Announcing a financial package for Andhra Pradesh that includes full funding of the Pollavaram irrigation project, tax concessions and special assistance, the Centre Wednesday night stopped short of giving the state a special category status.
The denial of special category status — it ceased to exist after recommendations of the 14th Finance Commission were accepted along with the recommendation to increase devolution of Union taxes to 42 per cent for each state — sparked a furore in Andhra Pradesh, leaving red faces in the ruling TDP which came under attack from the Opposition. The YSR Congress Party and Congress accused the TDP and BJP of “betraying” Andhra Pradesh.
The announcements will be discussed in the Andhra Pradesh assembly which will hold its last session in Hyderabad from Thursday, mainly to ratify the goods and services tax (GST) Bill.
Ater the session, the AP legislative assembly and legislative council will move to Velagapudi near Amaravati where buildings are being readied for both Houses.
In New Delhi, Finance Minister Arun Jaitley, while announcing the package, said the Centre has decided to grant special assistance to Andhra Pradesh, wherein an amount equivalent to what the state might have got as a special category state will be compensated by Centre through externally aided projects for five years.
Jaitley said the Polavaram irrigation project, which was declared a national project on April 1, 2014, will be fully funded by the Centre. “The process of funding will be decided. One process is that NABARD will fund it and we will return the loan back,” he said. Also, on behalf of the central government, the state will be authorised to undertake construction.
Urban Development Minister M Venkaiah Naidu said, “Andhra Pradesh will be considered a special state. All support will be given by Centre.”
The special assistance measures will be ratified by the Union Cabinet soon. The state will also get two tax concessions for accelerated depreciation and investment allowance, details for which will be notified by the CBDT shortly, Jaitley said. Several other issues such as the railway zone issue, delimitation of constituencies in the state are also under consideration, he said.
Andhra Pradesh has been seeking Special Category State (SCS) status from the Centre ever since the state’s economic centre Hyderabad went to Telangana in the bifurcation. Special status would have given the state preferential treatment in getting central funds assistance and tax breaks.
While the Andhra Pradesh Reorganisation Act does not mention SCS for the state, the then Prime Minister Manmohan Singh had, on the floor of Rajya Sabha on February 20, 2014, promised to grant the status to the state for five years.
In Hyderabad, as Chief Minister N Chandrababu Naidu and his top ministers were going through a draft of the package, the Left parties, YSR Congress Party and Congress upped the ante at Vijayawada, Visakhapatnam and Tirupati, demanding that nothing less than special category status to the state was acceptable.
Protests were staged outside government offices and roads and highways were blocked. YSRCP leader Ambati Rambabu alleged that since the Chief Minister Naidu was “very soft on NDA”, the Centre had dismissed the demand for special category status. “It is a fraud on the people of Andhra Pradesh… As TDP and BJP are allies, Chandrababu is unable to put pressure on the Centre to give special category status to AP,’’ Rambabu said.
State Congress chief Raghuveera Reddy said: “The BJP and TDP have once again betrayed the people of Andhra by promising much and delivering nothing. How will Chief Minister Naidu and BJP leaders now face the public? What happened to Prime Minister Narendra Modi’s promise of fulfilling all promises made to Andhra?’’
The bifurcation of Andhra Pradesh has left the truncated state without a capital of its own, and mainly a revenue deficit of around Rs 20,000 crore since revenue-generating Hyderabad went to Telangana.