Why does Andhra Pradesh need special status?

Special status for Andhra Pradesh is the solemn promise given, on the
floor of Parliament, by the then Prime Minister, Dr. Manmohan Singh. The
idea behind granting special status to the residuary state of Andhra Pradesh
is motivated by the fact that in the undivided state of Andhra Pradesh the
entire industrial and commercial development was concentrated around the
state capital, Hyderabadwhich territorially belonged to Telangana. Upper
most in the minds of the authors of bifurcation, at that time, was to ensure
Telanganas economic viability apparently to prevent any future demand
for re-unification a demand that is bound to raise its head sooner than
later, if the common man feels he is worse off in the separate state than in
the undivided state. That in fact is the reason why the entire revenue from
Hyderabad was generously credited in favor of Telangana irrespective of
which region the investments came from. Hence, there was an imbalance
that could only be corrected by giving impetus for a rapid industrial and
commercial development in the residual Andhra Pradesh and also help this
latter tide over its gaping budgetary shortfall of over Rs 12,000/- crores or
more annually.
Dr. Manmohan Singhs promise on the floor of parliament recognizes this
point of grievous injustice and announced a 5-year tax-concession for
industries set up in Andhra Pradesh from the date of bifurcation. The BJP
that criticized the UPA for the haphazard manner in which it went about
the bifurcation bill and cried hoarse about the injustice meted out to the
residual Andhra Pradesh, wanted the bar be raised to 10 years as the
industrial gestation period is fairly long. That is, the special status for
Andhra Pradesh is not meant to be forever. It is just meant to be a
temporary measure. Yet, the constitutional bodies like the National
Development Council and the Planning Commission found it to be against
rules and ruled it out altogether! And the BJP government smugly
acquiesced.
It is expected that the constitutional bodies and the present government
show utmost respect to a top most constitutional authority such as the
Prime Minister who gave his promise, not at a lunch-on or a dinner chat
with the parliamentarians but during an official session. If these bodies do
not show an iota of respect to democratic institutions, they are not just
undermining their own credibility but are actually deceiving people in the
name of governance. And when the promise is for a temporary measure
warranted by a specific situation, and when upholding democratic
conventions is at stake, is a technical scrutiny of constitutional conformity
necessary at all? By announcing governments decision on the floor of
parliament didnt the UPA government bestow on it the required
Constitutionality? After all, the promise comes with approval of the House
as the bill has been adopted following Prime Ministers promise! How
graceful it would have been if the NDC and Planning Commission simply
included in the list of their criteria one under the head exceptional
parliamentary provision? That would have allowed them both to respect
parliamentary institutions as well as justify the exclusivism in a rational
manner vis--vis the demands by other states.
Why is the Modi government not granting special category status to
Andhra Pradesh, though the BJP promised it and made unjust bifurcation a
major election plank?
Background:
A total of 11 states have been granted special category status based on
Gadgil-Mukherjee formula which has been revised over the years. The
criteria include hilly and difficult terrain, strategic locations along the
border, economic and infrastructural backwardness, and sizable share of
tribal population

The 11 states are: Assam, Manipur, Mizoram, Meghalya, Tripura,

Nagaland, Arunachal Pradesh, Uttarakhand, Sikkim, Himachal Pradesh,
and Jammu and Kashmir

Apart from Andhra Pradesh, Bihar, Jharkhand, Odisha, Rajasthan and

Chhatisgarh are also demanding special category status

Rajan Committee identifies Odisha as the least developed state, followed

by Bihar and Madhya Pradesh. Such recommendations strengthen the
aforementioned states to demand special status

My opinion on this question:

Consider the circumstances under which special status has been promised
to AP:

Congress desperately wanted to come back to power. It tried to retain the

power in Telangana by granting separate statehood. How do you think
congress can appease people on the other side who were opposing this
move? They promised special status for 5 years if they are brought back to
power. BJP promised to extend it to 10 years. This was clearly a political
move to get electoral votes to grab the power at centre.

Keep your emotions aside and think if AP finds itself in the league of
states which deserve special status. The only criterion it lacks in the
criteria listed above is infrastructural backwardness which is the resultant
of bifurcation as Hyderabad has geographically gone to Telangana.
However, this was compensated to an extent with the settlement of sharing
the capital for 10 years. If this alone gives the right to AP to demand
special status, then Chhatisgarh and Jharkhand should rightfully get status
as they too were deprived of their former capital cities.

