Andhra Pradesh Chief Minister N Chandrababu Naidu has threatened to move the Supreme Court in case the Centre fails to ensure justice to the state as per the AP Reorganisation Act, 2014. It’s not the first time he has threatened so but what makes it different this time is the fact that it came just a week after his meeting with Prime Minister Narendra Modi. Soon after the meeting, their first after nearly one-and-a-half years, Naidu appeared optimistic stating that the prime minister had responded positively to his demands. So, what has changed?
The immediate trigger was Niti Aayog Vice-Chairman Rajiv Kumar’s remarks that the state was not in need of hand-holding by the Centre given its double-digit growth rate. It is true that Andhra’s growth rate is more than the national average but in reality, its finances are in a shambles. Most of the provisions incorporated in the Reorganisation Act and meant to help the state recover from the loss of Hyderabad following the creation of Telangana have been confined to paper. For instance, the division of assets listed in Schedule IX and X is still pending.
The Centre is duty-bound to bridge the revenue deficit which the state has inherited. But while the latter pegged the amount at a little over Rs 16,000 crore for the year 2014-15, the former arrived at a figure of Rs 7,500 crore and even of that, it has released only Rs 3,979 crore. Neither has it released adequate funds for the construction of the capital city or the Polavaram irrigation project.
To tide over the financial crunch, the state government has been on a borrowing spree. If the debt of the successor state of Andhra was Rs 96,000 crore in 2014, the debt accumulated in the last three years alone stands at over Rs 1,20,000 crore. The state has now sought allocation of funds in the Union Budget and relaxation of the Fiscal Responsibility and Budget Management limit. If the state is to recover fast, the Naidu government must be frugal and the Centre must walk the talk on cooperative federalism. Any trust deficit between the two will harm the people in the long run.