On Special Category Status for Andhra

Source: This article has been created based on the article “On Special Category Status for Andhra”, published in The Hindu on 11^th June 2024.

UPSC Syllabus Topic: GS Paper 2 – Governance – Fiscal Federalism

News: The demand for Special Category Status (SCS) for Andhra Pradesh has resurfaced in the political discourse, especially after the 2024 Lok Sabha elections. This issue has reignited the debate whether the state qualifies for special category or not.

History and Background of Andhra Pradesh’s demand of SCS

The Andhra Pradesh Reorganisation Act, split the state into Andhra Pradesh and Telangana, came into effect on June 2, 2014.

In a 2014 Rajya Sabha debate, then Prime Minister Manmohan Singh assured SCS for Andhra Pradesh for five years, supported by BJP leader M. Venkaiah Naidu.

However, after the NDA took power in 2014, the promise of SCS was set aside, with claims that Andhra Pradesh did not meet the criteria and due to the dissolution of the Planning Commission.

Read more – Special Category Status – Explained Pointwise

What is the Criteria for Special Category Status?

The SCS was created in 1969, on the recommendation of 5^th Finance commission, to support states with significant socio-economic disadvantages and geographical challenges. There are 5 factors that are considered for granting SCS:

1) Majority tribal population,

2) Low population density,

3) Hilly terrain and international borders,

4) Socio-economic and industrial backwardness, and

5) Inadequate state finances

Current SCS States: Arunachal Pradesh, Assam, Himachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand.

What are the arguments in favour of granting a SCS to AP?

First, Andhra Pradesh continues to face a revenue deficit and increasing debt. Development projects and the new capital at Amaravati are stalled.

Second, 15^th Finance Commission chairman has stated in his book that 14^th Finance Commission never stopped SCS status. It is only up to the central government to take a call on this matter.

What are the arguments against providing an SCS to AP?

Andhra Pradesh does not qualify for the SCS, as per norms.

Tax Devolution and Grants: The 14th Finance Commission increased tax devolution to 42% and introduced revenue deficit grants, which Andhra Pradesh received. The 14th Finance Commission equated SCS with the general category status, nullifying SCS for new states.

Special Package (SP): In place of SCS, the NDA government offered Andhra Pradesh an SP, which included full funding for the Polavaram irrigation project, tax concessions, and special assistance.

No Mention in reorganization Act: The Andhra Pradesh Reorganisation Act, which split the state into Andhra Pradesh and Telangana, came into effect on June 2, 2014. It did not mention SCS for Andhra Pradesh.