The Joint Fact-finding Committee (JFC) observed that the state was yet to receive allocations amounting to Rs 74,542 crore from the Centre.

From special status to Polavaram Pawan Kalayans JFC report on bifurcationImage: Facebook/Jana Sena Party
news Bifurcation Sunday, March 04, 2018 - 14:59

Less than a month since its inception, the 20-member Joint Fact-Finding Committee (JFC) convened by Jana Sena Party chief Pawan Kalyan has published its much-awaited report about AP’s bifurcation promises and has made 15 recommendations to the central and State governments. 

Formed to fight the injustice meted out to both Andhra Pradesh and Telangana, post bifurcation, the committee published recommendations which highlighted several pending budgetary allocations amounting to Rs 74, 542 crore, from the Centre. 

Out of this, Rs 16,447 crore was for the 'special package' announced in 2016, Rs 10,225 crore was promised to minimize the revenue deficit and Rs 22, 250 crore was sanctioned for the backward areas in the State.

Further, the JFC also observed that the Visakha-Chennai corridor was promised Rs 6,000 crore, the Kakinada petro complex was due to get Rs 5,000 crore and Rs 10,819 crore was yet to be sanctioned for Institutes of national importance.

Here are the main recommendations of the JFC. 

1. Special category status (SCS) to Andhra Pradesh

Two entire pages of the report was dedicated to this demand. The JFC, highlighting this, said that the special status was yet to be granted despite former Prime Minister Manmohan Singh's assurance on the floor of the Parliament.

Emphasising that there was 'no alternative' to this demand, the JFC also pointed out that the Centre's claims of the 14th Finance Commission abolishing the concept in its recommendations was not true.

“We did not make a distinction between special and general category status in determining our norms and recommendations. In our assessments of state resources, we have taken into account the disabilities arising from constraints unique to each State to arrive at expenditure requirements. There is no recommendation that the classification of 'Special Category Status' should be abolished," the JFC quoted the Finance Commission's report. 

The second reason given by the Centre to deny SCS to AP was that NITI Aayog had decided to do away with this category.

"It is strange to argue that NITI Aayog, a non-statutory body, can overrule a Cabinet decision. The fact remains that 11 states even now enjoy SCS, despite the Centre’s claim that such a category is no longer relevant," the JFC report stated, pointing out to the North-Eastern states, Jammu and Kashmir, Himachal Pradesh and Uttarakhand.

The JFC said that it viewed SCS as a legitimate demand which should be sanctioned.

"A mere grant of Rs 16,447 crore towards centrally sponsored schemes is not a substitute to special category status," the JFC said.

2. Revenue deficit from June 2014 to March 2015

The JFC report said that the state's Accountant General had worked out a figure of Rs 16,078.76 crore as revenue deficit for the year 2014-15. This includes:

A) Agriculture redemption worth Rs 3,068.35 crore
B) Financial Assistance to Rythu Sadhikara Samstha worth Rs 4,001.32 crore
C) Financial assistance to DISCOMS worth Rs 1500 crore
D) Old-age pensions worth Rs 3,391.20 crore

However, the Centre rejected the above four items on the ground that they were new schemes or that their expenditure increased substantially post bifurcation.

The Centre calculated the net deficit instead, pegged at Rs 4,117.89 crore, of which Rs 3,979.5 crore had been released, and Rs 138.39 crore was pending, the JFC said. 

3. Polavaram Project

The JFC report stated that the Polavaram project, which was a national project, should be completed as scheduled and all costs, including any escalations related to land acquisition and resettlement and rehabilitation, should be borne by the Centre.

"Steps should be taken to ensure the smooth flow of funds to ensure seamless and uninterrupted project work," the JFC said.

4. Institutes of national importance

Of the 11 institutions of national importance for which funds are to be granted by the centre, nine have been sanctioned. The exceptions are the Central university at Anantapur and a Tribal university at Vizianagaram.

"Approximate cost to be borne by Centre for all the projects is estimated to be Rs 11,672.95 crore.  The total funds released by the Centre till now are Rs 576 crore. An additional provision of Rs 277 crore is made in the budget for 2018-19," the JFC pointed out.

