The recent budget announcements led to a familiar activity in Andhra Pradesh which has now become a routine scene in the state in the last four years. There were leaks that the government is not happy with the manner in which the Government of India ignored the interests of Andhra Pradesh and that a serious and bold decision is likely to be taken. After a series of media leaks and building up of tempo and a lot of sabre-rattling, finally swords are sheathed and the end has come on the familiar expected lines, claiming that there was a phone call from the Home Minister and the state government decided not to take the central government head-on collusion course but would like to put friendly persuasion and pressure to get justice done to the state of Andhra Pradesh.
To get an understanding of the issues involved and the role of different parties in making and fulfilling certain promises as part of bifurcation of the state of Andhra Pradesh one has to look at the provisions of the Reorganisation Act, the promises made on the floor of the Parliament at the time of the bifurcation of the state and the political promises that were made in the run-up to the General Elections 2014. First let us see the provisions of the Act.
The one most important provision of the Act is 46 (2) wherein promise was made to make available appropriate grants to the state government of Andhra Pradesh having regard to the resources of the successor state and a special package to backward areas of the state in particular Rayala Seema and north coastal regions.
With reference to this particular promise, a Special Package is already made available to the districts of Uttarandhra and Rayalaseema and financial assistance of Rs 3,980 crore to the state government of Andhra Pradesh for the financial year 2014-15 as against the request for about Rs 16,000 crore by the state government. Given the fragile foundations on which the above amount is claimed by the state government, they may end up only getting a fraction of the claim they have made as the revenue deficit for the year 2014-15 unless their political manoeuvring pays off.
Section 90 of the Act provides for Polavaram project to be declared as a national project and that the Central government shall execute the project and obtain all necessary clearances. The central government constituted Polavaram authority but the State government on its own requested and took on the responsibility of construction of the project.
Having continued with the same contractor for about four years, the State government as on date is making an issue of the progress of the project under the above contractor which in any case would have been obvious right from the beginning, what with hundreds of visits to the site by the honourable CM during this period. Issue of Polavaram looks to be one of the contractors and execution, since reasonable amounts have been given, it is for the state government to submit the necessary utilisation certificates and get further allocations.
The next important section which has a bearing on the development of the successor state of Andhra Pradesh is Section 93 wherein a promise is made to take measures as enumerated in the 13th Schedule for the progress and development of the successor states within a period of 10 years. Schedule 13 consists of two portions: one regarding education and the other regarding infrastructure.
As far as the portion relating to the education, almost all the institutions that have been promised have become functional in a record period of time because the state government was able to provide the necessary land within a short period of time and the Government of India also kept its promise of locating these institutions. The issue of greater concern is the second one relating to infrastructure.
Here the wording of the act is left as vague as possible. Except the Dugarajapatnam Port and an NTPC thermal power station in Telangana, all others only talk about examining the feasibility of establishing, rather than a firm commitment to establish. This holds good for the steel factory in Kadapa, a greenfield refinery and petrochemical complex, Vizag Chennai industrial corridor, railway zone , modernisation of airports at Vizag, Vijayawada and Tirupati and examine the feasibility of Metro at Vijayawada and Vizag. It is a little amusing to see leaders of the party which was in power at the time of bifurcation of the state and the act was enacted not taking care to properly word it but now insisting on the promises in the act to be fulfilled.
Out of these, modernisation of airports is in the process or completed. Vizag-Chennai Industrial Corridor as I understand is at tendering stage. The other institutions seem to be in different stages of evaluation of the financial feasibility before a decision is taken. Let us also not forget that the time limit for establishing all these institutions including the education institutions is a period of 10 years spread over 12th and 13th plan and the time frame is up to 2022. Out of these institutions, educational institutions have become functional within the first three years of bifurcation of the state. It would have been politically more prudent for Central government to have considered such emotionally important demands like the railway zone at Vizag even if it may not be financially viable.
The next important section of relevance is Section 94 which talks of appropriate fiscal measures including tax incentives to promote industrial development more particularly in the backward regions and financial support for the creation of essential facilities in the new capital city. As far as the new capital city is concerned, the central government has released funds to a tune of Rs 2,500 crore and state government is yet to start the construction of permanent buildings.
By far the most important promise which needs to be fulfilled is the tax incentives which the state government is claiming on par with the incentives that are given to the states like Himachal Pradesh and other border states. It’s only such tax incentives which can really usher in an industrial growth more particularly in the backward regions of Andhra Pradesh Uttarandhra and Rayalaseema: Since such tax incentives are leading to asymmetries, the central government is not inclined to extend it to any further states.
But there is a strong case for extending the same to the bifurcated state of Andhra Pradesh, especially to the two backward regions of Uttarandhra and Rayalaseema areas within the state. This is a major demand which the state cannot ignore and the Centre may have to concede at one time or the other since it is linked to the overall development of the backward regions of the state. People confuse this with the Special Category Status, but these incentives have to come independent of the Special Category Status and the Special Category Status does not guarantee extension of these tax incentives.
The other important issue is the Special Category Status which is not part of the bifurcation act but is a promise made on the floor of the house by the then Prime Minister. The central government has given special package in place of the Special Category Status and the State government has agreed for the same and to that extent is stopped from raising this issue, though the other opposition parties are flagging this as an important issue.
Given the present mindset of the government where all the investments are being channelled to the capital city region whatever amounts that come out of the special package are going to be concentrated there only. Already under this scheme, a request is made to the World Bank for about Rs 2,000 crore as grant and another Rs 2,000 crore from the ADB for the capital city region. It is but fair that these amounts which come as part of the special package should be invested across the state so that all regions get the benefit of these amounts which are coming as a compensation for the pangs of bifurcations, the whole state has suffered.
Thus, as could be seen, the track record of the central government in fulfilling the bifurcation promises is not all that bad. Chandrababu Naidu is running with the hares and hunting with the hounds cleverly keeping all his options open on this issue. What is intriguing is the inability of the local BJP leadership to present the facts properly to the people and instead allowing the agenda to be hijacked by the Chief Minister and his friendly media. Or is it a case of Vibheeshanas in AP BJP?
By: Krishna Rao Iyr
(Writer former Chief Secretary, Government of Andhra Pradesh)