AP is dearly in need of Special Category Status

Andhra region with rich soils, abundant water resources, a lot of surface irrigated area, relatively better human resources and well-settled institutions, was ahead of Telangana in various economic and social development indicators at the time of formation of the combined state in 1956. Though Rayalaseema was not so blessed with natural resources, it has relatively well-developed human resources, technical knowhow and institutions.

One of the powerful indicators, which reflect the development levels of different regions, is the population density. The population density in Telangana was 112 in 1961 vis-à-vis 147 in Seemandhra. Because of these differences, the people of Telangana were given certain concessions, known as the ‘Gentlemen Agreement’ at the time of the formation of combined Andhra Pradesh in 1956.

The Agreement itself indicates the noteworthy social, economic, geographical and historical inequalities between Telangana and Seemandhra. As per the Agreement, there were certain restrictions on the people of Seemandhra in seeking employment in Hyderabad and Telangana region. One of the major allegations by the leadership of the separate Telangana movement was that the jobs in the combined state were cornered by the Seemandhra people.

As the capital of the combined state, Hyderabad city and its surrounding districts have developed, by default, at the cost of rest of Telangana and entire Seemandhra. As per the Justice Sri Krishna Committee Reports, there was convergence between Seemandhra and Telangana regions on every socio-economic development indicator in the combined state. Migration and population density are powerful development indicators. As the development was concentrated in and around Hyderabad in the combined state, there was a huge migration from parts of Telangana and entire Seemandhra.

The migration from Seemandhra was not limited to employment. A lot of entrepreneurs also migrated to Hyderabad area and also other parts of Telangana. Even agriculture households from Seemandhra also migrated to Telangana.

As a result, the share of Telangana in the population of combined state increased about 35 per cent in 1961 to over 41 per cent in 2011. It may be noted that more dynamic, enterprising and able bodied people, in different sections, usually migrate, leaving behind children, old, women and other weaker sections. Apart from people, a lot of capital also moved into Telangana from Seemandhra.

The per capita income of Telangana increased from about 90 per cent of that of Seemandhra, at the time of merger, to about 150 per cent at the time of bifurcation. In 2011, the population density in Telangana was slightly higher than that of Seemandhra, which was significantly less in 1961. One of the reasons for such fast development of Telangana region was integrated development model adopted in the combined state. With moderate weather throughout the year, more vacant lands and free from sea coast related natural calamities Telangana has been more conducive for industrial and institutional development.

Relatively low wage rates in Telangana was another contributory factor for fast development of Telangana.
Quality employment, also known as regular employment with salary, is very important in India in general and in (residual) Andhra Pradesh (AP) in particular. As per Socio-Economic and Caste Census 2011, residual AP is at the bottom in terms of rural households with salary employment.

In AP, only 4.57% of rural households have employment with salary vis-à-vis 9.66% in India (Table 1). AP with 1.94% rural households with government jobs is far below than that of India (5.01%), HP (23.06%) and J & K (19.94%). In public sector employment AP with 0.35% is less than one-third of the national average (1.12%).

Realising the aforementioned facts, the then Prime Minister announced Special Status for residual AP, as part of state bifurcation, in Rajya Sabha. AP needs Special Category Status, especially tax concessions, for attracting investments in secondary and tertiary sectors. The state has certain challenges for industrialisation such as land scarcity, high land value, relatively higher wage rates, disasters proneness, etc.

To overcome these challenges, the state needs SCS, especially tax concessions, for at least 10 years, if not more. Unless there is a halt and reversal of migration from AP, Telangana may not be able to reap the full benefits of reorganisation of the state, with respect to employment for the local people.

As the 15th Finance Commission is taking 2011 Census as the basis for sharing the pooled resources, AP, which experienced a huge exodus in the combined state, would be adversely affected. Special Category Status, especially tax concessions, to AP would be beneficial to the country also. Tax concessions would induce the industrialists in India and abroad to establish new units/ branches in AP, which would be an additional investment in the country.

By: Bhaskara Rao G
(Writer is associated with non-government, government and international agencies. Views are personal)