5. Development of backward areas 

The JFC said that the Andhra government sent proposals to NITI Aayog in January, 2015 requesting a special development package for backward areas, for Rs 24,350 crore to be implemented over five years.

While the Centre has not made its response public, it has released Rs 350 crore per year for the seven 'backward' districts. An amount of Rs 1,050 crore was released for the last three years.  And the government has agreed to release another Rs 1,050 crore soon.

The Centre also announced a rebate of 15% higher depreciation, and 15% investment allowance on manufacturing units set up in the seven backward districts, between April 1, 2015 to March 31, 2020, the JFC said.

6. Rapid rail/road connectivity to Amaravati 

The JFC said that the state government has identified five road projects under this head.

This included the extension of a six-lane road on Hyderabad-Vijayawada Highway to Amaravati, expansion of existing Hyderabad-Nagarjuna Sagar-Macherla- Guntur- Amaravati  into a four-lane highway, expansion of the Amaravati-Ibrahimpatnam-Tiruvuru-Bhadrachalam and Jagdalpur into a four lane highway and building of a greenfield Hyderabad to Amaravati express highway. 

The fifth project is the sanction of Rs 72,000 crore that is being spent overall on national highways in Andhra Pradesh. 

A new railway line of 106.56 km between Vijayawada-Amaravati-Guntur has been announced by the Union Railway Minister on January 16, 2018, However, only a token provision of Rs 20 crore for crore for 2017 - 19 was made, the JFC stated.

7. Vijayawada Metro Rail

The Centre has returned the Detailed Project Report (DPR) of Vijayawada Metro Rail on January 1, 2017, requesting to examine the same under the new Metro policy announced in August, 2017, and to resubmit the same. 

The AP government has assigned the work of preparing the DPR for a light metro and the project cost would be known only after the DPR is out. 

8. Visakhapatnam metro rail

This proposal also has been returned by Centre on January 1, 2017 for re-examination under the new metro policy.

The State government's views on the metro rail are not clear, the JFC report stated.

9. The Visakhapatnam-Chennai Industrial Corridor

"The Visakhapatnam-Chennai Industrial Corridor (VCIC) comprises of four node-level Special Purpose Vehicles (SPVs). If equity is provided at the rate of Rs 3,000 crore to each SPV (according to approved pattern), the Centre would have to spend Rs 12,000 crore," the JFC said. 

There is no response from the Centre and the JFC requests the Centre to take an early decision.

10. Steel plant in Kadapa district

After the Steel Authority of India's (SAIL) negative feasibility report in 2015, a joint task force was constituted to explore ways to improve the feasibility of the proposed steel plant.

"MECON is working on the revised feasibility of the plant, and further details would only be available after the report is accepted by the Centre. JFC recommends that the Centre should clear the revised feasibility report," the committee said.

11. Dugarajapatnam port 

After NITI Aayog informed that the project was not viable, the Andhra government is yet to take a stand on the matter. The Union Finance Minister has stated that an alternative site for port can be considered, if recommended.

12. Kakinada Petrochem Complex 

This project is to be taken in Public-private partnership model and is estimated to cost Rs 32,900 crore. The Centre was requested to meet the viability gap of Rs 5,000 crore, for which there has been no response.

13. Railway Zone for AP

The demand for a railway zone with Vishakhapatnam as its headquarters has been a long standing demand in the State, with several protests being held against the centre’s indifference on the subject. 

"The matter is still pending with the Centre, which should clear it soon," the JFC said.

14. Amaravati Capital City Project

Accusing the Centre and the state of moving at a snail pace in this regard, the JFC said, "Even though four years have elapsed, the state government of is yet to finalise the designs, estimates and Detailed Project Report (DPR) for the projects in Amaravati. Works of the permanent buildings are yet to be started. Expenditure on the projects is poor so far."

15. Anomalies on taxation matters

The JFC said that as per the AP Reorganization Act 2014, the tax arrears have to be collected at the place of assessment, whereas the liabilities have to be discharged on the basis of population.

"This is resulting in loss to the Andhra government as most of the company headquarters are in Hyderabad and the losses are quantified at Rs 3,820.36 crore. Instead of amending the Act, JFC opines that the Centre must compensate the state for the loss," the committee concluded.


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