The States have not been categorized for the purpose of devolution

The NDA government had promised the “Special Status” category to Andhra Pradesh but that was before 14th Finance Commission came into effect.

The truth about the denial of the “Special Status Category” to Andhra Pradesh is, as they say, in the fine print. But in our loud and lunatic democracy, who is willing to read it, respect it and then decent enough to and project it to the public without a spin or a tweak?

That is precisely why Chandrababu Naidu has gone almost nuts to demand that Special Status, even if it means making sacrificial goats of his two Union Ministers, disrupting Parliament day after day, and leaving the country in a state of uncertainty and anarchic in effect.

The ruling NDA too has played its part in this scene. Almost totally unaware of the importance of honest communications, Arun Jaitley, the Finance Minister, and all else downwards has kept mum, only saying that it is the14th Finance Commission that removed the Special Status designation to the States. Their stage is when they can communicate only digitally, in 14 digits if you will.

Jammu & Kashmir was the first state to get Special Category Status, 10 other states were added over the years.

The TV media is no different. They will revel in creating shouting debates between six or seven (even ten for that matter) participants, fighting for their TRPs for 24 hours a day but ignore the fine print. And the social media activists will go berserk on their computers, posting all kinds of defamatory allegations, concerned only about their own “special status” rather than uncover the facts —- that is so much more troublesome than typing out their 140 characters into 140 Tweets.

In the process, words have flown, good versus bad, truth be blown away. Arun Jaitley points to the 14th Finance Commission and the Congress intellectual, Jairam Ramesh says Jaitley is lying.

The nation, meanwhile, is weeping, in shame as to where our democracy has led us into.

That is one truth.

And the other one lies in the Report of the 14th Finance Commission.

Even knowing that that truth will not make an iota of difference to how our shameless detractors of a decent democracy, here below are excerpts of is what that Commission said about the “Special Status” issue among its 497n-page Report which, one must happily acknowledge, is what good economic-cum-financial experts have set out before the nation.

But before those excerpts, let it be known what “Special Status” to a State has meant in India for long since the phrase was coined by the National Development Council (a body of the erstwhile Planning Commission) on various parameters such as

1.Hilly and difficult terrain. 2. Low population density
3. Low resource base. 4. Strategic location along the borders of the country. 5. Economic and infrastructure backwardness. 6. Non-viable nature of the state’s finances.7. A sizable share of tribal population

Jammu & Kashmir was the first state to get Special Category Status, and another 10 states were added over the years, with Uttarakhand being the last in 2018.

“Our objective has been to fill the resource gaps of each State to the extent possible through tax devolution.”

Why this craze for “Special Category Status” among our Federation structure? Because of the following benefits showered on them:

(a)Preferential treatment in getting central funds assistance
(b) Concession on excise duty to attract industries to the state
(c) A significant 30 percent of the Center’s gross is estimated that goes to the special category states
(d)· These states can avail the benefit of debt swapping and debt relief schemes
(e) In the case of centrally sponsored schemes and external aid, special category states get it in the ratio of 90 percent grants and 10 percent loans, while other states get 30 percent of their funds as grants.
(f) Tax breaks to attract investment

Now go the excerpts from the 14th Finance Commission report.

“We did not make a distinction between special and general category states in determining our norms and recommendations. Our endeavor has been to take a comprehensive view of these commonalities and special characteristics of individual States while making our assessment and recommendations. In this regard, we have observed that the North-eastern and hill States have several unique features that have a bearing on their fiscal resources and expenditure needs, such as low level of economic activity, remoteness, and international borders. Our objective has been to fill the resource gaps of each State to the extent possible through tax devolution. However, we have provided post-devolution revenue deficit grants for States where devolution alone could not cover the assessed gap.” (Section 2.29, Page 30)

Intellectuals like Jairam Ramesh will understand that truth, only if the will and the vision to see that truth are there.

“Prompted by the distinguishing features of our ToR (Terms of Reference) and an assessment of the evolving environment, we have made some changes in the approach and methodology wherever necessary… We have not categorized States for the purpose of devolution. We have minimized the use of conditionalities and incentives. We have also increased untied transfers. This reflects our trust in all tiers of governments.”(Section 2.42, Page 33).

