Amid the political chaos over the granting of Special category status to Andhra Pradesh, the Telugu Desam Party of Chandrababu Naidu decided to quit the NDA after the Centre decided not to give into their demands.

Let us understand the intricacies of the political and economic conflict.

What do you mean by Special Category Status?

Special Category Status is used to be granted to those particular regions that have historically been at a disadvantage economically due to geographical or any other reason, compared to the rest of the states.

SCS was first initiated by the National Development Council, a body of the former Planning Commission, and the status was explicitly granted based on copious factors like hilly and difficult terrain, economic invariability, infrastructure backwardness and non-viability of the state’s finances.

Jammu & Kashmir was the first state to get special category status and currently a number of states share the same tag.

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What Change has The 14th Finance Commission Brought in?

As per the recent recommendations, the 14th Finance Commission effectively removed the concept of Special Category States.

Arun Jaitley has vowed that the current government was willing to provide the “monetary equivalent” of a special category state in the form of a revenue deficit grant to Andhra Pradesh but wouldn’t be able to grant the “special status” that has been restricted only to the north-eastern and three hilly states.

What Benefits Accrue From Being Designated A SCS State?

In a centrally-sponsored scheme, the center pays 90% of the funds as opposed to 60% in case of normal category states, while the remaining percent of the funds is provided by the concerned state.

Also, in addition to the above major benefit, instruments like debt swapping and debt relief schemes can be made use of. Concession of excise duty to attract industries are also provided and all in all, a huge chunk, 30 percent of the Centre’s gross budget is allocated to the special category states.

Why is Telugu Desam Party demanding an Special Category Status For Andhra Pradesh?

After the bifurcation of AP, it lost a major share of its revenue to Telangana and has thus, claimed itself to be at a disadvantage. Also, it lost Hyderabad which has made a massive dent in their pockets.

At the time of bifurcation, the then PM Manmohan Singh had promised to grant it SCS. At the time of 2014 elections, BJP had promised the same but nothing could be materialized and now AP wants it at any cost.

As of now, nothing seems to have been decided. The next few weeks are important to look at the development of this matter as this might change a lot of equations for the upcoming elections.


Sources: Times Of India, Economic Times, The Indian Express + more

Images- Google Images


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