Centre announces financial package, tax concessions for Andhra Pradesh

The Centre on Wednesday 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 separate state of Telengana 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, Finance Minister Arun Jaitley at a late night press conference hours before the Andhra Pradesh Assembly is to meet.

Citing constraints placed by the 14th Finance Commission in grant of special category status to Andhra Pradesh, he 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. This will be in form of form of externally aided project, he said, adding the state would also get two tax concessions, details of which will be notified by the CBDT shortly.

Andhra Pradesh has been demanding a Special Category State (SCS) status from the Centre ever since the state's economic powerhouse Hyderabad, which housed several IT and pharmaceutical companies as well as PSUs, went to Telengana in the bifurcation. Running a revenue deficit and no capital to boast of, a special status would have given the state preferential treatment in getting central funds assistance and tax breaks.

While the Andhra Pradesh Reorganisation Act does not mention of SCS for the state, the then Prime Minister Manmohan Singh had on the floor of Rajya Sabha on February 20, 2014 promised to grant the status to the state for five years.