TDP threatens to part ways, Centre says yes to funds, no to special category status

Jaitley asserted that sentiment does not decide quantum of funds. (File Photo)

With the TDP threatening to walk out of the BJP-led NDA, Finance Minister Arun Jaitley on Wednesday said the Centre was willing to provide the “monetary equivalent” of a special category state to Andhra Pradesh but would not be able to grant the “special status” which was restricted only to the north-eastern and three hilly states by the 14th Finance Commission. Jaitley’s comments came hours after Chief Minister N Chandrababu Naidu told the Andhra Pradesh assembly that there was no question of compromise on the issue and he would continue to fight to protect the interests of the state.

“Time and again, we have told the Centre that Andhra Pradesh needs help because after bifurcation we have been suffering due to revenue loss. I have gone to Delhi 29 times but to no avail. I am anguished over the denial of special status to Andhra Pradesh. What is this humiliation and injustice to the state? It is a matter of self-respect of Andhra people and the Centre should fulfil the assurances made during bifurcation of the state,’’ Naidu said.

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Jaitley said he agreed with the assessment that Andhra Pradesh was suffering financially after Telangana was carved out of the state and the government would honour each and every commitment made by the Centre at the time of bifurcation. “Obviously, when the division took place, AP was unwilling, Telangana wanted the division. And Andhra was suffering in terms of resources and, therefore, some resource assistance had to be given to AP,” he said.

TDP has been vehemently protesting in New Delhi over the special category status issue.

Asked why the Centre cannot provide more funds to the state which has been witnessing a political backlash on the issue, Jaitley said: “Political issue cannot increase the quantum of money because the Centre has no free floating funds. Every state in India has the right to the central fund in the same manner.” On Chandrababu Naidu’s demand for fulfilling the promise of giving the state a special status, he said such a category did exist when the state was bifurcated in 2014. But after the implementation of the 14th Finance Commission award, such a treatment is now “constitutionally” restricted to just the north-eastern and three hilly states.

“Now one of the promises was that at that time (of bifurcation), a special category status could be given to AP. At that time, concept of special category states did exist. But when the 14th Finance Commission report came in, which is a constitutional award, they said there is no special category status that is now to be given. Instead states which are deficit in terms of revenue, we are compensating them. Because everyone gets a hike of 10 per cent to 42 per cent, plus for a certain period revenue deficit will be taken care of. And a provision for revenue deficit was made in the case of Andhra Pradesh,” he said.

After the 14th Finance Commission award, the Centre now shares 42 per cent of its taxes with the states as against 32 per cent earlier. Asked about Congress president Rahul Gandhi’s promise to give the state the special category status if his party is voted to power, Jaitley said, “I still have to follow the constitutional award” of the 14th Finance Commission. “Sentiment does not decide quantum of funds, it is the constitutional award of the Finance Commission which decides the quantum of funds that the states get,” he said.’

For special category status category states, the Centre pays 90 per cent of the funds required in a centrally-sponsored scheme as against 60 per cent in case of normal category states, while the remaining funds are provided by the state governments. For Andhra Pradesh, the Centre is committed to giving 90 per cent of the funds, equivalent to special category states, through other means like external agencies, he said.

The Centre is also willing to accept the state government’s suggestion of raising funds through NABARD. At meetings with the state government last month, the Centre suggested creation of a special purpose vehicle (SPV) where NABARD could give the money so as not to upset the fiscal deficit of the state, Jaitley said, adding that the Andhra Pradesh government is yet to come back on the modalities of this proposal. On meeting the revenue deficit of the state, he said, the Centre has already paid around Rs 4,000 crore and only Rs 138 crore remain.

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