- The Central government filed a counter affidavit in the Supreme Court expressing its inability to give Special Category Status (SCS) to Andhra Pradesh and said all commitments under the A.P. Reorganisation Act (APRA), 2014 had been addressed.
Petition for clarification:
- A writ petition filed in the apex court by Telangana Congress leader, who pleaded for clarity on issues concerning Telangana and Andhra Pradesh post-bifurcation.
- He seek status of various commitments made by central government like setting up of a steel plant at Bayyaram and the extent of submergence likely to be caused by the Polavaram project etc.
- Through his petition he said that it was the bounden duty of the Centre to implement the APRA in toto, and that was what he prayed for.
Response from Centre:
- The Central government filed a counter affidavit in response to above petition.
- It furnished details in the form of an annexure, listing out the financial and other forms of assistance given to the State since bifurcation.
- It said that all financial assistance including meeting the revenue gap, special assistance for construction of Capital and other developmental projects has been given as per APRA.
- The Centre reiterated its stand vis-a-vis the Special Category Status (SCS) and sought to support its position on the special financial assistance (package) which was offered by it in lieu of the SCS, with data from its correspondence with the State earlier.
Andhra Pradesh Reorganisation Act-2014:
- In 2013, the proposal for the creation of Telangana was initiated amid an agitation by students of Osmania University, which had become the centre of the pro-Telangana movement.
- It was decided that the new state would have 10 districts and Hyderabad would remain the joint capital for 10 years.
- In December 2013, the Union Cabinet approved the AP Reorganisation Bill, which was passed by Parliament, thereby, paving the way for the bifurcation of Andhra Pradesh.
- The Act doesn’t mention ‘special category’, but mentions that the Centre would help Andhra Pradesh bridge any resource gap.
- The Act included appropriate fiscal measures — tax incentives to promote industrialization and economic growth in both states — that were to be adopted by the Centre.
- It also provided for a special development package for backward regions of Andhra Pradesh, especially for Rayalaseema and districts in the northern coastal region.
Background of Special Category Status (SCS):
- The concept of a special category state was first introduced in 1969 by the 5th Finance Commission
- The rationale for special status was that certain states, because of inherent features, have a low resource base and cannot mobilize resources for development.
- The decision to grant special category status was earlier with National Development Council (NDC).
Benefits to Special Category States (SCS):
- Under Article 282 of Constitution, the Union make any grants under followings heads:
o Central Assistance to States’ plan (on development that mean NO discretionary expenditure to States)
▪ Normal Central Assistance (General and Special category states gets in ratio of 70:30)
▪ Special Central Assistance (only to special category states)
▪ Additional Central Assistance (assistance for externally aided projects and other specific project)
o Grants through Central Sponsored Scheme (CSS)
- Special Category States’ were entitled to get such assistance in the grant-loan ratio of 90:10 as compared with 30:70 ratio for other States.
- In addition to their earmarked share in normal central assistance, special plan assistance for projects (90 per cent grant) and untied special central assistance (100 per cent grant) were being given only to ‘Special Category States’.
- Other benefits to ‘Special Category States’ include assistance for externally-aided projects in the grant-loan ratio of 90:10, whereas such assistance to other States is on back-to-back basis.
- The assistance for Externally Aided Projects (EAPs) flows to Special category States as 90 per cent grant whereas for General Category States, it flows as loans.
- The state share in Centrally Sponsored Schemes (CSS) is usually lower for Special Category States as compared to General Category States.
- So, if the special category status provision had survived and had been granted to AP, the state would have received funding for Centrally sponsored schemes (CSS) in the 90:10 ratio — with 90% of the funds coming from the Centre as against 60% for normal category states.
Issues with the working of Special Category status:
- The way Special Category Status were assigned to a state has been a matter of debate. There is no consensus among states related to principles used for granting the SCS.
- From the earlier experience, there is no guarantee that even after awarding Special category status, economic progress will take place.
- This means that for economic development, it is important to follow sound economic policies. The positives of SCS may act as a stimulus but everything depends on the each state policy.