Here’s Everything You Need To Know About The Never Ending Special Status Debate!


So Pawan Kalyan has stirred up the discussion about Special status once again. Here is all that you need to know about this issue.



The biggest issue raging the the state of Andhra Pradesh today is the ‘Special Status’ classification for Andhra Pradesh. The movement has finally gained some much needed momentum thanks to Pawan Kalyan, founder of the Janasena Party, actively taking up the cause upon himself. However, how many of us really know what this whole issue is really about? Let me try to put things in perspective for a complete layman.


What is Special Status?

Special Status is nothing but a classification that is given by the centre to certain states in order to provide a helping hand to their development endeavours. States which face socio-economic disadvantages, geographical barriers, strategic international borders, infrastructural backwardness and general non-viability in the finance department are usually classified under the ‘Special Status’ category.


The benefits of being classified under the ‘Special Status’ category.

• Almost 30% of the central budget is allocated for the Special states.
• Significant concessions are given in taxes (income and corporate) along with excise and customs duties.
• NCA or Normal Central Assistance is usually skewed in favour of these states. A majority of the funds given to these states are considered as grants rather than loans.
• Additional amounts are also given to these states to aid in their overall economic development.
• The centre bears 90% of the cost on any centrally approved schemes or any external aid. The rest 10% is given to the state in the form of loans. This in perspective with the normal 30-70 ratio of fund allocation, where states are given 70% on loan tells you what sort of benefits a ‘Special State’ can expect. This also means that the state can take up welfare schemes much more easily.


Why does Andhra Pradesh need a Special Status classification?

The previous government, in a bid to claim credit for the creation of the new state of Telangana, carried out the bifurcation of Andhra Pradesh without giving much thought as to how AP would get along. Post-Bifurcation, Andhra Pradesh began with a major financial deficit as the revenue generating Hyderabad, with all its industries, went to Telangana. Since then the demand for a special status has intensified among the people of Andhra Pradesh.


What was promised by the centre?

Dr Manmohan Singh foresaw this situation and recommended that Andhra Pradesh be classified as a ‘Special Category State’ for a period of 5 years. The NDA, which was the opposition then, announced that AP would receive special status benefits for a period of 10 years at least. It has been two years since this and AP is yet to receive the ‘Special Status’ that was promised.


What the centre actually delivered.

The centre has so far refuted all requests for a ‘Special Status’ classification made by the state. They maintain that the 14th financial commission decided to scrap the whole policy of providing special classification to states. Instead, after all these days, the centre has announced a financial package for the state of Andhra Pradesh, which it maintains is more than fair compensation to the state.


As per this newly announced financial package, AP will receive the following benefits:

• Development packages to be given to the rural and backward regions of AP with special incentives going to the North Coast regions and Rayalaseema.
• The Polavaram Irrigation Project will now be considered a national project. This means that the centre will take the funding responsibilities for this project.
• Financial support for the creation of a new capital and all the required essential facilities there. These include all the government infrastructure that needs to come up like the Legislative Houses, Secretariat, High Court and Raj Bhavan.
• Tax incentives to promote economic growth and industrialization efforts.
• A revenue deficit grant to the tune of Rs 22,113 Crore for a 5 year period.


Why is this a problem?

Firstly, the centre’s argument about the 14th financial commission is nothing more than a diversionary tactic. Their claims of having given a package which ‘more than compensates’, in the stead of a ‘Special Status’ classification is also illogical. The only possible reason that this ‘insufficient package’ is being thrust at us is to appease us in the short term. The assembly sessions which began on Thursday will mainly discuss the GST (Goods and Services Tax) Bill. The house will debate on the ratification of this Bill. A Package announced at this juncture cannot be anything more than an appeasement tactic to get this Bill ratified without any impediments.


Points of conflict.

The package that has been offered by the centre is nowhere close to sufficient for AP. Several practical issues seem to have been blatantly ignored.

• AP revenue deficit at the time of bifurcation was Rs 16,000 Crore. It has climbed up to Rs 24,000 Crore in the current fiscal year. The centre has pegged the total amount that it needs to pay at Rs 22, 113 Crore for this five year period. Of this amount, it claims that 3979.5 Crore has already been paid for 2014-2015. This contradicts all their claims of fair compensation.
• The cost of establishing a new capital city is estimated to be over Rs 50,000 Crore. The centre has paid Rs 2500 Crore for the creation of a new capital.
• The state has spent Rs 1,713 Crore on the Polavaram project and has announced their readiness to spend an additional 3000-4000 Crores on it in the future. The centre has so far given Rs 100 crore for this project and promises to bear the complete cost of this project in the future.
• AP was promised several educational institutions including an IIT, IIM, AIIMS-type of institution, National Institute of Disaster Management and a Tribal University. The special package makes no mention of any such institutions.
• AP made demands for an all new Railway Zone. Centre has said nothing on this mater citing a delay in deciding the location of the headquarters.


While CM CBN seems to have welcomed this aid package, the people of the state are certainly not happy with any part of this announcement. Even CBN has stated that he would have been a lot more happy if the centre had given a ‘Special Status’ classification instead. Are we really happy about these provisions? Perhaps not. There is a feeling of mistrust and having been let down among all people of AP. This is the reason that Pawan Kalyan, the founder of the Janasena Party has already taken this cause upon himself. He has firmly raised his voice against all the callous politicians and their apathy. He is probably the only leader who is willing to go the distance to get what the people deserve by right. Is he the leader that we all rally behind in order to achieve what is ours by right?


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