Prime Minister Narendra Modi has sprung a surprise on the TDP government in Andhra Pradesh by providing legal status to the special economic package offered to the state last September. This has also cemented the relations between the TDP and the BJP. Andhra Pradesh Assembly on Thursday passed a unanimous resolution thanking the PM for the Cabinet motion granting official status to the package that would be in force with effect from 1 April 2015 to 31 March 2020. AP will get a Central assistance of Rs 19,000 crore during this period. Of that, Rs 10,461 crore has been received till now.

The Union Cabinet’s decision has brought relief to Chief Minister N. Chandrababu Naidu who is under pressure from Opposition YSR Congress and fledgling Jana Sena party which are agitating for special status to AP.

Finance Minister Arun Jaitley had earlier announced a slew of measures to offer an economic package equivalent to the special status which has now become obsolete in view of the recommendations of the 14th Finance Commission that scrapped the difference between special status and non-special status states in the country.

What thrilled the TDP leadership in AP about the Union Cabinet’s decision was its timing. The issues were on the agenda of the Union Cabinet since 15 February, as a group of TDP MPs led by Union minister Sujana Chowdary was in touch with the BJP top brass for long. 

But the PM’s decision to take up this issue on the very first Cabinet meeting and agreeing to grant official status to the package till 2020 happily surprised the TDP. “We are thankful to the PM for his decision as this would fulfill a major promise of our coalition (BJP-TDP) to people of AP,” Union minister Chowdary told the media.

CM Naidu said that he had always believed that the PM would stand by Andhra Pradesh. “Some parties have egged on me to pull out of NDA at the Centre, but I always felt that having friendly relations with the Centre would help us,” said Naidu.

AP Information and Public Relations Minister Palle Raghunatha Reddy, who spoke to this newspaper on phone from Amaravati, said: “This official status to the package by the Union Cabinet is binding on the government in all respects. This would shut the mouths of our opponents that we had compromised on the interests of our state.”

The Cabinet resolution that granted official status to the AP’s economic package has made it clear that the entire 90% grants from the Centre to the state would be treated as an EAP (externally aided project). AP would raise funds from EAPs to meets its schemes while the Centre would fully repay the loan.

One big benefit of the package was total reimbursement of the funds spent by AP on the Polavaram project, irrespective of the timeframe. So far, the state has spent about Rs 5,000 crore and the total estimated cost is around Rs 17,000 crore. This outlay is expected to go up further due to delayed execution, but the state should get Centre’s ratification to the revised costs. The responsibility of execution of the project will be in the hands of the AP government, but its designs, project monitoring and securing different clearances would be taken care of by the Polavaram Project Authority, a wing in the Union Water Resources Ministry. Now that the Centre has granted official stamp on the economic package to AP, the issue of special status would be a closed issue.

Municipal Administration Minister P. Narayana, who spoke to this newspaper on phone from Amaravati, said: “People of AP would see the reason and understand the importance of the Union Cabinet’s decision on the economic package. Now only two more issues remain—grant of a new railway zone to Visakhapatnam and increase of Assembly seats from 175 to 225 as per the AP Reorganization Act.”

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