In a major development, the Centre on Wednesday night announced a financial package for Andhra Pradesh that includes full funding of Pollavaram irrigation project, tax concessions and a special assistance, but stopped short of giving the State a Special Category Status.
Andhra Pradesh, which financially suffered because of creation of the separate State of Telangana in June 2014, will get a Railway zone as also all cost incurred on the irrigation part of Pollavaram project from the date it was declared a National Project on April 1, 2014 will be funded by the Centre.
The State Government will, however, implement the project, said Finance Minister Arun Jaitley at a late night Press conference hours before the Andhra Pradesh Assembly is to meet on Thursday.
Citing constraints placed by the 14th Finance Commission in grant of special category status to Andhra Pradesh, Jaitley said an amount equivalent to what that categorication would have fetched, would be given to the State in form of a Special Assistance Measure for five years.
Earlier in the day there was hectic activity and a series of meetings both in New Delhi and Vijayawada as the Center was mulling giving the State a Special Economic Package in lieu of the Special Category Status the State was demanding.
Union Minister for Urban Development M Venkaiah Naidu, who also hails from Andhra Pradesh, telephoned Chandrababu this morning and requested him to come to New Delhi. Sources said that Venkaiah Naidu told Chandrababu that his presence in New Delhi was required so that all the points in the package could be clarified before announcing the same.
Amid the continuing meeting and consultations, Union Finance Minister Arun Jaitely was reportedly keen that the package should be announced only in the presence of Chandrababu Naidu.
In this backdrop the Union Minister of State Y S Chowdary and Telugu Desam MP CM Ramesh, both close confidante of Chandrababu, also met Union Home Minister Rajnath Singh, apart from Arun Jaitley and Venkaiah Naidu in New Delhi on Wednesday to seek the clarifications on the provision of the package.
Sources said that the senior officials from the Prime Minister’s Office were also involved in discussions to finalize the special package. They were likely to meet Naidu and explain the details of the package, if the Chief Minister accepts the invitation to come to Delhi.
The Center was apprehensive that it will be highly embarrassing, if Chandrababu Naidu rejects the package after it was finalized and announced by Arun Jaitely.
But Chandrababu was in a big dilemma whether to accept the package in place of the Special Category Status as it can trigger a political backlash. He met his Cabinet colleagues this morning in Vijayawada to decide his future course of action.
All the Opposition parties including the YSR Congress and the Indian National Congress have warned the State Government against going back on the demand for SCS.
According to the sources many of the Ministers and advisors of Chandrababu Naidu were averse to the idea of his going to New Delhi at this stage as there was no clarity about many of the points in the proposed package.
Naidu was mulling the idea of sending a group of senior Ministers for discussion to finalise the package before he visits the national capital for accepting the same.
Chief Minister sought the views of the senior Ministers on how to respond if the package offered by the Centre does not meet all the expectations and demands of the State. Naidu told the Ministers that he had no official information about the package and he had not considered any alternative to the special category status.
There were serious differences in the positions of the Center and Andhra Pradesh Government over most of the points of the proposed package. Chandrababu has taken the stand that he will not accept if it was less than the benefits of the promised special category status.
AP Government and all the political parties were insisting on special category status as it means 90 per cent of the financial assistance from the Center will be treated as a grant while under the package only 60 per cent of the assistance will be grant.
There was ambiguity on the issues like incentives for industry, setting up the railway zone in Visakhapatanam and bridging the revenue gap the State was facing since the bifurcation in 2014.
The Center was unwilling to set up a Railway Zone at Visakhapatanam and was in favor of Vijayawada. However the state was worried that it will create big trouble in north coastal Andhra Districts.