Hours after the Centre on Wednesday rejected Andhra Pradesh’s demand for “special category” status to the State, TDP supremo and Chief Minister Chandrababu Naidu gave a big jolt to the BJP by deciding to withdraw from the Modi Government. However, the TDP has not bid “goodbye” to the NDA as yet.

Talking to reporters in Amravati, Naidu made the announcement to withdraw his Ministers — Ashok Gajapathi Raju and YS Chowdhary — from the Union Cabinet hours after Finance Minister Arun Jaitley rejected Andhra Pradesh’s demand for granting special category status to the State as was promised at the time of bifurcation of AP and creation of Telengana.

Naidu sounded highly upset with the Prime Minister and Jaitley for ignoring the demand of the State. He claimed that as courtesy he wanted to inform the PM on phone about his party’s decision to pull out of the Union Government, but the PM was not “available”. He also blamed the PM for issuing an order to take back `350 crore allotted to AP on February 9.

Naidu said he was very hurt by Jaitley’s words that the Centre cannot afford to give States the money, which is kept aside for safety and security of the nation. “When did I ask Jaitley to provide us money from the fund kept for the safety of the nation,” he asked, adding, “I’m deeply hurt by such words.”

Naidu took the decision to pull out his Ministers from the Modi Cabinet at a meeting with his party MPs and MLAs late in the evening. Naidu pointed out that during the 2014 election campaign, Modi had assured that if voted to power, the BJP would grant “special category” status to Andhra Pradesh for 10 years, as against five years assured by the previous UPA Government. “Why has he forgotten his promise after becoming Prime Minister?” Naidu asked.

“I would like to see how the BJP will now react. Andhra Pradesh is not getting its dues under the Andhra Pradesh Reorginisation Act. Would love to see how the Centre reacts to it, then will plan further course of action,” Naidu said.

“We have spoken about injustices to Andhra Pradesh, we have huge revenue deficit. We wanted institutions, wanted a new capital. Remarks of Arun Jaitley suggested we were asking for so much money and wanted too much,” the CM said.

Claiming that he went to Delhi 29 times and met the PM and Central Ministers to request them to fulfil his demands, Naidu said the Centre did not respect the sentiments of people of Andhra Pradesh. “Only in the interests of the State, we went into alliance with the BJP and became part of the Union Government. But for four years now, nothing has been done despite making several efforts. That is why we took the decision of withdrawing our ministers,” he said.

Naidu added that as of now his party is part of the NDA. However, in Delhi, TDP MP TG Venkatesh told a TV channel that his party would quit NDA soon and the decision to withdraw the Ministers was the first step towards it.

Earlier, Jaitley announced the Centre was ready to grant monetary package equivalent to “special category”. The Government said after 14th finance commission recommendation, the term special category or status for the States has ceased to exist.

Trying to reach out to its ally, Jaitley said special status was originally granted to North-Eastern States since they had inadequate revenues, but now there is no such category as ‘special status’. He said currently N-E States and three hill States are provided 90 per cent from the Central resources and 10 per cent are borne out of their own in respect to all Central schemes. He said 90:10 per cent money division is equivalent to special category which now after the 14th Finance Commission does not exist.

At a Press conference in Delhi, Jaitley conceded that before the 2014 elections the BJP had promised to give the status to Andhra Pradesh for a period of 10 years.

“However, the concept of special category status ceased to exist following the recommendation of the 14th Finance Commission, which is a statutory body. That is why, we have decided to grant a special financial package to Andhra Pradesh, keeping in view the loss of revenue it was facing on account of bifurcation,” he said.

He said that the special package would extend all the benefits to the State, which it would have got through the special category status.

“It is a simple formula. For the Centrally-sponsored schemes, the special category States would get 90 per cent in the form of grants, as against 60 per cent for non-special category States. The difference is only 30 per cent and we have agreed to reimburse this additional 30 per cent grants to AP and we stand by it,” he said.

With regard to revenue deficit, he said the dispute was only with regard to the reimbursement for the first 10 months period of 2014-15 (the year of bifurcation), while for all the subsequent years, the revenue deficit amount was being paid as per the 14th Finance Commission report.

On the assistance for externally aided projects, Jaitley said as per the special financial package, it was decided that the Centre would bear 90 per cent of the loan component. “But the State said it would take a long time to get the loans from external agencies, and so, it wanted the loan amount to be routed through Nabard. But if it is done, it would result in additional fiscal deficit and reduce the borrowing limit of the State. So, we suggested that the State can float a special purpose vehicle to raise loans from Nabard, so that the Centre can bear the 90 per cent of the loan. It is for the State to decide,” he said.

He said the Government has to follow the framework laid down by the Constitution saying like Andhra Pradesh, Bihar was also bifurcated and been seeking special status category, said the Finance Minister making it clear that the Government would play according to the rules.