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Why is Andhra Pradesh seeking special category status?
Monday, May 27, 2019 IST
Why is Andhra Pradesh seeking special category status?

When Andhra was bifurcated, it sought special category status on the grounds that it was at a disadvantage, especially because of the loss of its capital.

 
 

With the TDP pulling its ministers out of the Union government over denial of special category status to Andhra Pradesh, ET Magazine takes you through what the term means, the crisis and its implications.
 
What is special category status and why was it given to some states? 
 
Special Category Status used to be granted to some regions that have historically been at a disadvantage, compared to the rest of the country. This decision was taken by the National Development Council (NDC), a body of the former Planning Commission, and was based on various factors, such as hilly and difficult terrain, economic and infrastructure backwardness and non-viability of the state’s finances. Jammu & Kashmir was the first state to get special category status, and another 10 states were added over the years, with Uttarakhand being the last in 2010. 
 
What are the benefits for these states? 
 
Those states that have been accorded special category status enjoy several benefits such as special central assistance grants, assistance for externally aided projects being given as 90% grants (as opposed to loans, for others), excise duty concessions and other tax breaks to attract industry to their territory. The state share in centrally sponsored schemes is also lower, compared to general category states. 
 
Why was Andhra asking that it be included in this list? 
 
When Andhra Pradesh was bifurcated in 2014, it sought special category status on the grounds that it was at a disadvantage, especially because of the loss of capital Hyderabad to Telangana. The then-prime minister, Manmohan Singh, had told the Rajya Sabha that special category status would be extended to Andhra Pradesh for five years, to help put the state on a firmer footing. But the 14th Finance Commission changed this. 
 
Why did the category cease to exist, as FM Arun Jaitley mentioned?
 
The 14th Finance Commission did away with distinction between general and special category states, as it had taken into account the level of backwardness of states in the proposed transfer of funds to states. The idea was that adequate resources would be allocated through tax devolution and grants to address interstate inequalities. The special category status was restricted to three hill states 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. Andhra was one of the states that were to be given a revenue deficit grant. 
 

 
 

Why did the issue flare up now? 
 
The demand for special category status has been on the boil ever since Andhra came into being. Earlier in the week, Andhra CM Chandrababu Naidu threatened that it would walk out of the BJP-led National Democratic Alliance. Naidu asked MPs from his Telugu Desam Party to continue protesting in Parliament till the demand was met. On Thursday Union Civil Aviation Minister P Ashok Gajapathi Raju and Minister of State for Science and Technology Y Satyanarayana Chowdary, both TDP members, resigned, in line with what Naidu had announced the previous night. The BJP ministers in Naidu’s Cabinet in Andhra also resigned. However, Naidu is yet to confirm whether his party was pulling out of the alliance. 
 
What is the Centre’s defence? 
 
Jaitley said the Centre would honour the commitments made to Andhra in 2014 but the granting of special category status itself was restricted by the 14th Finance Commission. However, Jaitley said the government was committed to granting the monetary equivalent of a special category status to Andhra and would bear 90% of the share of schemes sponsored by the Centre, with the state having to pitch in with only 10%. Jaitley also said Rs 4,000 crore had been granted to Andhra to bridge its revenue deficit and only Rs 138 crore was left. 
 
What happens now?
 
As TDP has only 16 members in the Lok Sabha and 6 in the Rajya Sabha, there is no question of any threat to the BJP-led government, if it pulls out. Nor is the stability of the Andhra government at stake, since the TDP won 102 of the 175 Assembly seats. The move is seen more as political posturing by Naidu with the 2019 elections in mind, when he can hold the BJP accountable for not granting the state special category status. Naidu’s principal opposition, the YSR Congress led by Jaganmohan Reddy, had also been vocal in protesting the Centre’s decision, and Naidu could hardly let his rival gain an advantage in the contentious issue. 
 

 
 
 
 
 

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Shibu Chandran
2 hours ago

Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

November 28, 2016 05:00 IST
Shibu Chandran
2 hours ago

Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

November 28, 2016 05:00 IST
Shibu Chandran
2 hours ago

Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

November 28, 2016 05:00 IST
Shibu Chandran
2 hours ago

Serving political interests in another person's illness is the lowest form of human value. A 70+ y old lady has cancer.

November 28, 2016 05:00 IST


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