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Posted by tnsatish at 9:45 PM
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  1. AnonymousNovember 18, 2014 at 11:05 AM

    Andhra Betrayed

    By GS Vasu
    18th November 2014, The New Indian Express

    HYDERABAD: Most of the dreams sold to Seemandhra at the time of bifurcation of the State seem to be slowly, but surely, vanishing into thin air. After a series of meetings with Delhi bosses, official and unofficial, it is now dawning upon the establishment of the Andhra Pradesh government that other than a special package for the residuary state, nothing else is likely to be offered by the NDA dispensation at the Centre.

    After the AP Reorganisation Bill was passed in the Lok Sabha amid tumultuous scenes early this year, Andhra Pradesh leaders of the BJP, which was then in the Opposition, insisted that a concrete financial assistance plan be announced for Andhra Pradesh on the floor of the House.

    That was how the then Prime Minister, Manmohan Singh, came out with a six-point package after which the bill was considered by the Rajya Sabha on Feb 20 paving the way for the formation of Telangana, the 29th State of India.

    Most important of the six-point package are: 1) special category status to AP for five years — this would have brought with it a host of benefits; 2) special development package for backward districts; 3) appropriate fiscal measures including tax incentives; 4) compensation for the resource gap in the State.

    Highly-placed sources told The New Indian Express that it is now more or less certain that neither special category status nor tax concession is likely to be accorded. In fact, this newspaper had reported in March itself that the Centre would find it difficult to grant special category status to AP given that States like Bihar have been asking for it since long and have not succeeded so far.

    That seems to be precisely the argument the Centre is putting forth before the AP representatives now — bypassing those already in queue would not be possible. And, in any case, AP does not meet the criteria for granting special category status.
    Even with regard to tax concessions — Income Tax and Central Excise — the view being taken by Delhi now is that it is not practical/desirable to do it considering that the entire country is moving towards a common tax regime and concession to any particular State would upset the reform process.

    In fact, in August, the then Chief Minister of Tamil Nadu, Jayalalithaa, wrote a letter to Prime Minister Narendra Modi arguing strongly against area-based concessions in tax structure (as proposed to AP) on the ground that it could cause a huge flight of capital and relocation of industries.

    What is, however, likely to flow from the Centre to Andhra Pradesh is a special package - in the range of Rs 15,000 crore - to be released over the next few years. Having already submitted a detailed report to the Centre on the need for a special package, AP officials expect at least Rs 1,500 crore of this to come this fiscal itself.

    Interestingly, amidst all the slam-bang during the time of bifurcation, AP leaders including the then Opposition leader N Chandrababu Naidu projected the revenue gap per year to be around Rs 17,000 crore for the residuary state. It now transpires that the revenue gap has been estimated at only Rs 1500 crore this year and how much of it will the Centre accept and bridge remains to be seen. From next year onwards, the bridging of gap by the Centre will depend on the recommendations to be made by the Finance Commission.

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