As a seasoned business reporter, I have learned that internal deliberations within governments often provide important context behind challenging policy decisions. According to reliable sources familiar with the discussions in New Delhi, granting special category status to the states of Bihar and Andhra Pradesh, as demanded by key NDA allies – JD(U) and TDP respectively, will be a complex proposition for multiple valid reasons.
One of the major benefits that special category states enjoyed in the past was a 90:10 funding split for centrally sponsored schemes, with 90% grants borne by the Centre. For other general category states, this ratio stood at 60:40. Additionally, special category states received higher allocation of grants compared to loans under normal Central assistance.
However, opening this window exclusively for Bihar and Andhra risks setting an undesirable precedent that could compel similar demands from other economically backward states across the country. With limited fiscal resources at its disposal already, the government is wary of taking a decision that may snowball into an unsustainable financial commitment.
Instead, alternatives like special development packages tailored to the specific needs of these two states are being explored. Andhra Pradesh, for instance, could be supported through dedicated allocations for the ongoing construction of its new capital Amaravati. While not a substitute for special category status, such targeted measures may provide some relief to allies without straining the exchequer.
Of course, the states too will have an opportunity to directly make their case and present revenue-expenditure data before the 16th Finance Commission during its forthcoming visits. However, with competing priorities from multiple regions, strong empirical evidence will need to be furnished to justify preferential treatment over other needy states. Only a well-balanced approach can resolve these complex inter-governmental issues equitably.
