Andhra Pradesh is broken, broke and needing a break.

Andhras Special Status betrayal Why both BJP and TDP are culpable
news Opinion Wednesday, February 21, 2018 - 08:13

A full fourth of children in Andhra Pradesh simply stop going to school at Class 9. Equally large numbers of boys, as girls, 25% of all Andhra children that enter the ages of 13-14 do not enter school. And a couple of years after, 40% of children stop school, public and private, not even entering Upper Secondary. If this is the average across all districts of AP, imagine the situation in the seven backward districts! 

Why are so many children not even sent to school as teenagers in a state that prides itself on valuing education? Is it poverty? The kind that forces parents to pull children out of school so there is an extra pair of hands to work and supplement income? Perhaps. Follow that trail of out-of-school poverty stricken teenagers and it leads through illegal underage marriage and motherhood for girls between 15-18, and large out-migration from the state, especially of men and boys, in search of paying labour. The trail reveals the enormity of human development that remains undone.

The state run by the richest Chief Minister in the country has relatively high growth (GDP rank 10 of 36 states) and relatively low per capita income (rank 16 of 36.) What does this mean?

AP is producing well and is in the top third in GDP, especially in the agricultural and services sectors but it’s output is not commensurate with its population. Income per person is low compared to many other states.  Low income may explain why parents truncate teen education in favour of livelihoods. 

Addressing this means creating jobs and schemes that improve the standard of living. That requires capital infusion, more than what AP can generate in-state. Capital, not a capital city.  

Andhra Pradesh finds itself in this bind for two reasons.  One, the combined state that had high revenues due to its capital city, Hyderabad, was split abruptly, leaving one residue with both poor revenues and poor immediate potential for revenues. Two, the undivided state had been over-centralised by successive state governments with a single city as an overbearing economic hub. Indeed, even if the state had not been split asunder but Hyderabad had been carved out of the state, the remainder would have been cash strapped.

In other words, the split may have been gentler had development been more equitable across AP. Note that seven of thirteen districts of the new state, the majority, are backward.

As the extract from the state government’s own note says, “Andhra Pradesh State would have to replicate more than one hundred institutions of research, development and training along with several other premier institutions that are located in around Hyderabad city. In addition, several central public sector undertakings like BHEL, defence research institutions, research and development institutes like CCMB and DNA Finger Printing Institute that provide employment to lakhs of families have all devolved to Telangana State by virtue of their location in and around Hyderabad city.” This note on claims and receipts due to the AP Reorganisation Act, 2014 was sent to the Joint Fact Finding Committee constituted by the Jana Sena Party leader, Pawan Kalyan.

This developmental skew, exacerbated by bifurcation, results in revenue stress hurting investment in welfare measures and job creation programmes. Along with debt accumulation due to both genuine and profligate spending (not unique to AP) this leaves the state with no choice but to be needy for central funds. Given these circumstances, the moniker of the money matters not: Special Category, Special Status, or Special Package.

Problematic though is that Andhra Pradesh state and the Centre do not seem to agree on the arithmetic. As an example, there is a whopping difference of Rs 12,000 crore between the demands from AP against debt redemption, old age pensions & DISCOMS restructuring package, and the Centre's calculations. The Central government rejects these as ineligible for coverage from bifurcation and has provided about Rs 4,000 crore since 2014-15 against revenue deficits.

There are several more such bones of contention including Polavaram, a railway zone, a crude oil refinery, Amaravati, educational institutes, the Duggirajupatnam port, Kadapa steel plant, anomalies in taxation between the two child states, etc.

What is the truth? Is it in the state's claims? The centre's rebuttal? Or in-between?

The party that fought for special category status for Andhra in the Parliament at bifurcation, is now occupying the seat of the union government. It has since reneged on special category status, even special assistance for AP. Back home, the party that was elected by the shocked and shaken Andhra populace in the wake of bifurcation, incessantly brags about a high growth Mecca with a Singapore like dream-capital, not highlighting the human tragedies unfolding from Uddanam to Anantapuram, and the concomitant need for assistance.

