Special category status for Andhra, Bihar could call for a BJP trapeze act | Latest News India - Hindustan Times

Special category status for Andhra, Bihar could call for a BJP trapeze act

Jun 13, 2024 10:05 PM IST

Special category status to NDA allies like JD(U) and TDP could open floodgates as there have been more states that have long demanded this

"The 14th Finance Commission has clearly said no special status can be given.” said Finance minister Nirmala Sitharaman in February 2023 when questioned about Odisha's demand for special status. Referring to the 14th Finance Commission’s opinion, she ruled out any special category status to any state.

Telugu Desam Party’s 16 MPs and the Janata Dal United’s 12 are crucial for the Bharatiya Janata Party, which has 240 seats in the Lok Sabha where the majority mark is 272. (ANI Photo)(ANI)
Telugu Desam Party’s 16 MPs and the Janata Dal United’s 12 are crucial for the Bharatiya Janata Party, which has 240 seats in the Lok Sabha where the majority mark is 272. (ANI Photo)(ANI)

Cut to mid-2024, with a coalition government to manage, things could be a bit different. Telugu Desam Party’s (TDP) 16 MPs and the Janata Dal United’s (JDU) 12 are crucial for the Bharatiya Janata Party, which has 240 seats in the Lok Sabha where the majority mark is 272.

While an National Democratic Alliance (NDA) meeting has endorsed Prime Minister Narendra Modi as the alliance leader, there is little doubt that behind-the-scenes jockeying by new allies for key portfolios and concessions for their states is playing out in earnest.

Unlike the major ministries which have been ruled out for BJP's allies, long-standing demands from Bihar and Andhra Pradesh about special category status, could come up once the NDA government is in place.

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“Given the fact that this is a coalition government, and the government is dependent upon the TDP and JDU, special status can certainly be justified. The risk is other states too can start demanding similar status, and you cannot possibly oblige everyone,” says Arun Kumar, economist and author.

Special category status first introduced in 1969, based on the recommendations of the Fifth Finance Commission, is a classification of regions or states by the central government to provide special assistance in the form of tax benefits and financial support for development of the region. States that come under this category get preferential treatment in getting central assistance and tax breaks.

Additionally, for the implementation of the centrally sponsored schemes, the special category status states are required to contribute just 10 per cent while the central government offers 90 per cent unlike for other states where the centre provides only 60-70 per cent of the fund. These funds if not spent lapse for normal states while they are carried forward for SCS.

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Special category status is typically bestowed on those states that have hilly and difficult terrain; have low population density and/or a sizeable share of tribal population; strategic location along the borders with neighbouring countries; economic and infrastructural backwardness and non-viable nature of state finances.

If these yardsticks are used, then Andhra certainly and Bihar probably, do not fit the bill. Andhra Pradesh, for instance, is ranked first in the country for the year 2021-22 in terms of the Gross State Domestic Product (GSDP) growth at constant prices with a growth rate of 11.43 per cent. The State GSDP is expected to grow at a rate of 17 per cent for the year 2023-24. GSDP as per the first revised estimate, for the year 2023-24 is 15,40,000 crore.

A major rice and agriculture producer, Andhra is home to a large IT software industry spread over Visakhapatnam, Tirupati and Vijayawada, and boasts of several Indian and foreign companies like HSBC-GLT, IBM, Wipro and Infosys, among others, that play a dominant role in the state’s economy.

NR Bhanumurthy, economist and Vice Chancellor Dr BR Ambedkar School of Economics University, Bengaluru says, “Andhra Pradesh was promised special category status in the Andhra Pradesh states Reorganization Bill and there is no reason why it should not get it. There are different ways to support states. The Finance Commission can always evolve ways to do it.”

The Special Status demand for Andhra Pradesh goes back to the state’s bifurcation and the then Prime Minister Manmohan Singh's assurance in 2014 amid the passage of the AP Reorganisation Act, that the parent state would be compensated with a 'special category status' for five years.

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That is yet to happen, Bhanumurthy told this reporter, adding that southern states have already suffered under the Finance Commission’s devolution package, with Hindi-speaking states gaining at their expense.

Earlier this year, some states from South India have said that they have not been receiving their fair share as per the present scheme of financial devolution. They have flagged concerns about their less than proportionate share of receipt in tax revenue when compared to their tax collection rates.

The 14th Finance Commission (2015-20) recommended increasing the devolution of money to states from the divisible pool of central taxes to 42 per cent from the earlier 32 per cent. The 15th Finance Commission (2021-26) has also kept the tax devolution nearly at the same level.

Additionally, with a new capital coming up in Amravati, central assistance to Andhra would become crucial. "I believe the state needs assistance for its new capital, Amravati. All the three states that were created in 2000, Jharkhand, Uttarakhand and Chhattisgarh, got similar assistance while rebuilding Ranchi, Dehradun and New Raipur,” says Bhanumurthy.

Arun Kumar disagrees, “It is one thing to ask for special status for Amravati, which would be like a one-time assistance. That is different from Andhra getting special status, which is a more long-term arrangement.” Kumar is the author of 'Demonetization and Black Economy’ and 'Indian Economy’s Greatest Crisis: Impact of Coronavirus and the Road Ahead'.

In November last year, Nitish Kumar’s cabinet had passed a resolution demanding special status for Bihar. There is unanimity across all political parties in the state on the question of special status.

Bihar’s per capita net state domestic product for 2022-23 was recorded at 31,280, among the lowest in the country. According to the National Family Health Survey-5, the state had high poverty levels. Bihar is India’s poorest state, with 33.76 per cent of its population being multi-dimensionally poor.

In 2023, S Siddharth, the then Additional Chief Secretary of Bihar, said that giving lands to the landless and houses to homeless families, would cost the state 2.5 lakh crore. "To get such a large amount, it is essential that Bihar gets the status of a special state so that this happens faster,” he told the media.

“Bihar has a case for special category status, after its division from Jharkhand in 2000,” says Arun Kumar.

He calculates that the “government will accept the Andhra and Bihar proposals, and mull over it and play for time. Everyone will see how the situation evolves.”

The trouble is that in due course, if it comes down to BJP engineering defections from its allies to reach the magic figure of 272, in case the special status demand gets too shrill, it may be easier to break JD (U) rather than TDP, which has more members.

In 1969, three states — Jammu & Kashmir, Assam and Nagaland — were granted the special category status. Subsequently, eight more states now fall into this grouping, which include Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.

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