Andhra Pradesh State was bifurcated with a ludicrously drafted bill by congress which was later passed by Parliament in a most undemocratic manner in Feb 2014. People voted for NDA alliance at Center and State hoping they would fulfill the promises made. The NDA government has presented 2 Union Budgets till date and 3 full budgets will follow before 2019 elections. Let us review the status of the commitments made, based on the budgetary allocations (for 22 months) and other actions.

Andhra Pradesh Reorganisation Act, 2014: Link to the act

Rajya Sabha Assurances : After the shameless drama in Lok Sabha with the flawed bill and resentment from public, Shri Venkaiah Naidu and Arun Jaitley, forced UPA to provide further benefits to the state. The 6 points for BJP to support the bill  were announced by Prime Minister on floor of Parliament and approved by the UPA cabinet in 2014. [The 6 points announced by PM]

AP BJP Manifesto:

  • Assurance to provide and extend ‘Special Category’ status by 5 more years.
  • Provide Special package for backward regions on the lines of Bundelkhand and past packages.
  • Allocating funds to completely fulfill first year(2014-15) revenue deficit. (Before 14th Finance commission report comes out)


Let us review the current status:

“Special Category” Status: Special category status was promised for 5 years in Parliament by the PM and approved by UPA cabinet. BJP went ahead and said that they would further extend the status by 5 years once they are in power.[Special category states get allocations as 90% grants and 10% loans,Concession on excise duty etc]

Status: No action till date. There is a blame game going on between NDA and UPA.

Special Package/IncentivesThe parliament and UPA cabinet passed the implementation of a special package for the 7 backward districts for the state on the lines of other packages implemented in the past in Bundelkhand,MP,Orrisa.

Status: Rs 50 cr each for 7 backward districts was approved in Feb 2015 for the year 2014-15. There is no mention about allocation in the 2015-16 budget. Moreover, the Backward Regions Grant Fund (BRGF) scheme is now discontinued and state has to bear this burden. FM in his 2015-16 budget speech mentioned that they will provide special assistance to AP,Bihar and west Bengal.It needs to be seen if the Rs 20,000 crore allocated to NITI Aayog will be used for this purpose.

15% additional depreciation on new plant and machinery setup in backward region. 15% investment allowance for industries setup in backward region. This is applicable for 5 years(2015-2020). The above allowance is futile, as the industry will only benefit once it becomes profitable.

Revenue deficit in 2014-15: Parliament and BJP promised to fulfil the resource gap in first year budget before the 14th Finance commission recommendations are approved. The state has a revenue deficit of Rs 9,736 crore till end of Jan 2015. The State requested an amount of Rs 15,691 crore. There was no allocation made in the 2014-15 union budget.

Status: An amount of Rs 500 crore was allocated in Feb 2015. Will more funds be released before April 2015 to bridge the gap?

Polavaram ProjectThis multi-purpose dam on godavari river would irrigate 7.2 lakh acres and provide 80+ TMC water for drinking and industry.In 2009 National water commission approved the project at an estimated cost of Rs 16,010 crore which has skyrocketed to Rs 20,000 cr by 2015. Since 2004 the state government has spent Rs 5,700 crore on the project. AP Reorganisation act declared Polavaram as a national project. 50% of the canal work has been completed till date and the reservoir work has to start.


Status: An ordinance was passed to merge villages from 7 mandals of Telangana into Andhra Pradesh before the appointed day(June 2nd 2014). ‘Polavaram Project Authority’ was setup and Dinesh Kumar was appointed as CEO in Dec 2014. No commitment has been made on the funds spent by the state government.

Budget Allocations:

2014-15:Rs 250 crore

2015-16:Rs 100 crore (This has caused lot of heart burn among people.)

Anticipating a delay, the state government has embarked upon ‘Pattiseema lift irrigation’ to pump 70 TMC of water from Godavari to Krishna and plans to complete it in 2015.

New Capital: State government has sent a report with estimates of Rs 20,935 crore for 5 years to develop the new capital. Act: Section 94(3) of the act.


Status: No allocation was done in 2015-16 budget. The state has entered into an MOU with Singapore government to prepare a master plan for the capital. This would be completed by May 2015 and submitted to Center and kept public domain. The land Pooling for the project is in final stages. There is speculation in media that Rs 2000 crore might be released from unused funds under various ministries before April 2015.

Educational InstitutionsThe 13th schedule of the act directed to setup IIT,IIM,IISER,NIT,Central University,Petroleum University,Agricultural university,IIIT,Tribal University,NIDM and AIIMS. The state government is expected to provide land and central government will fund the Institution.



