The demand for granting Special Category Status (SCS) for Andhra Pradesh has got a fresh lease of life with the state Congress president YS Sharmila urging Chief Minister N Chandrababu Naidu to mount pressure on the Centre over the issue.
She also asked the Telugu Desam Party chief to withdraw support to the Central government if it does not accord Special Status as promised at the time of the bifurcation of the combined Andhra Pradesh to carve out a separate Telangana state in 2014.
In an open letter to the Chief Minister, Sharmila, who is the daughter of former CM of the combined AP late YS Rajasekhar Reddy, questioned Naidu as to why he was hesitating to take up the matter with the NDA leadership.
"Modi (PM Narendra Modi), who is enjoying power with your support should immediately fulfil state (united Andhra Pradesh) bifurcation promises. Your MPs should open their mouths in the Parliament Budget session,” she said in the letter.
She said SCS was the key to the prosperity of Andhra Pradesh. Pointing to Naidu’s oft-repeated concern that the State was burdened with heavy debt and there was a need to create wealth to wriggle out of the current financial crisis, the State Congress chief said the SCS was the ideal solution for it, as it would ensure the Centre’s contribution of 30% of the State’s funding needs. “This in turn would attract industries due to tax exemption like 100% excise and income tax relief, leading to the creation of jobs on a large scale,” Sharmila contended.
Political irony
In March 2018, Chandrababu Naidu’s TDP walked out of the NDA over the denial of Special Status to AP which was undergoing the pangs of bifurcation.
Six years later, Naidu is now a crucial ally of the NDA 3.0 and his support holds key to the stability and longevity of the coalition government. The TDP, with 16 Lok Sabha seats in its kitty, is the largest ally of the NDA.
In the changed circumstances, the Special Status issue is no longer relevant, particularly after the Centre made it clear that the policy of granting Special Status is a thing of the past. It will not be extended to any state in future, as per the recommendations of the 14th Finance Commission.
Neither Chandrababu Naidu nor any of his party leaders have been raising the issue now. Instead, they have been pushing for better financial packages and schemes for the state.
What is Special Category Status?
When Andhra Pradesh was divided to carve out a separate Telangana state in 2014, an oral assurance was given on the floor of the Parliament by then Prime Minister Manmohan Singh that the residual AP would be given Special Category status for five years to tide over the problems. This was mainly to compensate for the loss of revenue, and of Hyderabad, where much of the development was concentrated.
It was supported by BJP which included the promise in the manifesto. The idea was to handhold the successor AP since it would lose a significant amount of revenue as a result of Hyderabad going to Telangana, the new state that came into existence on June 2, 2014.
Special Category states would get funds from the centrally-sponsored schemes and external aid in the ratio of 90 per cent grants and 10 per cent loans, while other states get 30 per cent of their funds as grants. Besides, they would be given tax breaks and excise duty concessions to attract industries.
The SCS states enjoy special industrial incentives such as Income-tax exemptions, custom duty waivers, reduced excise duty, corporate tax exemption for a certain period, concessions and exemptions relating to GST, and lower state and central taxes
An irrelevant privilege now
However, the 14th Finance Commission did away with the distinction between general and special category states since it had taken into account the level of backwardness of states in the proposed transfer of funds to states. It recommended higher devolution of central taxes to the states.
The idea was that adequate resources would be allocated through tax devolution and grants to address interstate inequalities. The special category status was therefore restricted to the three hill states of Jammu and Kashmir, Himachal Pradesh and Uttarakhand and those in the Northeast.
It was also decided that a revenue deficit grant would be provided for certain states for which devolution alone would be insufficient. AP was one of the states that were to be given a revenue deficit grant.
While ruling out special status to AP in the light of the 14th Finance Commission report, the then Finance Minister Arun Jaitley, however, said the Centre was committed to granting the monetary equivalent of special status to Andhra and would bear 90 per cent of the share of schemes sponsored by the Centre.
Follow us