Central governments expenditure plans take a hit when such freebies are
announced on states. Dont ignore the existing strain on governments
treasure because of major events happened recently like OROP scheme
and unanimous ruling in north eastern states to extend the special status
granted to them in the past.

Concluding my opinion on this issue, I dont see AP getting the privilege

of special status in the near future because there are no imminent elections
in AP and more importantly, other deserving states dont sit quiet when AP
gets the status.
Andhra Pradesh is asking for Special Category Status not Special Status,
theres a big difference between Special Status and Special Category
Status.
Special Status is guaranteed by the Constitution of India through an Act
passed by the two-third majority in both houses of the Parliament
(example J&K)
Special Category Status(SCS) is granted by the National Development
Council, an administrative body of the government.
What exactly is SCS?
Special category status is usually based on the recommendations of the
National Development Council (NDC).
What are the parameters?
Low resource base, hilly & difficult terrain
Low population density or sizeable share of tribal population
Backwardness, border states/ sharing the international border
Economic & infrastructural backwardness
Non-viable nature of state finances
Which States are receiving it right now?
Assam, Jammu and Kashmir, Nagaland, Arunachal Pradesh, Manipur,
Sikkim, Himachal Pradesh, Meghalaya, Tripura, Uttarakhand and
Mizoram. (Total 11)
What are the benefits which states get?
The Planning Commission allocates funds to states through central
assistance for state plans. Central assistance can be broadly split into three
components
Normal Central Assistance (NCA)
Additional Central Assistance (ACA)
Special Central Assistance (SCA)
NCA, the main assistance for state plans, is split to favor special category
states: the 11 states get 30% of the total assistance while the other states
share the remaining 70%.
The nature of the assistance also varies for special category states; NCA is
split into 90% grants and 10% loans for special category states, while the
ratio between grants and loans is 30:70 for other states.
For allocation among special category states, there are no explicit criteria
for distribution and funds are allocated on the basis of the states plan size
and previous plan expenditures.
Allocation between non special category states is determined by the
Gadgil Mukherjee formula which gives weight to population (60%), per
capita income (25%), fiscal performance (7.5%) and special problems
(7.5%).
Special category states also receive specific assistance addressing features
like hill areas, tribal sub-plans and border areas.
Beyond additional plan resources, special category states can enjoy
concessions in excise and customs duties, income tax rates and corporate
tax rates as determined by the government.
Who promised SCS to AP? Congress or BJP??
Answer: Both
Though special status is not part of the AP Bifurcation Act of 2014, passed
by Parliament when the UPA was in power, it was promised by the then
Prime Minister Manmohan Singh on the floor of Parliament in February
2014 to put the states finances on a firmer footing. However, there has
been no progress on the issue.
Congress promised AP SCS for five years, while the BJP in opposition
also joined the chorus and demanded that the period be extended to 10
years instead. (Nothing new for Politicians to promise things which they
will not be able to fulfill after coming to Power)
However after the BJP government came to power, there has been no
move to give SCS to the state. This has further angered the people of the
state.
Why AP is asking for SCS?
The split was a raw deal for AP, as it has no capital, no infrastructure and
