Andhra gets a Special Package from Centre

The Centre has been unusually liberal in clearing a package for Andhra Pradesh. Although the state has not been granted special status, the package more than makes up for it by offering several additional benefits.
In fact, the package, pushed by BJP's NDA partner Telugu Desam Party (TDP) to keep YSR Congress under check, is being seen as much more attractive than what was offered to Jharkhand, Uttarakhand and Chhattisgarh when they were carved out as new states.
The Centre has already announced and made legal provisions to provide fiscal incentives, including an enhanced investment allowance and accelerated depreciation, moves that are meant to boost investment in the state after Telangana was carved out two years ago and a large part of the economic activity moved to the new state. The Centre has lobbed the ball in Andhra's court, asking it to identify the backward districts that would be eligible for the sops.
The Narendra Modi government has essentially drawn upon the promise made in the Andhra Pradesh Reorganisation Act, which was aimed at providing resources as part of development assistance and for the creation of new infrastructure, and boosting investment through fiscal benefits, apart from setting up new institutions. Another component was to declare the Polavaram project, comprising the construction of a dam and canal system along with power generation and drinking water supply , a “national project“.
The move to provide resources has been the most contentious issue, given the then PM Manmohan Singh's statement in Parliament in 2014 that “special category status“ would be provided to Andhra.The problem was complicated as the issue was referred to the 14th Finance Commission, which completely did away with the concept of `special category' states. But to keep the Centre's commitment, the Modi government has decided to provide a special assistance measure for five years to make up for the additional central share the state may have received between 2015-16 and 2019-20. The finance ministry said that this will come by way of central funding for externally aided projects in Andhra that are taken up during the five-year period. In other words, the Centre has virtually taken over the state's liability as far as externally aided projects are concerned, a move that will create a large fiscal space for Andhra and the resources can be deployed elsewhere.
In case of the Polavaram project, the government has already announced its plan to bear the remaining cost of the irrigation component from April 2014.
Factoring in the recommendations of NITI Aayog vice-chairman Arvind Panagariya, the Centre has also agreed to hand over the execution of the project to the state government.
Several educational institutions, such as IIT and AIIMS, have already been announced, and with the latest package cleared earlier this week, the government believes that it has “effectively addressed“ all commitments made to the state.

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