Andhra Pradesh Chief Minister N. Chandrababu Naidu's determination and perseverance has finally paid off. Prime Minister Narendra Modi on Wednesday announced a special package for the state, which will be valid for five years, between 2015 and 2020.
The package entails that the state would get around Rs 3,000 crore every year. The state government would save Rs 3,000 crore every year from its Fiscal Responsibility and Budget Management (FRBM) obligations and hence it can borrow an equivalent amount.
The announcement is significant as the chief minister has been making repeated trips to the national capital, trying to convince and plead with the Centre that the residual state of Andhra Pradesh need 'special status' which would mean huge amounts of funds for the state and tax holidays for a period of maximum 10 years.
The amount of funding that the state would get would be exact equivalent to the amount promised by former prime minister Manmohan Singh on February 20, 2014 in the Rajya Sabha during the marathon debate on the AP Reorganisation Bill.
The package revolves around various sections in the AP Reorganisation Act, 14th Finance Commission Report recommendations, the oral commitment made by the former prime minister and the recommendations made by the Niti Aayog in 2015.
The state can now breath easy as the special package would mean that in all the central assisted state plan (CASP) schemes and externally aided projects (EAP) "funded by World Bank, ADB, BRICS Bank among others” the contribution of the Centre will be 90 per cent, which for states that have not been granted special package is only 60 per cent. The former prime minister had not promised to fund EAP. However, a special package does not include provisions for income tax or central excise exemption.
As part of the special package, the Polavaram Project has been announced as a national project and the Centre will fund the entire project. This is a unique move as according to the definition of the national project, the Centre need to bear only 70 per cent of the cost and the rest is to be taken care of by the states. As funding is no longer a concern, the project is expected to be finished by 2018.
The Centre would also offer Rs 2,000 crore for the state capital Amaravathi. The state, however, is planning to demand more funding for the capital which is built on 34,000 acres of lands pooled from farmers.
The Central Board of Direct Taxes will issue two specific notifications on tax concessions being extended to AP, while the Railway Minister Suresh Prabhu will discuss a new railway zone with Visakhapatnam as headquarters.
There were also plans to set up a steel plant in Kadapa and a task force comprising Steel Authority of India and Andhra Pradesh Mineral Development Corporation Ltd had looked into the possibilities. The task force had come to conclusion that its not commercially viable to set up the plant there following which a request was made to the Centre to sponsor viability gap funding.
Ever since the 29th state of Telangana was formed in 2014, special status to the residual state had become the talking point in AP. Although the Congress-led government had promised special status for the state, the NDA government did not grant it the status in the past two years it was in power.
With the intention of embarrassing the ruling Telugu Desam Party in the state, opposition YSR Congress Party (YSRCP) and other political parties, including Pawan Kalyan-led Jana Sena, had tried to exert pressure on the Centre to accord special status to the state.