Current status of commitments of AP State Reorganization Act
- In Current Affairs
- 12:22 PM, Sep 12, 2016
- Shashank Davanagere
With the Center releasing a statement about Special Package to Andhra Pradesh, it would be a worthwhile effort to ascertain the original commitments and their current status, as listed in the AP State Reorganization Act 2014 [1] and, additionally, the 6 point amendments the then PM Manmohan Singh had made in the Rajya Sabha.
The Current Status is derived from the “Central Assistance to Andhra Pradesh” release [2] unless otherwise noted.
Item |
AP Reorg Act |
Commitments |
Current Status |
1 |
PM MMS Statement |
Special category status will be extended to the new AP state for period of 5 years to put state finances on firmer footing |
Unequivocal NO |
2 |
Section 94 |
Central government will take all fiscal measures such as tax incentives to promote industrialization and economic growth in successor states, along the lines extended to other states |
GoI to arrange 90% funding for projects. |
3 |
Section 46 & PM MMS Statement |
Special development package to backward regions of the new AP state |
Legislated for fiscal incentives of enhanced investment allowance and accelerated depreciation. They will come into effect once notified. Rs.1, 050 crore has been disbursed as special package for backward areas and a further amount of Rs.1, 050 crore would be paid in the coming years. |
4 |
Section 90 |
Central government will execute Polavaram project including passing amendments for full rehabilitation of displaced families |
100% of the remaining cost of the irrigation component only of the project. |
5 |
Section 46 |
Any resource gap (i.e. revenue deficit) will be compensated. |
The amount of deficit for each year mentioned to total Rs.22, 113 crores is to be paid. For 2015-16 AP will receive a tax devolution of Rs. 22,637 cr + deficit support 6609 cr = Rs 29,246 crore. (Plus other funds for local bodies etc.). For Budget year 2014-2015, a part of the revenue gap compensation amounting to Rs.3, 979.5 crore has already been paid and the balance to be being paid in annual instalments. A special grant of Rs 7,500 crore to cope with Revenue Deficit [6]. |
6 |
Not in Act |
24/7 Power and Projects |
The state along with Rajasthan and Delhi were selected for this pilot scheme. Westinghouse & Rosatom's Nuclear Power Plants are going to be built in AP. NPPs in Andhra could account for more than 30,000 MW of the Modi government’s goal of 63,000 MW installed capacity by 2031[3]. |
7 |
Not in Act |
National Waterway-4 |
A 1095 kilometer waterway costing Rs 1515 crore is being developed as part of Inland Waterways [4] |
8 |
Not in Act |
National Optical Fiber Network |
AP's the first state to start executing the NOFN and the telecom department would reimburse the cost for the same. The Telecom Commission has given its ‘in-principle’ approval to AP to lay its own fiber optic cable. [5] |
9 |
Section 94 |
Special financial support for the creation of essential facilities in the new capital of the successor State of Andhra Pradesh including the Raj Bhavan, High Court, Government Secretariat, Legislative Assembly, Legislative Council, and such other essential infrastructure. |
An amount of Rs.2,500 crore has already been paid as support for creation of new capital of State of Andhra Pradesh and a balance of Rs.1,000 crore would be paid in due course. |
10 |
Section 93 |
The government to examine the expansion of Vizag,Vijayawada and Tirupati airports to international standards. |
In Vishakhapatnam land has been identified at Bhogapuram for further expansion. The State is to acquire and hand over land for development by AAI as per the standard terms. |
11 |
Section 93 |
Railway Zone [within 6 months from established date] |
No action taken. No further information ascertained at the time of writing this article. |
12 |
Section 93 |
Feasibility of Metro Rail facility in Vishakhapatnam and Vijayawada-Guntur-Tenali |
The Government of India is actively considering proposals for the establishment of the Metro Rail in Visakhapatnam and Vijayawada-Guntur-Tenali urban area. |
13 |
Section 93 |
Education: Includes one IIT, one NIT, one IIM, one IISER, one Central University, one Petroleum University, one Agricultural University and one IIIT. |
A Petroleum University has already been established. |
14 |
Section 93 |
One AIIMS-type Super-Specialty Hospital and Teaching Institution |
An All India Institute of Medical Sciences has been approved at Guntur and the land for the same is being taken over. |
15 |
Section 93 |
A Tribal University |
A Tribal University is to be established for which a Site Selection Committee of the State has already approved the land. |