Status: Foundation stone was laid for IIM Vizag in Jan 2015. Approvals for other locations identified by state government are in Progress and in final stages. The IIM session would start from 2015 in a temporary campus.

Fund allocations:

2014-15: Rs 7 crore for other Institutes which in revised estimates came down to Rs 7 lakh. AIIMS final budgetary allocation was Rs 1 crore

2015-16: Rs 208 crores was allocated. (IIM,IIT,NIT,IISER got Rs 40 crore each. IIIT:Rs 45 Crore, Central University: Rs 1 crore, Tribal University: Rs 2 crore, AIIMS-unknown). Rs 75 core was allocated for Agricultural University.

[To give you an Idea of the ballpark costs involved, setting up an IIM – Rs 1000 crore and IIT – Rs 1750 crore]. While AP BJP President and MP K Haribabu said that “In just 5 months we have provided Rs 7,500 crore through MHRD”, the actual allocations have been around Rs 300 crore in 2 budgets.

Infrastructure: The act specifies that

  • The government has to examine the expansion of Vizag,Vijayawada and Tirupati airports to international standards.
  • A feasibility study for a greenfield oil refinery and Petrochemical complex within 6 months has to be completed.
  • Vizag-Chennai Industrial Corridor feasibility should be completed [was mentioned in 2014-15 budget]
  • Government should develop a new major port at Dugarajapatnam and complete Phase-1 by 2018

Status: There is no fund allocation or progress on this front. Port was mentioned in 2015 rail budget, but more clarity is needed on funding and timelines.

Railway Zone: The act directs to examine the establishment of a new railway zone for the state within 6 months and take an expeditious decision thereon.

Status: A committee was formed and its term extended further. No action even after 9 months.

Metro Rail: The act outlines conducting feasibility study for Visakhapatnam and Vijayawada metro rail within one year and taking decision thereon. Status: The State government appointed Shri E Sreedharan as the Principal Adviser of the Project. The team will submit the DPR by end of March 2015.

Allocations: 2014-15: None 2015-16: Rs 5.63 crore each.

No allocations were made for Police academy,Greyhounds,Octopus,Marine academy,SDR force setup in the new state. Other areas like Power and water sharing issues,Law & Order of Hyderabad with Governor,High court etc are not discussed here.

OTHER AREAS (Unrelated and outside the purview of Reorganisation Act):

14th Finance Commission: All the state governments receive a share of the central taxes and this allocation formula is reviewed every 5 years by a commission appointed by the President of India. The 14th finance commission’s report(2015-20) was approved by the government. Based on this an additional tax devolution of 10% was given to the states. States would now receive 42% of the central tax pool. AP share would be 4.3%. Even after due representations by the state to the chairman for providing a level playing field, there was no special treatment for Andhra Pradesh bifurcation losses. The state will receive additional grant of Rs 22,113 crore over 5 years to overcome the Revenue deficit. Similar grant is provided to 10 other states. There are additional funds that are allocated over a 5 year period[Rs 10,696 crore for Local bodies and Rs 2429 towards SDRF]. The state would also receive 4 % from the service tax pool. Apart from the above allocation, the center has transferred 24 central schemes to states (to fund partially) and 8 schemes to be fully funded by states.

For 2015-16 the state would receive a tax devolution of Rs 22,637 cr + deficit support 6609 cr = Rs 29,246 crore. (plus other funds for local bodies etc)

13th Finance Commission: State has to receive Rs 2,450 crore before April 2015 for the year 2014-15.

HudHud Cyclone: The state was hit by a devastating cyclone in 2014. The state received a relief package of Rs 737 crore. As per a UN study, AP and Orrisa had a loss of $11 billion(appox Rs67,000 crore) due to the cyclone.

Smart Cities: Vizag was selected as a Smart city. USA agreed to be a lead partner in developing the city. Krishnapatnam was selected in the previous budget. Status: No funds allocated. Not even a single rupee was utilised from the Rs 7000 cr allocated for smart city projects in country in 2014-15 budget. No clarity on allocations in 2015-16.

24/7 Power and Projects: The state along with Rajasthan and Delhi were selected for this pilot scheme. Apart from this NTPC will build 1000 MW solar projects and a 4000 MW thermal project. State and NTPC have signed MOU.

National Waterway-4: Clearances for this project on Buckingham canal are almostfinal.This is a Rs 353 crore project.

NOFN: Andhra Pradesh has become the first state to opt for executing the National Optical Fibre Network (NOFN) on its own and the telecom department will reimburse the cost for the same.