Will AP really benefit if its granted special status? Firstpost article says NO !

andhra special category statusThis is only a reference to an article in Firstpost and not our view. The question is simple. Is a special category status a medicine for all ills ?? Obviously there are alternative opinions. Here are excerpts from a Firstpost article.

  • Economically, the tag of Special Category State (SCS) no longer means a windfall of special funds to any state.
  • Till 2014-15, the SCS status indeed meant a bonanza of funds from the Centre. But the Centre virtually did away with the economic privileges attached to the SCSs from 2015-16, after the Fourteenth Finance Commission raised the share of states in central taxes from 32 percent to 42.
  • Andhra Pradesh Chief Minister Chandrababu Naidu must know that it’s not the ‘special’ label that his state needs. What it needs is cash.
  • Naidu’s demand is prompted by the fact that the largesse that SCSs received till last year was indeed significant. In 2014-15, for instance, the centre’s Plan Budget, accounting for a quarter of all the Centre’s budgetary resources, was spent this way:— 59 percent of the Plan Budget went as Central Assistance to State Plans.
    — 41 percent went to schemes of Central departments.
    — Out of the 59 percent Central Assistance to State Plans, 44 percent was transferred to states for Centrally Sponsored Schemes and 15 percent as Block Grants to states.
    — Block Grants had several sub-categories that included Normal Central Assistance, Special Central Assistance and Special Plan Assistance.

    In 2014-15, the SCSs received 56.25 percent of all the Normal Central Assistance, 90 percent of it as grant and 10 percent as loan. (The General Category states got the remaining 43.75 percent, but only 30 percent as grant).

    And as they always did, only the SCSs got the Special Plan Assistance (90 percent of a project’s cost as grant), Special Central Assistance untied to any projects (100 percent as grant) and a 90 percent grant in the Centrally Sponsored Schemes. All this dramatically changed in the 2015-16 budget.

    While states began to receive a higher share of 42 percent of central taxes, the Centre diluted the benefits that accompanied the SCS status and even slashed the outlay for Centrally Sponsored Schemes.

READ the full FIRST POST article here. 



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