In fact, just a few days ago, Chief Minister Chandrababu Naidu presented so rosy a picture at The Hindu Huddle in Bengaluru, that some in the audience rued their inability to migrate outright to the glorious first-world state! 

The issue is that the verbiage in the AP Reorganisation Act, does not explicitly qualify, assert, quantify or guarantee many of the projects mentioned. The state’s claims stem from verbal statements on the floor of the Parliament or on public record. Such claims may not stand up in court. 

Having won the country, the Centre no longer sees incentive or coercion to amend the Act and codify the promises. Indeed, it has something to lose if it does. Less money both for the central treasury and other poll bound states in the period starting 2014 till date. What is inexplicable however, is why the state, a bosom buddy of the centre, has not been able to secure any reasonable package for its people?

It has the advantage of being an ally. The powers of persuasion from the relationship between the Chief Minister, Vice President and Prime Minister. The voice of its MPs in Parliament. The leverage of conditional support to controversial programs like demonetisation and GST. The quid pro quo of a negotiated amendment to the APRA. The rallying of cross party support in AP due to the might of rule.  A levy of serious threat of divorce.  And when all else fails, mobilising of visible public sentiment. 

So many options, and combinations thereof.  None tried, or all failed?

The Centre’s sole job is not Andhra, neither is this one state its sole beneficiary. However, the one and only job of the state government is to fight for its people. To pull all stops when they are in crisis. Unfortunately, that has not happened.

To add to the woes, there are more ominous signs around the bend. The 15th Finance Commission will be making recommendations for funds devolution to states commencing Aril 1, 2020. Not one Chief Minister has objected to the Terms of Reference recently issued to it, one that may seriously decrease states’ devolutions while increasing the central kitty. While many other states may be impacted, Andhra’s whammy over and above the preexisting revenue deficit may become an albatross of a burden. The Centre’s Terms of Reference nudge for:

  1. Reducing states’ share of central taxes from the 42% that the Fourteenth Finance Commission had recommended and diverting it to union coffers. This would slash Andhra's base share of central taxes,  shrink incoming funds.
  2. Using 2011 population data outright or the increase in it's weightage compared to what the 14th Finance Commission used, which will diminish the population multiplier. Again, significantly reduce devolution to AP.
  3. Reducing compensation to states due to GST losses. A further penalty for a state that obediently sacrificed it’s federal rights of local taxation and flexibility in revenue generation.
  4. Narrowing of or cancelling entirely, grants-in-aid provided against unmet administrative expenses and essential development. If so, it will close the doors for revenue offset possibilities for a fiscal deficit state and further drive Andhra into debt. These grants are enshrined in Article 275, and as such, provide grounds for objection.
  5. Tying performance on central schemes to funding levels of states. This implies that Andhra’s priorities and administrative resources need must focus on central schemes instead of provincial welfare to avail funds.

It is feckless of the Andhra Pradesh government to not have reviewed and resisted these terms for the 15th Finance Commission when they violate both the letter and spirit of the constitution. But worse, the state government is betraying its people by its blindness to the storm clouds forming in the not so distant horizon and not acting urgently in defence.

Andhra needs serious attention to basic socio-economic and human development including poverty alleviation, school education, addressing of trafficking, marriage and malnutrition of children, indentured labour and farmer distress. It's urbanisation, the key indicator of decentralised job creation is woefully inadequate and instead, has a pixellated vision of a mega-city driven economy which only amplifies it is staggering deficit. This combined with oncoming 15th Finance Commission recommendations may well render it a body blow.

Unless every weapon from persuasion, negotiation, leverage, coercion, elections to compulsion, is deployed relentlessly for capital relief from the centre, the future of Andhra Pradesh will have been, both literally and figuratively, mortgaged to personal, party and parochial interests.

"Find out just what any people will submit to, and you have found out the exact amount of injustice and wrong which will be imposed upon them," said Frederick Douglass.

Or, as the Telugu's would say with characteristic alliteration: "Toorpu tirigi dhandam pettu!" For all that's left may be a Hail Mary pass.


Disclaimer: The author is a civic activist and independent member of the Joint Fact Finding Committee constituted by Pawan Kalyan of the Jana Sena Party. The views expressed are the personal opinions of the author.