Andhra Pradesh Special Package

15 Take Aways From The Central Government’s Andhra Pradesh Special Package


On 8th September 2016, in accordance with the promises made by the Central Government during the state reorganisation in 2014, the Central Government announced a Special Package to the state. While the promise of a ‘Special Status’ has not been delivered yet, this Special Package aims to solve some long pending issues. Here are the things you need to know about the Andhra Pradesh Special Package.

1. The Four Key Points That It Is Based On:


According to the official document, it is based on four key points, i.e. the Andhra Pradesh Reorganisation Act, 2014; the report of the Fourteenth Finance Commission; the statement of the then Prime Minister before the Parliament on 20.2.2014; and the Report dated 1.12.2015 of Vice Chairman, NITI Aayog on Developmental Support to the Successor State of Andhra Pradesh under the Andhra Pradesh Reorganisation Act 2014.

2. Andhra Pradesh Re-Organisation Act:


Under the Andhra Pradesh Reorganisation Act, the commitment for the resource gap for the year 2014-15 is being met on the basis of expenditure underwent by the state for that year. In accordance with this, a partial amount of Rs.3,979.5 crore has already been paid and the balance is being paid in annual instalments.

The Government of India will honour all commitments made under the Andhra Pradesh Reorganisation Act.

3. Creation of New Capital:


An amount of Rs.2,500 crore has already been paid as support for creation of new capital of State of Andhra Pradesh and a balance of Rs.1,000 crore would be paid in due course.

4. Development of Backward Areas:


An amount of Rs.1,050 crore has been disbursed as special package for backward areas and a further amount of Rs.1,050 crore would be paid in the coming years.

5. Polavaram Project:


The Polavaram Project, which will offer irrigation to 7.2 lakh acres, generation of 960 MW of hydro power, drinking water supply to a population of 28.50 lakh in 540 villages and diversion of 80 TMC of water to Krishna river basin; is now a National Project. The Central Government will provide 100% of the remaining cost of the irrigation component only of the project for the period starting from 1.4.2014

6. Enhanced Investment Allowance:


Government of India has already legislated for fiscal incentives of enhanced investment allowance and accelerated depreciation. They will come into effect after the Andhra Pradesh government identifies the eligible backward areas.

7. Educational Institutions:


With a Petroleum University, IIT, IIM, NIT, IIIT and IISER being already established in the state; the Central Government is now in the process of establishing a Central University, AIIMS, Tribal University, and National Institute of Disaster Management in various parts of the state.

8. Major Industries:


Proposals with regard to the Steel Authority of India, Indian Oil Corporation/HPCL to set up units in Andhra Pradesh are being examined as provided in the Reorganisation Act and will now be actively pursued by the Central Government.

9. International Airport at Visakhapatnam:


The Visakhapatnam Airport has been operating international flights and a new aerotropolis is being built at Bhogapuram, near Visakhapatnam. The Central Government will take over the construction after a techno economic feasibility report is submitted by the State Government.

10. Expansion of Airports:


For Vijayawada, an MoU has been signed by AAI with Andhra Pradesh Government to develop the existing terminal; after the state allots 698 acres of land required for the expansion as per the standard terms.

In Tirupati, the new terminal was inaugurated by PM Modi in 2015 and now, some expansions will be made by the Central Government.

11. Highways In The State:


The statement just said “The National Highway Authority of India has taken several steps for establishment of the National Highways in the State of Andhra Pradesh.” As to what exactly this means is known only to the Central Govermnent.

12. Railways In The State:


The Railways is now planning on establishing rapid rail connectivity between the new capital of Andhra Pradesh with Hyderabad and other cities in the region.

13. Development of Ports:


Along with the expansion of the existing ports in the state, the Cabinet Committee on Economic Affairs has given in-principle approval for the establishment of a major port at Dugarajapatnam in Andhra Pradesh on PPP basis, subject to feasibility.

14. Fourteenth Finance Commission:


As per the 14th Finance Commission, the enhanced devolution amount due to Andhra Pradesh is being paid in entirety; with an increase of Rs.7,787 crore in tax devolution in 2015-16 compared to 2014-15, a growth of 55%. The revenue deficit grants for each of the years recommended by the Fourteenth Finance Commission will also be paid by the Government of India to the State of Andhra Pradesh.

15. Special Category Status:


While the then Prime Minister Manmohan Singh’s statement says a Special Category will be given to the state; the class of special category states ceases to exist according the statements made during the 14th Finance Commission. Accordingly, the Central Government has agreed to give a special assistance measure for Government of Andhra Pradesh for five years, till 2020. This will be in the form of Central Government funding for externally aided projects for the state for Andhra Pradesh signed and disbursed during these years.