Andhra Pradesh wants Special treatment: Why, and why the Govt isn’t keen

A week’s protest in Parliament and simmering unrest in Andhra Pradesh has fed on a sense of betrayal among a people who continue to feel aggrieved by the 2014 bifurcation of the state. The Indian Express explains the context and compulsions, facts and frustrations of the situation

Written by Sreenivas Janyala | Updated: August 8, 2016 8:42:50 am
TDP members demand for Special Status to Andhra Pradesh at Parliament House in New Delhi last week. PTI Photo

For all of last week, members of the YSR Congress Party have been disrupting Parliament demanding fulfilment of the promise of Special Category State status to Andhra Pradesh following the creation of Telangana — a protest that initially also saw participation from the YSRCP’s political rival, the Telugu Desam Party. A Private Member’s Bill moved by Congress Rajya Sabha member K V P Ramachandra Rao seeking Special Category status has, at the end of prolonged wrangling over its categorisation as a Money Bill (and therefore, constitutionality of its introduction in Rajya Sabha) been referred to the Lok Sabha Speaker. On Friday, former Prime Minister Manmohan Singh asked the central government to “protect the honour of the august House” by implementing the promises he had made in Rajya Sabha on February 20, 2014, including the grant of Special Category status. The same day, Congress vice-president Rahul Gandhi tweeted, “Modiji a reminder: The decision [to] grant Spl Category Status [to] Andhra was taken by the Parl[iament] of this country in 2014… Today 5 [crore people] of Andhra are watching BJP-TDP betray them”, and Andhra Chief Minister N Chandrababu Naidu posted, “In a meeting with Hon’ble PM… elaborated on the assurances that the Centre had given… PM has responded positively & assured that promises will be fulfilled.” On Saturday, Union Minister M Venkaiah Naidu, however, accused the Congress of “adopting double standards and shedding crocodile tears” “for the sake of publicity”, and demanded to know “why UPA government failed to grant special category status… when it bifurcated the united state by incorporating the same in AP Reorganisation Bill?”

What is Special Category status, and why does Andhra want one? What are the issues in the street protests that have been rocking the state for weeks now — apart from the exchanges and disruptions in Parliament?

Why does Andhra Pradesh want the status of a Special Category State?

The 2014 bifurcation has left the successor state with several disadvantages and a revenue deficit of approximately Rs 20,000 crore. 70% of the revenue of undivided AP came from Hyderabad, which is now in Telangana. October 2014’s Hudhud cyclone and drought-like conditions in some districts last year compounded problems. The successor state now wants a level playing field in the form of Special Category status, with central funding and tax concession benefits.

So what is the problem with that?

The policy of granting Special Category status has been discontinued as per the recommendations of the 14th Finance Commission, and a new funding pattern has been drawn up, which, according to Finance Minister Arun Jaitely, has given states more central funds than earlier. The Centre has told AP that the Finance Commission had suggested that with the states’ share of central taxes up from 32% to 42%, granting special status does not make sense. Over and above the 10% hike, AP will get a special grant of Rs 350 crore from the Centre per year for the development of 7 backward districts — it has already received Rs 700 crore for the last 2 financial years.

And what is Andhra arguing?

That the “unscientific and hurried” bifurcation still puts a huge financial burden on the new state, which is home to 58.32% of the population of undivided Andhra Pradesh. Also that the UPA government had promised to bridge the revenue deficit, apart from industry incentives, a special development package, assistance to develop the state capital, and Special Category status. The expectations from the Centre in the form of funding to build the capital, Amaravati, the Polavaram dam, and infrastructure projects like Metros in Vijayawada and Vizag, have not fructified. Chief Minister Naidu says AP has lost significant resource base and is at a disadvantage compared with its revenue-surplus neighbours. The Centre should help in the competition with cities like Bangalore, Chennai and Hyderabad.

So is Andhra actually being cheated?

Granting Special Category State status is not mentioned in the AP Reorganisation Act, 2014, and therefore, it is not mandatory for the Centre to grant that status to AP. However, when the AP Reorganisation Bill, 2014, was tabled in Parliament for discussion, Manmohan Singh gave an assurance to MPs and people of AP that the successor state of AP would be granted Special Category status.

Things changed with the Congress losing power. The NDA government has cold-shouldered requests of Andhra MPs for Special Category status, and told CM Naidu that the provision to grant SCS status no longer exists. This, despite the TDP and BJP being partners in government.

Is this only about finances, then?

In AP, Special Category State status is more a matter of prestige, pride, and assuaging hurt feelings. There’s also politics — in raising the issue in Parliament, the Congress, which was decimated in the 2014 elections, and the YSR Congress, which is being driven to the wall by the TDP, see an opportunity to present themselves as fighting for the people of Andhra.

K V P Ramachandra Rao, the Congress MP who moved the Private Member’s Bill seeking Special Status and a special package, was a loyalist of, and adviser to, the late Y S Rajasekhara Reddy. He belongs to Andhra Pradesh, but was allotted to Telangana after the bifurcation by a draw of lots. The TDP had quietly agreed to support the Congress in case Rao’s Bill was taken up for discussion. The YSRCP, CPI(M) and SP too had supported the Bill.

Okay, but in the end, what special benefits does a Special Category State ultimately get?

In 1969, the Fifth Finance Commission proposed Special Category States based on recommendations made by the National Development Council. The idea was to give preferential treatment to certain states that were deemed disadvantaged, by allocating more central funds and tax concessions. The criteria for granting special status were 1) a lot of hilly terrain 2) economic and social backwardness and lack of infrastructure 3) a large tribal population 4) international borders 5) non-viable nature of finances.

Assam, Nagaland, and J&K were the first to get Special Category State status; subsequently Arunachal, Manipur, Meghalaya, Mizoram, Sikkim, Tripura, Himachal, and Uttarakhand got it too.

SCS states would get 30% of the normal central assistance; with the remaining 70% being split among other states based on their population, per capita income, and fiscal performance. Special Category states would also get concessions in income-tax rates, excise and Customs duties. Additional funds for centrally-sponsored schemes and special projects could also be granted, with the Centre bearing 90% of the cost. External aid was also devolved in the same ratio as received by the Centre. For general category states, the grant to loan ratio was 30:70. But all of this has now changed.

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