Andhra Pradesh Chief Minister Chandrababu Naidu’s frequent Delhi trips seem to have worked favourably for his State, while the sibling State Telangana seems to have missed the bus. On the face of it, Naidu seems to have gotten something from the Union Budget out of what he reportedly had sought -- ₹1 lakh crore aid -- for the reconstruction of the State. But critics see it as just a hand-holding and no direct perks as there is no extra benefit.
Naidu-led newly formed Andhra Pradesh alliance government had also taken a call to defer the State Budget to see what the Union Budget has to offer. Despite this offering from the Union Government, Naidu will need to find ways to generate revenues locally. The 15th Finance Commission suggestion, if followed, will require him to work towards increasing the non-tax revenues of the State Government.
In her Budget speech, Union Finance Minister Nirmala Sitharaman said, “Recognising the state’s need for a capital, we will facilitate special financial support through multilateral development agencies. In the current financial year, ₹15,000 crore will be arranged, with additional amounts in future years.”
Assurance on financing and early completion of the Polavaram Irrigation Project. An additional allocation will be provided this year towards capital investment for economic growth. Grants for backward regions of Rayalaseema, Prakasam and North Coastal Andhra, as stated in the Act, will also be provided.
There is no mention of ‘A Special Package’ or ‘Special status for AP’.
Meanwhile, the Union Budget is silent on Telangana which has its own share of challenges. Telangana had been looking for more tax devolution; reorganisation issues - Kazipet coach factory, Bayyram steel plant, Backward Regions Grant Fund (BRGF), metro rail and Musi River Development support, etc.
The Union Budget does offer interest-free loans to State governments but it is with certain conditions. The availability of these funds will be subject to the state governments undertaking various reforms, including land and labour reforms.
While Telangana prepares to present its State Budget on July 25, Andhra Pradesh has bought time for now. However, Naidu’s task will not be easy because he still needs to do a lot of financial reconstruction as the State’s interest payment is significantly higher as a proportion of revenue.