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AIR spotlight summary on “Demand for Special Category Status by Andhra Pradesh”



AIR spotlight summary on “Demand for Special Category Status by Andhra Pradesh”


  • The Centre has announced a financial package for Andhra Pradesh. This comes at the end of the persistent demand by Andhra Pradesh for special category status.
  • All the agricultural surplus of Andhra Pradesh and the irrigated district of Hyderabad where the climate was good, open land, productive labour, immense technical capability acted as a magnet. None of these will come to Andhra Pradesh.

Parameters for Special Category Status

  1. hilly terrain;
  2. low population density and/or sizeable share of tribal population;
  3. strategic location along borders with neighbouring countries;
  4. economic and infrastructure backwardness; and
  5. Non-viable nature of State finances.

Special category status

  • Andhra Pradesh is asking for special status because the bifurcation of Andhra Pradesh or the creation of Telangana gave rise to a revenue deficit — since Hyderabad (which was in AP), which housed several IT and pharmaceutical companies as well as PSUs, industries, trade and commerce went to Telangana.
  • With the forthcoming of GST certain taxation situation also changes making it redundant having a special category status. There will be vast increase in the transfer of revenue from the Government of India to various states.
  • Perhaps the idea of Special category status is no longer valid after the 14th Finance Commission (FFC) removed the distinction between general and special category states, given that it had factored in the levels of backwardness to devolve funds to states.
  • There has been a demand for special category status from Bihar, west Bengal and odisha. All the industrially backward states felt the need for special category status for them to make the leap in terms of economic growth.

Financial package for Andhra Pradesh

  • The Financial package will fund the revenue deficit; they will enhance the railway profile by adding a zonal head quarter; fund irrigation projects; and set up education institutions. So vast investments will flow over time.
  • This is the one time financial assistance which should be used carefully by taking help of the best brains in the country so that there is equilibrium between Andhra Pradesh and other states. Andhra Pradesh is way high up in the ease of doing business.
  • Now is the time to utilise the resources given by Government of India and make use of it so that the state in the shortest span of time has achieved something.
  • This kind of packages should be used properly without any wastage, leakage and without unnecessary wastage in unnecessary area.
  • It is up to the government and the people to chart the new path. There are different trajectories and different routes.

Need of the Hour

  • Every state can specialise and make strong its assets and then go forward. There is no need that every development model has to be the same. If China has industry as its model of development, then other countries can have other entity. China with all the wherewithal has never been able to develop an Aero Space Industry like USA or France.
  • Develop education skills; develop world class educational institution and health facilities. To set up a big steel and aluminium industries one job is generated for every 2 or 3 crore of investment. But a small portion of it is enough to generate a job in healthcare sector, tourism and education sector. There is no gestation period in these sectors.
  • The challenge for the Andhra Pradesh government now is to chart a path towards growth. They have an excellent hill terrain right from Vizianagaram to west Godavari, presence of Eastern Ghats, long coastline, favourable climate for tea and coffee and tourism. Developing small cities into smart cities.


Political leadership will be the key in the task of implementation and need of technological expertise to translate projects into realities. The bureaucrats from the central services should be given some opportunity so that they are attracted to come to Andhra Pradesh.