Why Andhra Pradesh is demanding Special status ?

1. When Andhra Pradesh was bifurcated in 2014, it sought special category status on the grounds that it was at a disadvantage, especially because of the loss of capital Hyderabad to Telangana.
2. Andhra not only lost a capital but also an important industry hub, which was in and around Hyderabad. The contribution of agriculture to state GDP is higher for Andhra than its neighbouring states. This is also a reflection of a lower level of industrialization and along with it a lower per capita income and again, the lowest in South.
3. Promise was made:- One of the promises was that at that time (of bifurcation), that special category status would be extended to Andhra Pradesh for five years, to help put the state on a firmer footing
4. Andhra Pradesh is facing a situation of continued massive revenue deficit – Rs 14,682 in 2017-18. The state government says that the deficit has occurred due to bifurcation of the state .So special status will ease the burden on the state government.
5. Some of the districts in the state are very backward especially the districts in the rayalaseema region.

How will a special status help:-

• Typically, the big attraction is all the industrial incentives such as tax exemptions for 10 years .For instance Baddi in Himachal Pradesh emerged as an important pharmaceutical hub. It was largely on account of such incentives.
• All the borrowings from other countries for the externally aided projects in a state, about 90 per cent is repaid by the government of India for special status states.
• Under special category status, a state gets Centre’s assistance in the ratio of 90:10 (Union : State) for all externally aided and centrally sponsored projects much above the Finance Commission mandated 60:40 ratio.

Now with huge people support special status has become an emotional and political movement.

Constitutional provisions:-

• Constitution never categorised some states as special and treated all of them on an equal footing.
• The 14th Finance Commission did away with distinction between general and special category states, as it had taken into account the level of backwardness of states in the proposed transfer of funds to states.
• The recommendations were accepted in 2015, a year after the Andhra was bifurcated

Fiscal implications:-

1. Centre perhaps does not want to earn the displeasure of Andhra’s neighbouring states including Karnataka, Tamil Nadu and even Maharashtra by granting that special status.
2. This is primarily because it will lead to potential migration of industrial investments from one region to another.