New Delhi, Sept 8: Two and a half years after the bifurcation of Andhra Pradesh, the NDA-led central government on Wednesday night finally announced a special package for the state, stopping just short of granting it Special Category Status (SCS). The special package includes full funding of Pollavaram irrigation project, tax concessions and special assistance by the central government. The package was announced after hours of negotiations and consultations with the Telugu Desam Party-led state government headed by Chief Minister N. Chandrababu Naidu.

The special package was announced by Union Finance Minister Arun Jaitley alongside Union Minister M. Venkaiah Naidu and is valid for five years, i.e. 2015-2020. “It would be a continuous process. The new State needs hand-holding and the Modi government would do so,” Union Minister Naidu said. Most of it is based on the sections of AP Reorganisation Act, the 14th Finance Commission Report Recommendations and recommendations made by NITI Ayog in 2015. This package is also seen as the central government fulfilling the commitments made by former Prime Minister Manmohan Singh in the parliament during his tenure.

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The opposition parties, however, have criticized both, the TDP as well as the BJP at the centre for “betraying” the people of Andhra Pradesh since the Centre refused to grant SCS to the state. Left parties, YSR Congress, Congress and launched protests outside government offices, saying that nothing less than special status would be acceptable. Road and highways were blocked due to the demonstrations led by opposition parties in Vijayawada, Visakhapatnam and Tirupati.

YCR Congress party leader Ambati Rambabu said, “It is a fraud on the people of Andhra Pradesh… As TDP and BJP are allies, Chandrababu is unable to put pressure on the Centre to give special category status to AP”. He also accused the Chief Minister of going “soft on NDA”. While most of the demands of the opposition have been met in practical terms, the only issue is that the special category status has not been granted. Apart from the nomenclature, the state of Andhra Pradesh has received a more than decent deal. Following the BJP-trend, the opposition parties have to oppose every decision by the government. After all, agreeing and appreciating progress won’t get them any political mileage.

“The BJP and TDP have once again betrayed the people of Andhra by promising much and delivering nothing. How will Chief Minister Naidu and BJP leaders now face the public? What happened to Prime Minister Narendra Modi’s promise of fulfilling all promises made to Andhra?” chief of AP’s Congress unit, Raghuveera Reddy said.

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The package given to the state includes, full funding of Pollavaram irrigation project which was declared a National Project by the central government on April 1, 2014. “The process of funding will be decided. One process is that NABARD will fund it and we will return the loan back,” the Finance Minister said. The state will also be authorised to undertake the construction on behalf of the centre.

As for the tax concessions, the state will be given two tax breaks for accelerated depreciation and investment allowance the details for which will be notified by the Central Board of Direct Taxes (CBDT), Jaitley said according to report by The Indian Express. Had Andhra Pradesh been granted special category status, it would have mainly received monetary assistance and tax breaks, both of which Andhra Pradesh has been given through the special package. Instead of direct monetary assistance, the state will be receiving aid via externally funded projects. It also has the option of undertaking the construction of the project while the financial needs would be taken care of by the centre.

The state suffered a major economic blow after the bifurcation, since the revenue hub, Hyderabad went to the newly formed state, Telangana. According to one estimate, the state has suffered a revenue deficit of Rs 20,000 crore.