News Excerpt:
The demand for special status for Andhra Pradesh is back in the political limelight. Is the State qualified to be granted special status?
More About the News:
- The Andhra Pradesh Reorganisation Act, 2014, which bifurcated unified Andhra Pradesh into two States, was notified on March 1, 2014, and came into force on June 2, 2014.
- While the Act had specified many things, there was no mention of giving a Special Category Status (SCS) to Andhra Pradesh. Now with the completion of the 2024 Lok Sabha elections, the demand for SCS to Andhra is again gaining attention.
- After the reorganization of Andhra Pradesh, it was promised that the special category status (SCS) would be extended to the state of Andhra Pradesh for five years.
- However, the NDA government under Narendra Modi put it on the back burner saying that Andhra Pradesh does not qualify for Special Category Status (SCS).
Why does Andhra Pradesh not qualify for the SCS?
- The concept of SCS was introduced in 1969 by the 5th Finance Commission to provide special grants to states facing socio-economic issues and geographical disadvantages like hilly terrain, low population density, etc.
- Five key factors determine eligibility for SCS:
- States with a majority tribal population
- Low population density
- Hilly states and those near international borders
- States with socio-economic and industrial backwardness
- Lack of adequate state finances
- Currently, 11 states have SCS: Arunachal Pradesh, Assam, Himachal Pradesh, J&K, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand.
- It was argued that Andhra Pradesh does not meet the qualifying criteria for SCS based on the above factors.
- The Finance Commission had also annulled the SCS for new states as it equated SCS with the general category status.
- While denying full SCS to Andhra Pradesh, the Central government offered a special package instead as an alternative assistance measure.
Does Andhra still qualify for SCS?
- The 14th Finance Commission did not categorically rule out granting special category status (SCS) to states. It was left to the discretion of the Union government.
- Instead of SCS, the 14th FC increased tax devolution to states to 42% and introduced revenue deficit grants for states facing revenue gaps, which Andhra Pradesh has received.
- SCS typically involves central funding of 90% and state funding of 10% for approved projects/schemes.
- N.K. Singh, the 15th FC chairman, has stated that granting SCS is still a possibility for Andhra Pradesh if decided by the Union government.
- The Union government can refer the SCS issue for Andhra Pradesh to the 16th Finance Commission and NITI Aayog for consideration.
- So while SCS was initially denied to Andhra after bifurcation, the door is not completely closed, and it can potentially be reconsidered based on the Centre's decision.
Why is SCS in the limelight again?
- Andhra Pradesh has been facing a significant revenue deficit since the bifurcation of the state.
- The debts of the State have shot up enormously. Most of its projects and development have come to a standstill and on top of that the building for a new greenfield capital at Amaravati is pending and needs funding.
- With the Telugu Desam Party (TDP) rejoining the NDA alliance at the Centre, which lacks a clear majority, there is hope that the TDP MPs can leverage their position.
- This could be an opportune time for Andhra Pradesh to renew its push for special category status (SCS) from the Central government.
- Obtaining SCS is viewed as crucial for the overall development of Andhra Pradesh.