no institutions in Seemandhra.
The special status has become an emotive issue as the truncated AP started
its post-bifurcation journey with a Rs 16,000 crore deficit budget and is
finding it difficult to mobilise resources to build the new capital city.
Hyderabad was not just the capital but also a rising IT hub with about 80-
90 per cent of jobs. Though AP got to share Hyderabad as the capital with
Telangana for 10 years, it now has the burden to build its own capital at
par with Hyderabad and provide facilities that will attract investments, to
keep the state going. Andhra Pradesh thus had lost the revenue from
Hyderabad and has the additional burden.
Why is BJP not granting SCS to AP?
This years revenue deficit is 3.9% and Govt has to take care of defence,
salaries, loans and support central sector schemes.
BJP also feels that though AP has lost revenue at this point of time. it will
be able to recover in coming years.
BJP believes though it is not going to grant SCS to AP but promised to
handhold the revenue deficit AP.
Granting SCS means that 90 per cent of a special states expenditure on
schemes would be borne by the Centre. This will be difficult to implement
and will lead to similar demands from other states (Bihar, Odisha,
Jharhand and Chattisgarh).
In the words of Arun Jaitley
Andhra Pradesh has lost revenue, even though in long run it is bound to
recover. For some time it will need handholding. Undivided Andhra was a
revenue surplus state. But the division created a situation where the more
lucrative part has gone to Telangana
As far as our commitment to honour each one of these commitments is
concerned it is absolute, there are no ifs and buts
Forty-two per cent central revenue goes to states. With rest 58% have to
take care of defence, salaries, loans... we also have to support central
sector schemes. After that central government has a deficit. This year it is
3.9%. In case there is larger economic management of the country, if there
is a crisis, then the central government has to spend more.
India is a union of states. The union has to survive so have India as a union
of states, you can't have a vulnerable union that India eventually becomes
only a confederation of states.
Central government must also have sufficient resources available for itself
after having supported state governments.
We can resort to political point scoring... this is a sensitive area.
We cannot give preferential treatment to any state, even if it is one ruled
by an ally of the BJP, as Andhra Pradesh is at present.
This will be difficult to implement and will lead to similar demands from
other states.
What does this mean to TDP ??
It is a political embarrassment to the ruling party which is an ally of BJP.
AP CM N Chandrababu Naidu has said that his party (TDP) will not pull
out of NDA. Instead he has suggested that the TDP will adopt a PPP
(plead, pursue and petition) approach to secure the special status for his
state.
In the words of CB Naidu, AP CM
"In what way is the special status linked to the 14th Finance Commission
grants? Have you given anything special to AP? It is not correct for Jaitley
to say they have given us so many funds. Even the revenue deficit has not
been bridged despite clear provision in the AP Reorganisation Act," Mr
Naidu said.
"He (Jaitley) says injustice has been done to AP. What is that they have
done to undo this injustice," the Chief Minister questioned.
Mr Naidu, however, remained evasive when asked if he would now
exercise the "two options" he had reportedly given to Mr Jaitley during a
meeting a few months ago.
"I have two options. One, to get out of the coalition. Two, to see how long
we can survive (on our own)", he had reportedly told Mr Jaitley.
"We are taking every step cautiously. But injustice is being done to AP, so
we will see what is the best option (for us)," he added.