16 |
Section 93 |
National Institute of Disaster Management |
A National Institute of Disaster Management is being established for which identification and takeover of the land is being completed. |
17 |
Section 93 |
Develop a new major port at Dugarajapatnam [Phase I by end-2018] |
The Cabinet has given in-principle approval for the establishment of a major port at Dugarajapatnam on PPP basis, subject to feasibility. |
18 |
Section 93 |
Feasibility of establishing an integrated Steel Plant |
Proposals for SAIL to set up unit in AP are being examined. |
19 |
Section 93 |
Feasibility of establishing a greenfield crude oil refinery and petrochemical complex |
Proposals for IOC/HPCL to set up unit in AP are being examined. |
20 |
Section 93 |
Feasibility of establishing a Vizag-Chennai industrial corridor |
Rs 12,000 crores for establishment of Eastern Coastal Industrial Corridor [6] |
21 |
Section 93 |
Establish rapid rail and road connectivity from Amaravati to other parts of the state |
The National Highway Authority of India has taken several steps for establishment of the National Highways in the State of Andhra Pradesh. The Railways is considering measures for establishing a rapid rail and road connectivity between the new proposed capital of Andhra Pradesh with Hyderabad and other cities in the region. |
Additional Comments on some items in the list above
Item 1: As mentioned elsewhere too, with the dissolution of Planning Commission, the Special Category Status has ceased to exist [8, 11].
Item 2: At a fundamental level, the SCS is most beneficial for two things a. Tax holiday for Central Excise and b. Grants of up to 90% for certain projects.
With the passing of GST into law, the Excise has been subsumed by GST. It has been noted in world, and particularly in the USA [9, 10], that states with better infrastructure are better job creators in the long run than those states which rely on tax sops [12].
Additionally, the biggest benefit with SCS was the 90-10 split in grants-loans for projects. Since the Center has stated that AP will still get this benefit, it is a huge game changer especially for a CM like Chandrababu Naidu whose track record shows his capability in getting projects. With the Center providing the required funds for these projects, it will only help strengthen economic growth in AP.
Item 4: There is a 2868 crore drinking water project which was included in the original 16,010 estimate. There is no clear information if the drinking water project now has to be implemented by State on its own or if this will be paid by the Center.
Item 9: The AP State government has requested for Rs. 20, 000 crore to build Amaravati. This includes the Raj Bhavan, Secretariat etc. The Center has said it will pay only for the “essential” infrastructure.
Item 11: The Finance Minister Arun Jaitely has mentioned in his press conference that the issue of separate Railway Zone has been passed onto the Railway minister and further information is awaited.
As mentioned elsewhere, given it is now not possible to get a SCS, it would be better to get a Special Package to strengthen the infrastructure. If one were to look at the Special Package for Bihar [13] and compare that with the Special Package for AP, there are a lot of similarities – wherein both look to strengthen the infrastructure to make the state more conducive for investment. As with California or New York or Texas, an infrastructurally and politically sound State would result in all round development and better livelihood for its peoples rather than time bound tax sops.
References
- http://www.indiacode.nic.in/acts2014/6%20of%202014.pdf
- http://pib.nic.in/newsite/PrintRelease.aspx?relid=149631
- http://www.thehindu.com/news/national/andhra-pradesh/ap-set-to-be-countrys-nuclear-power-hub/article8876943.ece
- https://en.wikipedia.org/wiki/National_Waterway_4
- http://indianexpress.com/article/india/india-news-india/national-optical-fibre-network-rollout-centres-nod-to-some-states-going-solo-bid-to-push-rollout/
- https://twitter.com/BJP4India/status/774327095275163648
- http://www.southreport.com/andhra-pradesh-bifurcation-promises-vs-current-status/
- http://pib.nic.in/newsite/PrintRelease.aspx?relid=115810
- http://www.cbpp.org/research/state-budget-and-tax/its-time-for-states-to-invest-in-infrastructure
- http://www.epi.org/publication/impact-of-infrastructure-investments/
- http://byjus.com/videos/current-affairs-finance-commission-recommendations/
- http://taxfoundation.org/article/2016-state-business-tax-climate-index
- http://timesofindia.indiatimes.com/india/Complete-list-of-Rs-125003-crore-package-for-Bihar/articleshow/48525915.cms
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