When Andhra Pradesh was divided in 2014, leading to the creation of Telangana, it was promised "special category" status by the United Progressive Alliance (UPA) government of the time. Bihar wanted this status in 2000, when it was split to create Jharkhand.
The demands of the two states have gained added weight with N Chandrababu Naidu's Telugu Desam Party and Nitish Kumar's Janata Dal (United) emerging as crucial allies of the new coalition government at the Centre led by the Bharatiya Janata Party. Naidu is the chief minister of Andhra and Kumar of Bihar. The special category status had earlier been accorded to the northeastern states and three hilly states: Uttarakhand, Himachal Pradesh, and Jammu & Kashmir. However, the 14th Finance Commission, whose recommendations were implemented from financial year 2015-16 (FY16) to FY20, suggested scrapping the system.
States with this tag used to receive 90 per cent of funds from the Union government for centrally sponsored schemes, compared to 60 per cent for other states, along with other fiscal benefits. Additionally, unspent funds did not lapse at the end of the financial year.
The Andhra Pradesh Reorganisation Act of 2014 provides for special financial support to develop essential facilities in Andhra's new capital and offers fiscal measures such as tax incentives to promote industrialisation. Support for backward areas, including physical and social infrastructure, is also included. At a pre-Budget interaction with Union Finance Minister Nirmala Sitharaman on Saturday, Andhra Pradesh Finance Minister Payyavula Kesavis appealed to the Centre to fulfil the assurances under the Reorganisation Act and demanded a special grant of ₹15,000 crore for development of the state's new capital at Amaravati. Do the economic conditions of Andhra and Bihar justify a special package?
Case for Bihar
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