Internal discussioins within the government suggest that the demand for special category status by the BJP’s two key allies, TDP and JD(U) for Andhra Pradesh and Bihar, respectively, will be hard to meet since there are several states which may need a higher percentage of grants given their socio-economic and fiscal health. According to the Modi 3.0 government which has already decided to avoid the specvial status packages to Andhra Pradesh and Bihar states respectively.
One of the biggest benefits for states classified as a special category earlier was that 90 per cent of funds under centrally sponsored schemes was contributed by the Centre, with only 10 per cent being the state contribution. For all other states, the split was 60:40 with the Centre contributing just 60 per cent.
Further, Normal Central Assistance from the Union government for special category states comprised 90 per cent grants and 10 per cent loan; for other states, it was 30 per cent grants, and 70 per cent loans.
The Central government fears that opening such a window for Andhra Pradesh and Bihar will trigger similar demands by other states, especially those which are stressed for resources, and are backward.
The sources said, support for the two states held by the allies, could be in the form of special packages, like funds for building a capital city Amaravati in Andhra Pradesh or more Central projects for the city, the sources said.
“The Planning Commission ceased to exist and the Finance Commission did away with the concept of special category status. Even then the special treatment continued for erstwhile special category states with 90:10 sharing in centrally sponsored schemes with 90 per cent contribution by the Centre,” a source said.
States may well be asked to place their request for special category status to the 16th Finance Commission under Arvind Panagariya. Sources said the Finance Commission members are slated to begin their tour of states beginning June end to hold consultations with chief ministers and other key officials of states. States put forth their demands for funds and tax devolution in their meetings with the Finance Commission, an official said.
IF not special category status, the BJP-led government may be willing to allocate extra funds to states for specific projects. For example, it may extend more loans to build Andhra’s capital or even plan central projects in Amaravati.
While there’s no legal roadblock in reverting to the earlier system of special category status, another person aware of the developments said the funds could be provided to the states in the form of special packages, which would be a political call. A special package for Andhra Pradesh especially will be under the Andhra Pradesh Reorganisation Act for construction of the capital city of Amravati, the person said.
“There is a provision in the (Andhra Pradesh) reorganisation legislation for financial assistance for construction of a state capital, some funds were provided earlier but were not fully disbursed because the capital construction stopped,” a person cited above said.
The Comptroller and Auditor General of India (CAG) in a compliance report in September 2023 had raised questions over expenditure incurred and infrastructure work remaining incomplete along with the land pooling mechanism creating a huge financial burden.
“The 57 infrastructure packages costing Rs 33,476.23 crore awarded between July 2016 and February 2019 and planned to be completed by April 2017 to November 2021 remained incomplete despite incurring Rs 4,901.67 crore. Lackadaisical approach of the State Government to submit the clarifications required by GoI (Government of India) on the DPRs (Detailed Project Reports) resulted in non-release of further financial support for creation of essential facilities in the new capital of the successor State of Andhra Pradesh,” the report had said. #hydkhabar
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