Amidst the clamour by Andhra Pradesh seeking special category status, Union Finance Minister Arun Jaitley on Wednesday said the Centre is fully committed to giving the monetary equivalent of the demand through a special package and is now awaiting a response from the State.
“The Centre has not once said it would not give money," he said. Stressing that he is personally sympathetic to Andhra Pradesh, which has suffered with the creation of Telangana, Jaitley, however, pointed out that the special category status does not exist any longer after the recommendations of the Fourteenth Finance Commission were accepted.
SPV route
He further said that the Centre is amenable to routing funds to Andhra Pradesh through a special purpose vehicle as well as making further adjustments to write off the State’s revenue deficit.
“It is almost like my waiting to know the bank account in which the money has to be given,” Jaitley told reporters.
The Minister’s comments come at a time when Andhra Pradesh Chief Minister N Chandrababu Naidu has sought special category status for the State; there is speculation that the Telegu Desam Party (TDP) may leave the NDA if the demand is not met.
Big payouts already made
The Minister said tax incentives to the State have already been given by the NDA government in its first two Budgets. Andhra Pradesh has also been given ₹2,500 crore to build its new capital as well as ₹5,000 crore for the Polavaram irrigation project.
“Political sentiment can’t decide the quantum of funds to be given. We have to look at the country as a whole. We can’t have other states earning less than Andhra Pradesh,” Jaitley said, stressing that the Centre has no more floating funds and every State has an equal right to money.
“Why not Bihar and Jharkhand,” he asked.
States also receive 42 per cent of the Centre’s taxes under the devolution formula of the Fourteenth Finance Commission and also collect their own revenue, he said, adding that the Centre also needs funds for development and security needs of the country.
The erstwhile special category states comprising of the North East and the three hill States now receive higher assistance from the Centre for Central sector schemes, which was also offered to Andhra Pradesh, Jaitley said.
More funding
For Central sector schemes, these States receive 90 per cent of the funds from the Centre and only contribute 10 per cent, unlike other States, which contribute 40 per cent.
In Andhra Pradesh’s case, the higher allocation was given for Externally Aided Projects of the State, Jaitley said.
In January, the State then requested that the funds be given through NABARD, Jaitley said, adding that the Union Finance Ministry then said that it would have to be done in a manner that did not impact the deficit or the borrowing of the Centre or States.
In discussions between the Union Expenditure Secretary and State government officials on February 6 and 7, it was decided that the higher allocation through NABARD to Andhra Pradesh would be routed through a special purpose vehicle.
Jaitley further said that the Centre has already paid ₹4,000 crore for writing off the State’s revenue deficit, using 2013-14 as the base.
The Centre is also willing to pay more using 2015-16 as the base year, which would increase the pay out by ₹ 1,600 crore.