As a rational Indian and also being from Andhra Pradesh (Vizag), Ill try
to express my view which might not be the same for most of the people in
AP.
It is complete hypocrisy from BJP. They knew from the beginning that
special category status to AP will create troubles in the form of other states
like Bihar, Orissa, Rajasthan and Chattisgarh too demanding for SGS
which will no longer be Special if given to too many states.
Of the 5 guidelines laid out by NDC to grant SCS AP meets only one
(Economic & infrastructural backwardness). So technically AP shouldnt
be pressing for SGS.
After Planning Commission is taken over by NITI Ayog, there has been a
drastic cut in the allocation to CSS, and difference between funds allotted
to SCS and other states have been considerably reduced. So why fight for
something which is already being reduced considerably.
The fight for SGS is to gain political mileage, both the opposition and
ruling parties in AP are equally responsible for this.
Instead AP should focus on important things like financial packages and
tax breaks (not the regular grants which Central Govt is supposed to give),
railway zone, better planning and execution. Issues like water sharing and
power sharing should be given more importance.
The Waltair division of East Coast Railway (ECoR) is among the top five
divisions in the country, in terms of revenue generation for the Railways
and a separate railway zone has been a long-pending demand. BJP should
stop its hypocrisy and grant this zone as early as possible.

Better planning and execution of development projects in the new

state. The big mistake which AP did years ago is focusing on Hyderabad
alone. They neglected other cities and towns. Theres something the entire
Country can learn from Kerala. The state follows decentralized
development, which means the entire state is slowly but equally getting
developed. This is the reason there are no villages or huge cities in Kerala.
Every modern facility like hospital, super market, school, bank etc are
accessible within 5 to 15 km from any place in Kerala. Maximum distance
to an airport from any part of Kerala is 100 km. This is better than
centralized development in which one city gets extremely developed,
while most other parts of the state remain poor.
Centre should stop behaving like a saint (to get a good image inand should
help the state of AP by mobilizing resources and cutting the delays in
releasing the funds
What is the advantage of special status over special package given for
Andhra Pradesh?
Forty-seven years after it was first introduced, this special category has
ceased to be anything special.
If Andhra Pradesh, whose demand for SCS status has now reached a peak,
does manage to get it, it would only help the ruling Telugu Desam Party
(TDP) boast of extracting a major concession which it will never get
from the Centre. The BJP, an ally of TDP, will claim that its the Modi
government that is doling out that concession. On its part, the Congress
will say that it was, after all, an assurance given by Manmohan Singh in
2014. Then the party will be struck by amnesia: It will forget to mention
that Singh had never come good on his hasty promise.
Till 2014-15, the SCS status indeed meant a bonanza of funds from the
Centre. But the Centre virtually did away with the economic privileges
attached to the SCSs from 2015-16, after the Fourteenth Finance
Commission raised the share of states in central taxes from 32 percent to
42.
Yet the Centre can now take a political decision by bestowing this
privilege on AP and still find enough reasons to deny the state the
economic benefits that supposedly go with it.
Andhra Pradesh Chief Minister Chandrababu Naidu must know that its
not the special label that his state needs. What it needs is cash, and here
is how he can get it. But lets begin at the beginning.
It was in 1969 that the SCS was for the first time granted to Jammu and
Kashmir, Assam and Nagaland. (This is different from the Special Status
that J&K enjoys under Article 370.) Later, this indulgence was extended to
eight other states: Arunachal Pradesh, Himachal Pradesh, Manipur,
Meghalaya, Mizoram, Sikkim, Tripura and Uttarakhand.
It was the National Development Council (NDC) which bracketed states in
this category, based on criteria like hilly and difficult terrain, unviable
finances, low population density or huge tribal populations and strategic
location on borders with neighbouring countries.
The grounds on which Naidu has been clamouring for it is that the
bifurcation of the state and creation of Telangana left Andhras economy in
a mess. While the loss of Hyderabad to Telangana not only led to a loss of
nearly Rs 70,000 crore in revenue for Andhra, it also means that the state
will have to build a new capital at Amaravati at a huge cost.
Naidus demand is prompted by the fact that the largesse that SCSs
received till last year was indeed significant. In 2014-15, for instance, the
centres Plan Budget, accounting for a quarter of all the Centres budgetary
resources, was spent this way:
59 percent of the Plan Budget went as Central Assistance to State Plans.
41 percent went to schemes of Central departments.
Out of the 59 percent Central Assistance to State Plans, 44 percent was
transferred to states for Centrally Sponsored Schemes and 15 percent as
Block Grants to states.
Block Grants had several sub-categories that included Normal Central
Assistance, Special Central Assistance and Special Plan Assistance.
In 2014-15, the SCSs received 56.25 percent of all the Normal Central
Assistance, 90 percent of it as grant and 10 percent as loan. (The General
