Andhra Pradesh after a long struggle. On February 20, 2014, when the Andhra Pradesh Reorganisation Bill was passed by the Rajya Sabha, the then prime minister Manmohan Singh said that as part of the bifurcation, Andhra would be given
special category status (SCS) for five years to “put the state’s finances on a firmer footing”.
But that was not to be. As a result, SCS and assurances in the 2014 Act are turning out to be the biggest issue in Andhra in the run-up to the general and state elections, which will be held concurrently. Andhra has 25 Lok Sabha seats and Telangana 17.
Though most voters may not know what exactly SCS means, it has become an emotive issue in Andhra Pradesh. On February 11, Chief Minister N Chandrababu Naidu held a hunger strike at New Delhi’s Andhra Bhavan, calling for the grant of SCS and release of more special assistance funds by the Centre.
Naidu’s Telugu Desam Party was part of the ruling National Democratic Alliance till March 2018, when it pulled out saying the Centre had not given Andhra its due.
Ever since, Naidu has been trying to corral a grand alliance of national and regional parties against the Bharatiya Janata Party. Several opposition leaders, including Rahul Gandhi and Arvind Kejriwal, made an appearance at Naidu’s protest.
In the four decades to 2010, 11 states, including Jammu & Kashmir and all northeastern states, were granted SCS on the basis of factors like economic backwardness, hilly terrain and low population density. SCS meant more funds — the Centre would contribute 90% of the funds for a centrally sponsored scheme, instead of the 60% it gave other states — and tax incentives.
But the 14th Finance Commission, tabled in Parliament in February 2015, did away with the distinction between states with SCS and other states and instead recommended a higher share of taxes — 42% instead of 32% — for states and revenue-deficit grants for those states in need, like Andhra. The Centre said this meant SCS had ceased to exist so there was no question of granting Andhra the status.
Dinakar Lanka, a spokesperson for the TDP, says SCS was a precondition for the passage of the AP Reorganisation Bill and hence it should be accorded to the state. K Nageshwar, a political observer, concurs: “Special category status to AP has more sanctity as it was linked to an act in Parliament whereas the other states got the status through an executive executive order.” YS Jagan Mohan Reddy’s YSR Congress Party, the chief opposition party in Andhra, has also been trying to gain political capital out of the issue.
Sajjala Ramakrishna Reddy, general secretary of YSRCP, says the state needs SCS to level the playing field, let alone regain advantages it once enjoyed. But he is quick to flay the TDP government. “Demand for special category status has now become a political drama for TDP, which sailed with the BJP and enjoyed power at the Centre for four years, compromising on the state’s interests.” The BJP and the Congress are minor players in Andhra.
The other key issue in the Andhra-Centre tussle is over funds. The Union government has since 2014-15 given over Rs 14,000 crore to Andhra as special assistance, according to the government’s response to a question in the Lok Sabha in July 2018. But Andhra says the funds are only a fraction of what it sought. For instance, it had sought around Rs 16,000 crore to meet its revenue deficit from the bifurcation in 2014-15, but says the Centre has agreed to give only a fourth of that. Andhra also complains that it will get less than a tenth of the Rs 24,350 crore it demanded for the development of seven backward districts.
Andhra Pradesh has also been asking for more funds for the Polavaram irrigation project and to build its capital, Amaravati, for which the Centre has given Rs 1,500 crore and will dole out another Rs 1,000 crore. The Centre has also transferred Rs 1,000 crore for infrastructure works in neighbouring Vijayawada and Guntur. The BJP’s Andhra president Kanna Laxminarayana says the special assistance offered by the Centre is far higher than what AP would have got under SCS.
Despite the disadvantage of losing Hyderabad, an information technology and pharma hub, in the bifurcation, Andhra has grown at nearly 10% annually between 2013-14 and 2017-18, compared with Telangana’s 8.6%, and is estimated to have a fiscal deficit of 2.8% in 2018-19, compared with Telangana’s 3.5%.
While it will take a while for Andhra to match Telangana in IT and pharma, the coastal state has an edge in manufacturing, says RVS Rudraraju, chairman of the Andhra chapter of the Confederation of Indian Industry. Isuzu Motors, Kia Motors, Ashok Leyland and TCL are among the companies that have or will set up plants in Andhra.
But Laxminarayana Thunga, a political analyst, points to other metrics like per capita income where Andhra needs to improve, which is predicated on creation of more jobs. Andhra’s annual per capita income in 2017-18 was around Rs 1,42,000, the lowest in south India.
With just weeks to go for the polls, both the TDP and YSRCP will be using Andhra’s demands as a rallying cry but it will be interesting to see which party reaps the electoral rewards.