Naidu’s return to national politics with big win puts SCS demand back in the limelight

The much-debated and long-pending Special Category Status to Andhra Pradesh is back in the limelight with the return of Telugu Desam Party president Nara Chandrababu Naidu to national politics post thumping victory in the just-concluded elections.

The unprecedented majority for the alliance of the Telugu Desam Party (TDP), the Bharatiya Janata Party (BJP), and the Jana Sena Party (JSP) — 165 Assembly seats out of 175 and 21 Lok Sabha seats out of 25 — in Andhra Pradesh (A.P.), makes the TDP supremo once again a kingmaker in the national politics.

With the BJP falling short of 32 seats to form the government on its own, Mr. Naidu’s role at the Centre has turned significant with the TDP’s tally of 16 Lok Sabha seats. The Alliance has two more seats won by Pawan Kalyan’s JSP. The BJP is also banking on its other friend Nitish Kumar of JD (U) from Bihar, who won 12 LS seats. Both A.P. and Bihar have a long-pending unfulfilled demand – Special Category Status (SCS).

Post counting in the 2024 polls, the Congress has lured the TDP by offering the SCS to A.P. along with plum posts but Mr. Naidu made it clear to the media that he was with the NDA and would continue to do so. But he may demand the Special Category Status to A.P., which was denied by the BJP at the Centre between 2014 and 2019 when Narendra Modi was the PM and Mr. Naidu the CM of A.P. The demand was also not considered during the YSR Congress rule between 2019 and 2024.

A.P. lost its jewel and major revenue earner Hyderabad when the State was bifurcated and Telangana formed in 2014. The then Prime Minister Manmohan Singh had promised SCS to A.P. in the Rajya Sabha, which has not yet been fulfilled. Mr. Naidu, who was in alliance with the BJP in the 2014 polls, came out of the NDA just ahead of the 2019 elections, following the denial of SCS. However, A.P. was given a Special Package during the 2014-2019 TDP term.

Now, A.P. has more reasons to seek SCS as it does not have a fully developed capital city and its finances are in a bad shape. The revenue deficit claimed by the A.P. government between 2015 and 20 was over ₹66,000 crore but the NITI Ayog and the 14^th Finance Commission’s estimate was just over ₹22,000 crore. The current public debt is over ₹3.5 lakh crore. The State government is of the view that there has been an unjust bifurcation and distribution of assets and liabilities. The revenue of the State is estimated to be half of that of Telangana.

Benefits of SCS

The SCS status will ensure investments in the manufacturing sector, IT, premier educational and research institutions, specialty hospitals, star hotels etc., besides the Centre’s 90% funding for the Centrally-Sponsored Schemes. For other States, the Central assistance is calculated at 30% grant and 70% loan.

The States with SCS are also provided Special Plan Assistance for projects of special importance and unspent funds do not lapse at the end of the financial year.

The concept of SCS was introduced by the Fifth Finance Commission of India in 1969 for the development and fast-tracking growth of States which are plagued by historical, economic or geographical disadvantages. States with difficult and hilly terrain, low population density or sizeable tribal population, strategic location along borders, economic and infrastructural backwardness and poor State finances can also be granted SCS. However, the 14^th Finance Commission scrapped the SCS concept and suggested that the resource gap of the States should be filled by increasing the devolution of tax to 42% from 32%.

At present, 11 States have the SCS status – Assam, Nagaland, Himachal Pradesh, Manipur, Meghalaya, Tripura, Sikkim, Arunachal Pradesh, Mizoram, Uttarakhand and Telangana.