Category states got the remaining 43.75 percent, but only 30 percent as
grant).
And as they always did, only the SCSs got the Special Plan Assistance (90
percent of a projects cost as grant), Special Central Assistance untied to
any projects (100 percent as grant) and a 90 percent grant in the Centrally
Sponsored Schemes.
All this dramatically changed in the 2015-16 budget.
While states began to receive a higher share of 42 percent of central taxes,
the Centre diluted the benefits that accompanied the SCS status and even
slashed the outlay for Centrally Sponsored Schemes.
The higher share in central taxes was also precisely the reason the Modi
government cited for rejecting Chief Minister Nitish Kumars demand for
SCS label for Bihar in 2014. Its another matter that states including Bihar
are complaining that despite the higher tax share, they are getting less cash
from the Centre than before.
Reddy is right. Tamil Nadu Chief Minister Jayalalithaa bristled in 2013 at
the very possibility of the UPA government according special status to
Bihar, ruled by a Congress ally.
And after Andhra Pradesh was truncated and the NDA government took
reins at the Centre, she shot off a letter to Modi, cautioning him against
acceding to the demand of his alliance partner Naidu. She said the Centre
must ensure a level-playing field for states.
Any concessions that Modi will offer Naidu will raise her hackles. And
Nitish Kumar, as well as the CMs of many states like Odisha, Jharkhand
and Rajasthan who have been demanding the special tag, too are sure to
cry foul.
Modi knows better than to commit political hara-kiri by conferring on
Naidu the special privilege even in its diluted form.
On his part, Naidu would be wise to demand, instead of a special status
that doesnt ensure funds, a special package that does. He must make
sure that Modi would make good the commitments that Manmohan Singh
made in the Andhra Pradesh Reorganisation Act 2014 in terms of
infrastructure development in the state. The TDP leader would also
perhaps be within his rights to demand that the Centre shell out more cash
by way of more Centrally Sponsored Schemes in Andhra Pradesh.
Top Ten Benefits Of Special Status
the top ten benefits ensured by the sanction of special status.
1) 90% of central grants will be available.
Good percentage in taxes, grants and loans will be available. A grant is
something that does not need to be paid back while a loan has to be. To the
states without special status, the centre does not give grants more than
30%. Whatever scheme or programme is taken up, 30% will be sponsored
by the Government while the rest of the 70% should be taken as loan. With
special status, 90% of the amount will be given as grant and 10% has to be
borrowed.
2) Huge industrial discounts
Already 11 states of India have special status. They have benefited with
discounts due to special status. They are enjoying huge industrial
discounts.
3) Chandrababu's statement that special status and industrial discount are
two mutually irrelevant topics is false. In the history of India, no state has
enjoyed such huge discounts without special status. Chandrababu's
deliberate release of wrong information is unfair.
4) Thousands of industries and resulting employment opportunities are
possible only due to special status. Lakhs of people can find jobs due to
the status.
5) Industrial units will have 100% excise duty exemption if special status
is given. Income Tax exemption also will be given. Fright reimbursement
also will be possible. Attracted by these benefits industries will prefer to
establish their units in this state to the other states. lakhs of crores of
rupees' expenditure also will reach the state. This will result in lakhs of
jobs.
6) 30% discount will be given on the expenditure on plants and machinery.
Along with newly-established industries, this will also apply to those
industries which were established before the announcement of special
status but are extending their establishment now.
7) 3% discount will be given on interest on working capital for
establishment of industries. 50% discount will apply on power charges of
the industries for not less than 20 years. These decisions will encourage
aspiring businessmen within the state to set up industries. Medium scale
and small scale industries will benefit from these discounts.
8) Special status will change the expenditure pattern in the arrangement of
infrastructure creation for micro, small, medium and large scale industries.
Central Government agencies like ONGC and HPCL may also come
forward to set up units here.
9) Due to tax discounts, the cost of many things we buy may come down
by half. If 100% tax exemption is available for goods produced, the people
of our state may buy certain goods and commodities much cheaper than
the people of other states.
10) With special status sanctioned, our water projects will be built by the
centre. Accelerated Irrigation Benefit Programme (AIBP) of the central
Government offers funds to the water projects in the states. If the states
without special status receive grants from this programme, a maximum of
25-50% grants may be given. But for the states with special status, 90% of
the funds will be born by the Government. The central Government will
also bear the foreign loans related to externally aided projects. 90% of the
loan will be given as grant by the centre. The interest on the loan also will
be paid by the centre.
Special Category Vs Special Package
Special Category Vs Special Package
Question: Which is better for states-seeking special category status or a
special package? Elaborate with examples.

