RSTV – The Big Picture: Special Status: Andhra’s Demands, Larger Issues

RSTV – The Big Picture: Special Status: Andhra’s Demands, Larger Issues

 

Guests: K.A. Badarinath, Policy Editor, Financial Chronicle ;

Parsa Venkateshwar Rao Jr, Senior Journalist ;

C.N. Rao, Political Analyst ;

Gopal Krishna Agarwal, National Spokesperson, BJP

 

Importance of this Episode:

 

  • Political gatherings and social associations in Andhra Pradesh have framed a joint action committee (JAC) in an offer to change their campaign for extraordinary class status for the state into a noteworthy social development

 

Key points with respect to the Issue:

  • In lieu of tolerating the bifurcation design and to make up for income misfortunes, essentially because of Hyderabad turning into the capital of the new state, Telangana, Andhra was guaranteed SCS.
  • Union denied the requests referring to the suggestions of the Fourteenth Finance Commission
  • Suggested that the resource gap of each state be filled through ‘tax devolution’
  • Centre to increase its offer of assessment incomes to the states from 32% to 42%.
  • If devolution alone couldn’t cover the income gap for specific states the Center could give a revenue deficit grant to these states. This was additionally proposed to Andra Pradesh.

 

The Andhra Pradesh Reorganization Act, 2014:

  • The Andhra Pradesh Reorganization Act, 2014 under which the province of Andhra Pradesh was bifurcated in 2014, doesn’t specify ‘special category’, however says that the Center would help Andhra Pradesh connect any revenue gap by influencing appropriate grants and furthermore to guarantee that sufficient advantages and incentives in the form of special development package are given to the regressive regions of that State.
  • Be that as it may, Former Prime Minister Manmohan Singh had in the Rajya Sabha guaranteed that Andhra Pradesh would be allowed extraordinary classification status for a time of five years.
  • Other promises from the Bifurcation Act and the Special Package promised
  1. Bridging the revenue deficit
  2. Setting up of a railway zone, steel plant, port
  3. Supporting the construction of Greenfield capital
  4. Development of infrastructure in backward districts
  5. Construction of Polavaram project
  6. 90 percent central funding
  7. Industrial incentives similar to the entitlements in case of special category states
  8. Satisfactory funding for national educational institutions

 

Special Category Status (SCS)

Background: 

  • Fifth Finance Commission introduced SCS in 1969 giving Jammu and Kashmir, Assam, and Nagaland additional Central assistance and tax concessions. 
  • The SCS are allotted 30 per cent of Normal Central Assistance and the remaining 70 per cent is split among other States based on their population, per capita income and fiscal performance.
  • The SCS enjoy concessions in excise and customs duties and income tax rates.
  • In addition to this, the Plan panel may allot more funds to these States to carry out centrally sponsored schemes (CCS) and special projects, if any.
  • The SCS will have to spend 10 per cent for CCS, while the rest will be borne by Centre. (If the special category status provision been granted to AP, the state would have received funding for Centrally sponsored schemes (CSC) in the 90:10 ratio with 90% of the funds coming from the Centre as against 60% for normal category states.)

 

SCS granted by: National Development Council (NDC), a NITI Aayog body

States received SCS: Jammu and Kashmir, Assam, Nagaland, Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura, and Uttarakhand 

 

The National Development Council (NDC) laid five guidelines to grant the status:

  • Hilly and difficult terrain
  • Low population density or the presence of sizeable tribal population
  • Strategic location along international borders
  • Economic and infrastructural backwardness
  • Non-viable nature of state finances 

 

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