Only the North-eastern States, as well as the hill states of Himachal Pradesh, Jammu and Kashmir and Uttarakhand continue to receive a substantial portion of Plan grants by way of normal assistance for State Plans.” (Section 5.6, Page 63)

iv) Grants-in-aid for state-specific projects or schemes will not be considered, as these are best identified, prioritised and financed by the respective States. (Section 11.33, Page 160)

Detailed reasons for withdrawing this Grants-in-aid support are attached separately to this article.

The truth of why Andhra Pradesh has not been granted the “Special Status” has been laid on the table here. Intellectuals like Jairam Ramesh will understand that truth, only if the will and the vision to see that truth are there.

Yes, the NDA government had indeed promised the “Special Status” category to Andhra Pradesh when it came into power after May 2014, soon after the old Andhra had been bifurcated. But that was before 14th Finance Commission came into effect. The latter simply compelled a change in the rules of engagement. Considering that it radically altered the country’s financial devolution structure with a well-reasoned economic logic, its relevant recommendation could not be refused. But NDA  has repeatedly promised to provide the needed funds to Andhra. And done so.

Today, considering that Rs.4,000 crore has been granted to Andhra to bridge its revenue deficit (as stipulated by the 14th Finance Commission) and only Rs.138 crore was left to be paid, even hugely egoistic Chandrababu Naidu – and his sycophants — should understand the truth.

Reasons Why the 14th Finance Commission Removed Grants-In-Aid Benefit to States by PGurus on Scribd


Arvind Lavakare has been a freelance writer since 1957. He has written and spoken on sports on radio and TV. He currently writes on political issues regularly. His writings include a book on Article 370 of the Indian Constitution.

His freelancing career began in "The Times of India" with a sports article published when he was a month shy of 20 years of age. He was also a regular political affairs columnist first for for five years or so and then shifted to He also wrote extensively for "till it stopped publication."


  1. If people will only read the detailed analysis done by the author they would not jump to conclusions hastily. Mr S.Viswanathan ,in his replies of 29th March and 1st April Has well defined the subject .I suggest people to read the article thoroughly and the replies it has attracted before jumping to conclusions.

  2. Reacting to my question as to whether the reorganized Andhra Pradesh State had made a specific quantum of funds from the centre/ Finance Commission, one reader told (“ordered”?) me to read the Andhra Pradesh Reorganization Act, 2014. That Act (Section 46) dealing with Distribution of Revenue does not mention any specific amount to be given to AP by the 14th Finance Commission. In any case, remember, Article 280 of our Constitution is the one that decides on the devolution of resources to the States — in one form or another for one purpose or other. Instead it lists the various kinds of allocation categories to be referred to the 14th Finance Commission which was nearing the end of its term (2010-2015).
    Accordingly, the NDA government got the President of India to issue an Order to the Finance Commission to the President of India to alter its existing Terms of Reference. By that Order, dated 2nd June 2014, the President ordered that “The Commission shall also take into account the resources available to the successor or reorganized States on reorganization of the State of Andhra Pradesh in accordance with the Andhra Pradesh Reorganisation Act, 2014.”
    For that very purpose the Commission requested a two-month extension of its previously stipulated term; that extension was duly granted.
    The Commission also had discussions with both the successor States, AP and Telangana with both, the Account Heads as well other representatives of the two States.
    Annex 7.4 (Paragraphs 7.18 and 7.45) of the 14th Finance Commission carries a fairly detailed account of the detailed discussions with both the States. (
    What is conspicuous about those discussions (as reported in the Commission’s Report) is that no mention at is made of Andhra Radish’s expenditure on building a new Capital city, on the Kolavaeram project etc for which Chandrababu Naidu is shouting hoarse.
    It’s not surprising (or is it?) therefore that the Finance Commission’s Table 11.2 shows that, Post-Devolution, Andhra Pradesh shows surplus of Rs. 6609 crore, Rs. 4930 crore, Rs. 4439 crore, Rs. 3644 crore and Rs. 2499 crore for the years 2015-16 to 2019-20, while Telangana shows a deficit of Rs. 15003 crore, Rs. 18554 crore, Rs. 22846 crore, Rs. 28023 crore, and Rs. 34252 crore for the same corresponding years.
    So where has the arithmetic, or the chemistry, or both, gone wrong? Is it with Manmohan Singh’s UPA, or Chandrababu Niaidu, or the Modi Government, or the Finance Commission headed by Dr. Y.Venugpal Reddy, the Andhra cadre I.A.S. man? Let the angry young readers of PGURUS decide. But please leave poor me out – I’m through with it all.

