The no-confidence motion that the TDP had unsuccessfully brought against the Modi Government was over the refusal of the Centre to accord special category status (SCS) to Andhra Pradesh, which would have entitled the State to a range of financial benefits. The TDP claimed that the Modi regime had not only gone back on its own assurances but also failed to honour the commitments that existed in the Andhra Pradesh Reorganisation Act of 2014. In response, the Bharatiya Janata Party-led NDA Government rubbished the charge and said that every single commitment made in the Act had been either honoured or was in the process of being met.
The issue of granting SCS had reached the Supreme Court too, where the Centre had filed a counter-affidavit stating its position unambiguously, in response to a plea by a Telangana Congress leader who sought clarity on the matter. The Modi Government made the following two points: That the SCS could not be given to Andhra Pradesh following the acceptance of the recommendations of the 14th Finance Commission, and that notwithstanding this position, the Centre had implemented a social financial assistance package for the State, extending all financial benefits which would have been due in the case of SCS.
The Centre pointed out that it had released Rs 15,970 crore to Andhra Pradesh (2014-18) out of the post-devolution revenue deficit grant of Rs 22,113 crore for 2015-20 on the recommendations of the Finance Commission. Of the State’s revenue gap of roughly a little over Rs 4,000 crore, the Centre had paid close to Rs 4,000 crore, while the balance was being processed. In addition, the Modi regime had given Rs 2,500 crore towards the construction of Andhra Pradesh’s new capital, Amaravati; it said in the affidavit that another Rs 1,000 crore would be sanctioned in the coming three years at the rate of Rs 333.30 crore per year.
It is obvious that, despite this flow of monetary help, the Chandrababu Naidu Government of Andhra Pradesh has stuck to its demand on the SCS nomenclature as a matter of ego. In a bid to counter the facts the Centre has presented, it has claimed that the SCS would have led to additional gains for Andhra Pradesh, including tax incentives for rapid industrial growth. But this is not true. In the past, when States were given SCS, they became entitled to 90 per cent of funds that centrally sponsored schemes required — as opposed to 60 per cent of the money that non-SCS States received. Besides, the Centre assists the SCS States in raising of funds through agencies such as NABARD etc at affordable rates.
Having been a beneficiary of the devolution of funds pursuant to recommendations of the 14th Finance Commission, Andhra Pradesh, like any other State, cannot now reject the other major aspect — that of the panel effectively scrapping the SCS concept. The SCS is in simple terms a discretionary power which the Centre had enjoyed to dole out special favours to States. But this power ceased to exist once the Planning Commission was abolished and replaced with NITI Aayog. In the past, States were given SCS based on a host of parameters, including its geography (hilly or difficult terrain, for example), low population density, share of tribal population, economic or infrastructural backwardness etc. With the acceptance of the 14th Finance Commission recommendations in 2015, the Centre has switched to other forms of incentives such as special financial packages for deserving States — and Andhra Pradesh has been one of them.
It may be recalled that Chandrababu Naidu had taken offence at Union Minister for Finance Arun Jaitley’s categorical rejection of the SCS demand and decided to pull out from the NDA. However, Jaitely had also made it clear that the Centre was committed to giving the requisite funds (90 per cent as laid down for SCS States) to Andhra Pradesh through other means such as external agencies. The Centre had also extended its assistance in raising funds from organisations such as NABARD, HUDCO and commercial banks, and asked the Andhra Pradesh Government to create a special purpose vehicle (SPV) for the purpose.
Only two years ago, Chandrababu Naidu had expressed satisfaction over the Centre’s announcement of a special financial package for Andhra Pradesh. He had then also stated that while he would have been “happier” with the SCS status, the Union Government must continue to monetarily assist the State and do “whatever is possible as per law”. He had applauded Jaitley for announcing the special package, saying that the people of Andhra Pradesh had been ‘waiting for this for many days…” Besides other things, the special package included the full funding of the Pollavaram irrigation project. Significantly, while the project was to be entirely centrally funded, the executing authority would be the State regime. At that point, Naidu had shown understanding of the Centre’s position with regard to the SCS and appreciation of its commitment to extend all financial help to the State.
Naidu had then taken a sensible position. He realised that while the SCS was not possible, he was nevertheless getting all the financial aid that an SCS State would have got. What made him change this stance later is competitive politics in the State. He was being accused by both the State unit of the Congress and YSR Congress leaders, besides those of the Left, of having capitulated to the Centre and compromised the State’s interests. There was no capitulation, nor had there been any compromise, but politics being politics, Naidu had to demonstrate muscle. He is one of those Chief Ministers who understands not just politics but also finance. When he puts on his finance hat, he will acknowledge, even if in private moments, that Andhra Pradesh is not being denied anything that an SCS would have fetched it.
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