Economic benefits under the Special Category status are minimal and have
diluted over the years

States would be better off seeking special package

Case for Special Category

- Numerous states have sought Special Category status in recent times

- However, FFC has increased tax devolution to states by 42% of the

divisible pool of central taxes eliminating the need for special categorising

- Under the D. R Gadgil formula for distribution of central plan assistance

that was implemented during the 4th 5 Year Plan, Assam, J&K and
Nagalands needs are to be met first.
- HP, NE states and other NE states and Sikkim were also included in the
category

What is Special Category?

Special Category has been decided in the past by the Union government to
states having the following characteristics based on NDC
recommendations:

- Hilly terrain

- Low Population Density and sizeable share of tribal population

- Strategic location along borders with neighbouring nations

- Economic and infrastructure backwardness

- Non viable nature of State Finances

- As per the revised Gadgil Mukherjee formula, 30% of the normal central
assistance was earmarked for Special Category states and remaining 70%
is allocated to General Category States

- Special Category States were entitled for providing assistance in grant

loan ratio of 90:10 as against 30:70 ratio for other States

- Special plan assistance for projects (90% ) and untied special central
assistance (100% grant) were provided only to Special Category states

- Other benefits to Special Category states include assistance for externally

aided projects in grant loan ratio of 90;10 while such assistance is given to
other states on a back to back basis

- Under AIBP, Special Category states include assistance for 90% of the
project cost as against 25% for others

Case Against Special Category

- CSS contributes less for Special Category States especially NE

- Though Special Category States are provided with central incentives for
industry promotion, there is no overt linkage between incentives and
special status

- Incentives given to special category states like HP and J&K have more to
do with backwardness and less with status

- Several changes introduced in the Union Budget 2015-2016 have diluted

the benefits of Special Category states

- Centre has dispensed with normal plan assistance, special central

assistance and special plan assistance from 2015-2016

- Few externally aided projects are there for Special Category States

- Union Budget has reduced allocations under AIBP from INR 8992 crore
in 2014-2015 to INR 1000 crore, for example

- Benefits of matching contributions for Special Category states for CSS is

not likely to be substantial with reduced assistance to State Plans by 40%
to INR 1,96,743 crore in 2015-2016

- Benefits for special category status states is minimal now; special

packages are more beneficial.

Facts and Stats

- Special Status was recently demanded by Bihar

- A 2013 committee under Dr. Rajan suggested that States given
classification as Special Category States and those seeking inclusion
would find their needs met by basic allocation more adequately for each
state and categorisation of some as least developed

- Committee also recommended the political problem of granting special

status to new States as this would result in more demands from other states
and lead to further benefit dilution

Supporters
The protests that gathered momentum on social media among students and
youth just like Jallikattu Protests soon saw supporters from all quarters. A
number of Actors, including the Jana Sena Chief Pawan Kalyan supported
the protesters, and also insisted that it be conducted in a peaceful way. The
opposition political party of Andhra Pradesh, YSRCP and its chief YS
Jagan Mohan Reddy are the fore front of the protests. Jagan has also
announced that his party MPs may resign and seek fresh mandate after the
upcoming Budget session in June.[5]
The communist Party of India also declared their support by holding a
candle light rally demanding SCS for AP.
Tollywood Celebrities Tweets In Support of AP Special Status Protest
This protest gains momentum after actor and Jana Sena Party chief Pawan
Kalyans series tweets in support to AP Special Status. Already hashtags
#APDemandsSpecialStatus and #APSelfRespectMoment are
trending on social media. Following the path of Pawan, many celebrating
from Tollywood like Manchu Manoj, Varun Tej, Renu Desai, Sai Dharam
Tej and many other celebs raised their voice in support
of #APDemandsSpecialStatus. See Tollywood celebs Tweets in the
support of silent protest below.
Renu @renuudesai said I can only say that I believe in @PawanKalyan
and he will always have my unconditional support for public welfare!
#APDemandsSpecialStatus.
Varun Tej @IAmVarunTej Will be supporting anything tht is for the
welfare of the people of our states! I Support the Special Status of AP!
#APDemandsSpecialStatus.
Sai Dharam Tej @IamSaiDharamTej Its time for us to be united and
fight for what we were promised and deserve #ApDemandsSpecialStatus
#SilentProtest.
Sundeep Kishan @sundeepkishan Will be taking part in the Silent
Protest in Vizag on the 26th,to do my bit as a responsible citizen..pls join
us
Nikhil Siddhartha @actor_Nikhil In Democracy its our right 2 protest
but In a peaceful way. 26th Vizag Rk Beach, the place 2 Let ur voice b
heard. #APDemandsSpecialStatus.
Navdeep @pnavdeep26 Me too! RT @PawanKalyan:
#APDemadsSpecialStatus ,If youth of AP are planning to do a silent
protest on 26th Jan at RK Beach , Vizag, #Janasena Supports them.
Sampoornesh Babu @sampoornesh My Ticket is confirmed to Vizag.
See you there. Hum Jeetne tak ladenge..special status leke hi rahenge. AP
DEMANDS SPECIAL STATUS