Andhra Pradesh Special Category

Table of Contents

THE RESIGNATION OF TDP MINSITERS
Y.S. Chowdary – MoS for Science Tech and Earth sciences
P. Ashok Gajapathi Raju – Civil aviation

WHAT IS SPECIAL CATEGORY STATUS?

‘Special category’ status is a classification given by Centre to assist in development of those states that face geographical & socio-economic disadvantages like hilly terrains, strategic international borders, economic & infrastructural backwardness and nonviable state finances.
5th Finance Commission | 1969 (chairman – Mahavir Tyagi)

HOW IS IT ACCORDED?

Let us keep it situation specific

Hilly and difficult terrain
Low population density and/or sizeable share of tribal population
Strategic location along borders with neighboring countries
Economic and infrastructure backwardness
Non-viable nature of State finances

BENEFITS

Concession in excise & customs duties, income tax and corporate tax
30% of Planned Expenditure
Normal Central Assistance: More than other States | Mostly Grants instead of Loans
Funds in the form of Special Central Assistance in addition to Normal Central Assistance
Centrally Sponsored Schemes: (Grant) 90:10 (L0an) • Other States: 30:70
Unspent money is carried forward and does not lapse
States that enjoy the Special category status. 1. Arunachal Pradesh 2. Assam 3. Himachal Pradesh 4. Jammu and Kashmir 5. Manipur 6. Meghalaya 7. Mizoram 8. Nagaland 9. Sikkim 10.Tripura 11. Uttarakhand
Q. Chairman of 14th and 15th Finance commissions?
Q. Which article of the constitution deals with the Finance Commission?

ANDHRA PRADESH’S CONCERNS

The bitterness of Bifurcation
The promise of PM Manmohan Singh on the floor of the house
UPA government agreed to grant a special status to Andhra Pradesh for a period of five years. 1. NDA urged for a 10-year period
What do we do with the promise?
14th Finance Commission: 42% Devolution
State of Special Status

THE REORGANIZATION ACT SECTION 107 AND SECTION 108

The Section 107 of the Act clearly states that the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law.
The Section 108 of the act further states that if any difficulty arises in giving effect to the provisions of this Act, the President may, by order, do anything not inconsistent with such provisions which appears to him to be necessary or expedient for the purpose of removing the difficulty.
14th Finance Commission Recommendations can be overruled?

PROMISES OF CENTRE VS REALITY

Special Package in lieu of Specials Status
It was promised that the Centre would fund to the tune of 90 per cent in regard to centrally funded schemes. Thus, the additional central grant is arrived at Rs 16,447 crore.
The Centre proposed to compensate this through higher central component in Externally Aided Projects (EAPs)
The execution of such projects would take time.
Therefore, the state preferred direct fiscal transfers.
As half of the 14th Finance Commission period is already over, the state government desired 50 per cent of payment.
The Centre has hardly paid Rs 400 crore.

PROMISES OF CENTRE VS REALITY

Railway Zone The state was promised railway zone for Visakhapatnam.
The opposition expressed by Odisha
The BJP and its political stakes in neighboring Odisha
The argument put forward is that the Vizag railway zone will be unviable
Polavaram Project
Section 90 of the AP Reorganisation Act, 2014: Polavaram Irrigation Project is declared as a national project
Inordinate delay in clearing the bills – the state government is incurring an interest burden of Rs 300 crore
Revolving fund?

PROMISES OF CENTRE VS REALITY

Revenue Deficit
Hyderabad is with Telangana
The revenue deficit was initially estimated at Rs 16,700 crore.
The amount was later revised by the Centre to Rs 7,500 crore and the central government only paid Rs 3,977 crore.
Andhra Pradesh government claims that the revenue deficit to be paid by the Centre is Rs 12,500 crore,
The Centre claims that the due is merely Rs 138 crore.
A Port
Proposed in Dugarajapatnam, Nellore District
Objections: Pulicat Lake, Proximity to Sriharikota
No alternative yet

PROMISES OF CENTRE VS REALITY

Petroleum Project
Andhra Pradesh should also get a petroleum refinery and cracking unit as per the bifurcation package.
The HPCL-GAIL consortium is reportedly seeking a viability gap funding of Rs 1,200 crore per year for a period of 15 years from the state government.
The state feels this is unfair as it is the assurance of state bifurcation and any such viability gap funding should come from the Centre itself

PROMISES OF CENTRE VS REALITY

Steel Plant
The state was also promised that a steel plant would be set up in Kadapa.
The district has iron ore mines. The state government has even offered to give these mines as captive mines for the proposed steel plant on free of cost basis as the quality of the ore is low grade.
This offer of the state government would make the proposed steel plant viable as raw material itself accounts for 50 per cent of cost of production.
While the private steel plants of Tatas, Jindals etc., have been allotted captive mines by the Government of India, the public sector Visakhapatnam Steel Plant is denied such captive mines forcing the plant to incur losses. Inflicting further insult on the state,
Moreover the Centre is not coming forward to set up Kadapa steel plant.

PROMISES OF CENTRE VS REALITY

Development of Backward Regions
As per Section 46(2) of the Reorganisation Act, 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 a Special Development Package are given to the backward areas of that State.
The Central Government shall, while considering the Special Development Package for the successor State of Andhra Pradesh, provide adequate incentives, in particular for Rayalaseema and north coastal regions of that State (Section 46(3)).
The Section 94(2) of the Act further assures that the Central government shall support the programmes for the development of backward areas in the successor States, including expansion of physical and social infrastructure.
1,050 Crore Rupees Sanctioned!
PROMISES OF CENTRE VS REALITY
Capital City
The Section 94(3) of the act states that the Central government shall provide special financial support for the creation of essential facilities in the new capital of the successor State of Andhra Pradesh including Raj Bhawan, High Court, Government Secretariat, Legislative Assembly, Legislative Council, and such other essential infrastructure.
Thus, the Reorganisation Act mandates the Centre to fund the construction of a green field capital at Amravati for the state of Andhra Pradesh as the existing capital of Hyderabad became the capital of Telangana. However, no specific resources were mentioned in the act.
Taking advantage of this, the NDA government has granted only Rs 1,500 crore so far.
The fact that the underground drainage works taken up in Vijayawada and Guntur were also included in this head on the pretext that these two cities also fall in the capital region has further infuriated the state.

FORESEEING FUTURE: TERMS OF REFERENCE OF 15TH FINANCE COMMISSION AFFECTING ANDHRA

Reducing states’ share of central taxes from the 42% that the Fourteenth Finance Commission had recommended and diverting it to union coffers.
Using 2011 population data outright or the increase in it’s weightage compared to what the 14th Finance Commission used
Reducing compensation to states due to GST losses.
Narrowing of or cancelling entirely, grants-in-aid provided against unmet administrative expenses and essential development.
Tying performance on central schemes to funding levels of states.