The demand for Special Category Status (SCS) has been a prominent and long-standing issue for Andhra Pradesh ever since the state’s bifurcation in 2014. The creation of Telangana left Andhra Pradesh facing severe economic challenges, including loss of revenue and a lack of infrastructure in its new capital, Amaravati. To address these challenges, the state has been consistently appealing to the central government for SCS to ensure equitable development and financial support.
What is Special Category Status (SCS)?
Special Category Status is a classification that allows states facing economic or geographic disadvantages to receive preferential financial assistance from the central government. The status was originally introduced by the Fifth Finance Commission in 1969 to help backward states or those with difficult terrain and limited resources.
Key Benefits of SCS:
- Central Funding: 90% of central funds are provided as grants, while only 10% need to be repaid as loans.
- Tax Incentives: Industries in SCS states enjoy tax concessions to boost investments.
- Priority in Resource Allocation: Greater access to central schemes and infrastructure support.
- Developmental Focus: Special attention to projects in sectors like education, irrigation, healthcare, and employment.
Why Does Andhra Pradesh Demand SCS?
- Post-Bifurcation Challenges
- The bifurcation led to a loss of Hyderabad, a major revenue-generating hub for the combined Andhra Pradesh.
- The state’s economy now lacks a developed capital city or adequate industrial hubs.
- Revenue Deficit
- Andhra Pradesh has been facing a significant fiscal deficit due to reduced tax collections and increased administrative expenses.
- Need for Infrastructure Development
- With the new capital Amaravati still under construction, the state requires large-scale investments in infrastructure, education, and industries.
- Promise of SCS
- At the time of bifurcation, the central government assured Andhra Pradesh of Special Category Status for a period of 5 years to mitigate economic hardships.
- The unfulfilled promise has led to ongoing political and public pressure on both state and central governments.
Central Government’s Position
The central government has expressed reservations about granting SCS to Andhra Pradesh, citing:
- The abolishment of the SCS system post-2014.
- Shift to a revenue-sharing model under the 14th Finance Commission, which replaced SCS with a “Special Package” that provides additional financial assistance.
While a Special Financial Package was proposed, it has not met Andhra Pradesh’s expectations, as SCS includes greater benefits and long-term developmental assistance.
The Road Ahead
The demand for Special Category Status continues to be a political and economic debate. State leaders and citizens alike emphasize the urgent need for support to ensure balanced development and economic stability. Achieving SCS would be instrumental in:
- Attracting industries and investments.
- Reducing fiscal deficits.
- Strengthening infrastructure and employment opportunities.
The Special Category Status remains an emotional and economic issue for Andhra Pradesh. Despite alternative measures, SCS is viewed as essential for addressing the state’s post-bifurcation challenges and promoting equitable growth. As public and political discourse continues, the focus remains on ensuring a just solution to help Andhra Pradesh prosper.