The AP Reorganisation Act, 2014 assured that 19 institutions and projects like IIT, IIM, etc., would be established in AP. While work on more than a dozen institutions is ongoing, AP says progress is slow and funds are coming in a trickle. For instance, the estimated cost of setting up an IIT in Tirupati is Rs 3,150 crore, but the Centre has so far released only Rs 56.49 crore.

Special Category/Package

The Centre says the assurance of special status clashes with the recommendations of the Fourteenth Finance Commission, which came subsequently. Following the acceptance of the recommendations, the class of Special Category States has ceased to exist.

However, the Centre has agreed to give “special assistance” to AP for five years, which would make up for the additional central share the state might have received during these years — 2015-16 to 2019-20, as envisaged by Singh’s 2014 statement. This will be in the form of Union funding for externally aided projects that have been signed and disbursed during these years. AP is demanding that special assistance funding should be in the 90:10 ratio (Centre:state) for both EAPs and centrally-sponsored schemes — which adds up to about Rs 20,010 crore of central assistance. Because the state government may not be able to spend this amount on EAPs in the stipulated five years, AP is demanding that the Centre allow it to use the money to clear outstanding loans. It is seeking permission to borrow from internal lenders like NABARD, HUDCO and other commercial banks, and to use the gap to pay interest commitments to the Government of India, NABARD and EAPs.

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