Need of Special category status for Andhra Pradesh: All you need to know
Special status for Andhra Pradesh: Andhra Pradesh has required special status status (SCS) of the Centre since it was decided to carve Telangana with the capital Hyderabad. State-wide protests, slogans shouting at Parliament, a private member’s bill and intense lobbying have not yet resulted in a favourable ruling.
Special Category State Status
Before turning to the question, let us look at what MCS means. The Fifth Finance Committee introduced SCS in 1969 by providing additional aid and tax relief to Jammu and Kashmir, Assam and Nagaland. The National Development Council (NDC) has established five guidelines for granting status: hilly and difficult terrain; Low population density or a significant proportion of the tribal population; Strategic location along borders with neighboring countries; Economic and infrastructural backwardness; And the unsustainable nature of public finances. Finally, eight other States were added to the list – Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura and Uttarakhand.
The SCS receives 30 per cent of normal assistance to the Centre and the remaining 70 per cent is allocated to other states based on their population, per capita income and budgetary outcomes. The SCS enjoy concessions on excise duties and customs duties and tax rates. In addition, the Plan panel may allocate more funds to these states to carry out Central System (CSC) and Special Projects projects, as appropriate. The SCS will have to spend 10 per cent on the CCS, while the rest will be borne by the Centre.
Andhra Pradesh Bifurcation
Back in Andhra’s case, the state lost its capital to Telangana and with that it lost its big piece of income. Before the bifurcation, Hyderabad alone generated Rs 70,548 crore as income.
Prior to the 2014 Lok Sabha elections, then Prime Minister Manmohan Singh assured that the Seemandhra (a term used to designate the coastal regions of Andhra and Rayalaseema) would be granted SCS status for a Period of five years.
But the insurance was purely oral. The bill that eventually became a law assured central assistance to develop a new capital for Andhra Pradesh, a separate High Court, ports and other infrastructure, and the Centre sponsored the irrigation project Polavaram, but had no mention on SCS status.
The Post-General Election Scenario
When Dr. Singh spoke in the Rajya Sabha of the SCS status in Andhra Pradesh, then the Minister of Parliamentary Affairs of the Union, Mr. Venkaiah Naidu, was in opposition. He demanded that the status be extended to 10 years, since the proposed reorganisation of the State of Andhra Pradesh requires Hyderabad to be the common capital for both states for 10 years. But the 2014 general election changed the parliamentary equation. Those in opposition were the ruling party now.
In the state, Telugu Desam Party that forged an alliance with the BJP snatch power. He independently trained the government and continues to be in NDA. Andhra Pradesh Chief Minister N. Chandrababu Naidu had great plans for the state and was expecting his ally at the Centre that he would support it.
The NDA government proposed amendments to the law, but it was seeking approval to create separate legislative councils in both states and a bill for the Polavaram project. Again, there was no mention of the granting of a special status.
Private Members’ Bill
At this stage, K.V.P. Ramchandra Rao, a member Rajya Sabha representing Congress moved a private member Bill seeking a special status in Andhra Pradesh.
During a brief discussion in Rajya Sabha, Finance Minister Arun Jaitley said that instead of granting him a special constitutional right, the government would “hold” Andhra Pradesh until ” It becomes economically stable.
“42% of Central revenue goes to the states, while the remaining 58% has to deal with defence, wages, loans, etc. We also have to support central projects. A deficit of 3.9% this year, “said Jaitley.
The question of the “delay” of a State has always been the subject of debate. A number of states, including Bihar, Jharkhand and Odisha, have demanded status, but successive governments categorically rejected these allegations. If a state is granted this status now, it will trigger more requests from other states. Although the TRS has not sought it now, it is possible that it requires an MCS status as it is the newest state in the country.
Andhra Pradesh only meets one of the five guidelines for awarding a special category. After the completion of the Commission’s planning and NITI Aayog’s takeover there was a drastic reduction in the allocation to the SCC and the difference between the funds allocated to SCS and the other States was significantly reduced.
It is obvious that what remains in the statute is the political mileage. If the Center allocates additional funds without naming the state as SCS, the BJP would claim it. But, this can win the anger of neighbouring states.
Although the Congress, the YSRC and the other opposition parties in the A.P. case accuse the TDP of being soft on SCS’s request, it will also seek credit if such status is granted.
Benefits of Special Status for Andhra Pradesh:
- 90% of central grants will be available: A good percentage of taxes, grants and loans will be available. A grant is something that does not need to be repaid while a loan has to be. In states without special status, the centre does not give subsidies of more than 30%. Whichever plan or program is chosen, 30% will be sponsored by the government while the remaining 70% will be supported. With a special status, 90% of the amount will be granted in the form of a grant and 10% will have to be borrowed.
- Huge industrial reductions: Already 11 states of India have a special status. They benefit from reductions due to special status. They benefit from enormous industrial discounts.
- Thousands of industries and the resulting employment opportunities are possible only through special status. Lakhs of people can find jobs because of status.
- Industrial units will benefit from a 100% exemption from excise duties if special status is granted. The exemption from income tax will also be granted. The reimbursement of penalties will also be possible. Attracted by these profits industries prefer to establish their units in this state to other states. Rupee spending crores lakhs will also reach the state. This will result in lakhs of jobs.
- 30% reduction will be granted on plant and machinery expenses. With the newly established industries, this will also apply to industries that were established before the announcement of a special status but are extending their establishment now.
- 3% discount will be granted on interest on working capital for establishment of industries. 50% reduction will apply on electricity industry costs for at least 20 years. These decisions will encourage aspirants within the state to create industries. Small and medium-sized industries will benefit from these rebates.
- A special status will change the structure of expenditure in infrastructure development for micro, small, medium and large industries. Central government agencies like ONGC and HPCL may also present themselves to create units here.
- Due to tax rebates, the cost of many things we buy can go down in half. If the 100% tax exemption is available for produced goods, people of our state can buy some goods and products much cheaper than people from other states.
- With sanctioned special status, our water projects will be built by the centre. The Central Government’s Accelerated Irrigation Benefits Program (AIBP) provides funding for water projects in the states. If States without special status receive grants from this program, a maximum of 25-50% of the grants can be given. But for states with special status, 90% of the funds will be born by the government. The central government will also support foreign loans related to projects receiving external assistance. 90% of the loan will be granted by the centre. Interest on the loan will also be paid by the centre.