    • The link shows the expected expenditure for Andrapradesh in page 469. It is more than > 141000 crores and the revenue from the doc and GSDP all show the disparity.

      These just hit my eyes with just first glance and I am nether an financial expert.

      I so far thought, I could trust PGURUS, as it did the research…. This author and article broke that trust!!!!

  3. The easiest thing the PM could have done and more so with the general election due a year from now is to grant special status to AP. As a quid pro quo Naidu would have continued to support the government and both the parties would be happy. This is what any politician would have done. If BJP did not do this in spite of the downside it must be for a valid reason and that is why i am inclined to agree with the author’s logic and arguments. How may of the readers have studied the Finance Commission report which the author of the article has done?

    Finally granting of special status is what the economists will call” beggar thy neighbour” measure. Who will want to set up industries in states bordering AP if AP gets various exemptions. Remember what happened when Himachal Pradesh and Uttarakhand got special status last decade and all industrialists flocked to the two states to the chagrin of other impoverished states. Then there will be clamour for jobs for locals in AP like it happened in what is now Telangana( places like Hyderabad) during separate state agitation when pressure was put on companies not to employ non- Telanganaites, particularly APites!

  4. I thought this blog will bring unbiased information and details as it is championed by dr . Swamy and sh Iyer Ji. But it seems no different from main stream media.

  5. I thought this blog is different from other mainstream as it is promoted by DR SWAMY and Sh. I yer Ji. But it turns out to be MODI Bhajan brundam. Super arrogant government.

  6. All this is a load of conjecture. We can only hypothesise because no one on this blog, either the author or us readers are privy to all this details. Two things are clear – First, whatever decision was taken has not been communicated (blame squarely falls on the Central Government). In fact, it is was incumbent on them to take AP along with them on the path to the decision. Second – Chandrababu Naidu is crying hoarse only after YSR Congress created such ruckus. For God’s sake, this guy was part of the NDA till about month ago. If this is how he evaluates and escalates matters, then AP had bigger problems than not being given the Special Category status.

  7. As a follower, of Pgurus, till date, I thought all the articles written were well researched and written unbiasedly. After reading this article it either seems to me that the author has not done his research or he is completely biased.
    I hope after reading this comment the team and especially the author reads the Andhra Pradesh Reorganization Act or the Telangana Act 2014 of the Indian Parliament and I hope he would view the video

    • Pradhan sevaak after assuming office has became Nehru….

      Bhakts like this author are just washing away his sins….rather than course correcting. Now all time is up,,

      sufferrers will show Nehru his place…

  8. Will the AP sympathisers tell us just how many crores of rupees exactly should be given to AP over which period? And someone should also tell me whether as, provided in our Constitution, the new AP of Chandrababy Naidu agreed to the bifurcation? Will someone also tell me whether the “special status” to AP was included in the relevant Constitution Amendment Law of bifurcation OR was it only a promise of the then PM, Mamnmohan Singh, stating in, the Rajya Sabha, his wish that AP should be given that “special status”? By the way, alimony is given after a divorce is recorded, and cannot be given once the law on alimony is itself annulled. That alimony can come come only through a detailed polite discussion (ending in a written agreement) between the parties concerned, bearing in mind the resource
    financial capabilities of the alimony giver.

  9. Half baked article. I doubt if any research is done at all to look deep into the issue.

    Did people of Andhra Pradesh ask for separate state?. The current situation is a result of politics driven by both Congress and BJP to pass a bifurcation bill without doing a proper study to assess the impacts.

