New Delhi: While announcing financial support for Andhra Pradesh in her budget speech, Union Finance Minister Nirmala Sitharaman spoke about how the Modi government has made “concerted efforts” to fulfill the commitments made in the Andhra Pradesh Reorganisation Act, 2014.
Sitharaman said that under the Act, her government will facilitate special financial support to the state through multilateral development agencies for the development of Amaravati as its capital. For the 2024-25 fiscal, the government will arrange Rs 15,000 crore for the capital project, she added.
The minister also promised to provide finances for the early completion of the Polavaram irrigation project, which has been pending for the last 20 years.
For promoting industrial development, Sitharaman said funds will be provided for essential infrastructure such as water, power, railways and roads in Kopparthy node on the Visakhapatnam-Chennai Industrial Corridor and Orvakal node on Hyderabad-Bengaluru Industrial Corridor.
An additional allocation will be provided this year towards capital investment for economic growth, she added.
Despite the myriad announcements, several provisions of the Act, related to the development of social and physical infrastructure in Andhra Pradesh and division of assets between the state and Telangana, have remained unfulfilled.
ThePrint explains what the AP Reorganisation Act is and what all it entails.
Also Read: Can Naidu, Revanth finally settle Andhra-Telangana bifurcation issues? Bonhomie clear, meeting fixed
Centre’s key roles under AP Reorganisation Act
The AP Reorganisation Act was notified on 1 March, 2014. Three months later, on 2 June 2014, the erstwhile state of Andhra Pradesh was bifurcated and a separate state, named Telangana, comprising 10 districts of the original state, was carved out.
The Act spells out the measures that were to be taken by the Centre to financially support Andhra Pradesh, which “lost significant resource base” in the bifurcation and “therefore remains at a disadvantage”. It also lays out how the assets were to be divided between the two successor states — AP and Telangana.
It categorically provided that the central government will take “appropriate fiscal measures including offer of tax incentives” to promote industrialisation and economic growth in Andhra Pradesh and Telangana.
For AP, the Act specifically states, “The central government shall provide special financial support for the creation of essential facilities in the new capital of the successor state of Andhra Pradesh including the Raj Bhawan, High Court, Government Secretariat, Legislative Assembly, Legislative Council, and such other essential infrastructure.”
The legislation also talks about a special development package for the backward regions of the successor state of Andhra Pradesh, in particular for the districts of Rayalaseema and north coastal Andhra Pradesh, along the lines of the Special Plan for Odisha, Bundelkhand, Madhya Pradesh and Uttar Pradesh. The Special Plan is an annual fund allocation under the panchayati raj ministry’s Backward Regions Grant Fund scheme.
In the ten years since the Act came into force, most of the commitments it promised have remained unfulfilled.
Measures for progress and development of successor states
The Act specifies that the central government shall take all “necessary measures” as enumerated in the Thirteenth Schedule for the progress and sustainable development of the successor states — Telangana and AP — within a period of ten years from the appointed day.
The Thirteenth Schedule lists the education and infrastructure projects to be established by the central government in the successor states. In AP, for instance, the Act said that the Centre shall take steps to establish institutions of national importance in the 12th and 13th Plan periods.
This would include one Indian Institute of Technology (IIT), one National Institute of Technology (NIT), one Indian Institute of Management (IIM), one Indian Institute of Science Education and Research (IISER), one central university, one petroleum university, one agricultural university and one Indian Institute of Information Technology (IIIT). Moreover, one AIIMS-type super-specialty hospital cum-teaching institution must also be set up by the Centre in AP, the Act states.
On the infrastructure front, the Centre had promised — in the AP Reorganisation Act Schedule 13 — to develop a new major port at Dugarajapatnam in Andhra Pradesh. The port was to be completed in phases, Phase I by end-2018. In 2018, soon after Chandrababu Naidu’s Telugu Desam Party (TDP) pulled out of the National Democratic Alliance (NDA) government over denial of special category status to Andhra Pradesh, the port project was scrapped by the Centre on the grounds that it is not viable.
The Centre had also committed to take measures to establish rapid rail and road connectivity from the new capital of Andhra Pradesh to Hyderabad and other important cities of Telangana.
The Act also spelt out the allocation of resources by the finance commission. The resources had to be allocated between AP and Telangana on the basis of population ratio and other parameters.
When the AP Reorganisation Bill was introduced in Parliament in 2014, its statement of objects and reasons mentioned that post-bifurcation, the residual state of Andhra Pradesh has “lost significant resource base and therefore remains at a disadvantage vis-a-vis neighbouring revenue-surplus States. The fund crunch and resource-wise disadvantage are not the making of Andhra Pradesh.”
It further stated that it was assured by the government that “necessary grants would be provided in the current budget which has not been done inspite of assurances to support to the state of Andhra Pradesh on several fronts, including bridging revenue deficit, providing industrial incentives, special development package for backward areas in seven districts (four districts of Rayalaseema and three northern coastal districts of Andhra Pradesh), assistance to State capital development, railway zone for the State and Special Category status”.
Representation in Parliament, legislative assemblies
Besides provisions for financial support by the Centre, the Act mandated that post bifurcation, Andhra Pradesh will have 11 seats in Rajya Sabha, and Telangana 7, while in Lok Sabha, AP will have 25 seats and Telangana 17. In the legislative assembly, AP will have 175 seats while Telangana will have 119.
The High Court at Hyderabad was to be common for the successor states for a period of time after which it would become the High Court for the state of Telangana, and AP would get a new court.
However, the Law Association of Telangana did not allow AP lawyers to enter the High Court in Hyderabad in the initial days after bifurcation. The HC is now divided with Andhra Pradesh’s principal judiciary operating from Amaravati.
Also Read: Some matters settled, but many squabbles persist — AP-Telangana ties 10 yrs after bifurcation
Disputes over assets remain
A little over 10 years since the bifurcation, disputes over the division of most assets and liabilities of the combined state persist.
The main bone of contention between Andhra Pradesh and Telangana lies in the division of assets of companies, corporations, and institutions as outlined in Schedules IX and X of the Reorganisation Act.
Schedule IX, which deals with apportionment of assets of companies and corporations between the two states, specifies that the assets of headquarters of such undertakings are to be divided based on the population ratio of 58:42 (58 percent to AP and 42 percent to Telangana) and operational assets on location.
In all, there are 89 government companies and corporations listed under Schedule IX whose assets, rights and liabilities have to be apportioned. These include Andhra Pradesh State Civil Supplies Corporation Ltd, Andhra Pradesh Housing Board, and Andhra Pradesh Aviation Corporation Ltd, among others.
Additionally, 142 institutions valued at approximately Rs 40,000 crore listed under Section X — such as the Environment Protection Training and Research Institute and the AP Forest Academy, among others — remain undivided due to ongoing disputes.
Most of these companies and corporations’ headquarters are located in Hyderabad, which was previously the capital of the combined state and the joint capital of the separated states till 2 June this year.
There is also a lack of agreement on other liabilities, including power dues owed by one state to the other. Andhra Pradesh alleges Telangana owes it over Rs 7,000 crore for energy supplied between June 2014 and June 2017, which Telangana has so far refused to clear.
Unable to resolve the differences, mainly concerning public sector assets, AP knocked on the Supreme Court’s doors in 2022, complaining that the actual division of assets and liabilities belonging to combined Andhra Pradesh has not commenced to date. The matter is pending in the apex court.
(Edited by Gitanjali Das)
Also Read: ‘Whose history?’: In Telangana and Andhra Pradesh, the archives are fighting