‘Package Bigger Than Status’ on the Way to Eyewash AP

Buzz in Lutyens City suggests that the Central government is gearing up to announce a Special Package in less than a week to Andhra Pradesh, which will have all the benefits of Special Status without the actual name. Union Minister Venkaiah Naidu met Prime Minister Narendra Modi the other day and also met Finance Minister Arun Jaitley and BJP President, Amit Shah after that.

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Under Special Status, the state will get to have 90% of Central funds as grants (loans without interest). Also Center will repay 90% of the foreign loans. Under this compensation package, the government may remove the new loans of AP from FRBM limit and will repay 90% of them. The state may have to agree to 70-30 proposal for Polavaram.

But since the state is insisting on 90-10. The Center may also reimburse 70% of the already spent 5000 Crore on the project and 70% of the expenditure on the project going further. The Package may also have Railway Zone announcement. The Center may allot the needed 1200 Crore for the Zone in the next budget totally or partially.

The Revenue deficit for the first year may be borne removing the state government’s new schemes, which may arrive at 6000-7000 Crore in total. Coming to the Capital Construction, the center will fund the construction of the government buildings once their DPR is ready. This will be minus the already released funds. The 1000 Crore allotted for the underground drainage system in Vijayawada and Guntur will not be considered in Capital account.

Since GST is coming next year, the state can not be given Tax incentives. So, the center is planning to give one-time industrial incentives fund which may be to the tune of 1000 or 2000 Crore which will be transferred to the state government which will itself offer incentives to the industries from that. Vijayawada Metro will be completed by 2020. The center may commit to the early execution of the already announced 65000 Crore Road Projects. While this package seems to be okay, it is not a ‘Package Bigger than Special Status’ as BJP claims.