    Any new state require huge funds to catch up with the other states. How can be a capital be built with paltry sum that are being thrown at the state ? If you can divide a state into two with little concern about the impact, what is stopping the GoI from creating a separate railway zone at Vizag? Is creating a new zone more difficult than creating a state?

    If special status is not possible what stopped centre from implementing the special package which was announced in lieu ? Did this article discussed that ? FM promised that the special package and special status will differ only by name ? If so, Did this article raised on what was implemented as part of special package?

    Is a financial commission report more sanscrosant than the act that is passed in the Parliament ?

    Please get your facts right before laying out your foolishness for everyone to see.

    • The division itself is half baked because aspirations of Rayalaseema people were ignored and they are made to suffer in the so called AP. Modi did well by denying exhorbitant demands of profligate Chandra Babu who is wasting public money on foreign tours and temporary buildings. BJP shall take immediate steps to form Rayalaseema state to earn tremendous good will of Rayalaseema people.

  10. One can understand the Comments synpathising with the cause of Andhra Pradesh (AP). But why has Chandrababu Naidu, the CM, woken up to his State’s plight four years after the constitutional bifurcation happened? What purpose will the delayed wrath serve, excepting cause enormous disharmony in the country? Assuming its “no confidence” motion does succeed and fresh elections result in toppling the Modi government, will the new government of, say, the United Front or whatever, be able to satisfy AP’s huge, very huge, financial demands?
    Very recently, the NDA government issued a 27-page report saying it has has allocated Rs 3,979.5 crore to AP to make up for the state’s revenue deficit and has also committed Rs 22,113 crore to the state by 2020, according to The Deccan Chronicle newspaper. Further, the Union Minister of State for Power, RK Singh, has said that Andhra Pradesh got more from the Centre in the past three-and-a-half years than any other state since Independence. But,in anger, Andhra issued a 28-page counter that the Centre’s report was a “cinema script or fiction document”. Why this coarse retort instead of a statesmanlike rebuttal?
    Even now, it’s not too late for both the parties to meet as gentlemen, especially as its MP and BJP’ AP president, K.Haribabu, after saying that “They may call it a cinema script or something else, but let them prove it if anything listed in it is wrong”, he reiterated the oft-stand of the the BJP that it was “fully concerned and committed” to the development of the state.
    I’m not a finance man, but perhaps one via media to resolve this “Chakravue” is for the Centre to seek a long-term loan fro the World Bank/IMF exclusively for AP on terms as easy as it got for the huge loan from Japan for the Centre’s “bullet train” project. The interest burden and the repayment of the principal amount can be shared on the basis of 90:10 as was the norm between the Centre and A State conferred with the benefit of the “Special Status” before the 14th Finance Commission abolished the “Grants-in-aid” devolution scheme.

    Give-and-take, compromise and diplomacy between the parties seems the only way out at this crucial juncture where the two contending parties stand on the verge of breaking the whole nation, slowly but surely. In short, there should be a mix of statecraft and statesmanship and…calm. If the Andhra Pradesh sympathisers and BJP supporters have other ideas, they should not hesitate to put them out here on this open platform.

    • I as Andhraite want to clarify few points here:
      1) A.P. CM babu visited delhi 29 times to discuss the problems
      2) Even before pulling out his ministers from central cabinet he dialed modi
      3) After pulling out ministers he waited one week before formally existing NDA. No one from centre tried reach out him
      4) Not only babu all allies of NDA are in discomfort with BJP.
      5) Arun Jaitly in press conference stated that if given chance A.P. will ask funds from Defense budget.

      The above all clearly shows that arrogance of present BJP dispensation. they are not in a mood to listen peoples grievances. Instead they fitting one party against and other and watching the fun.

    • As some people mentioned above about the quality of pguru articles. But this one is totally biased and no valid presentations. Either you knew some thing only or nothing. I would like to suggest pgurus to block this author from writing for pgurus. When someone commented about this article, he neither tried to get the information rather counterfeited as a politician. I am thinking pgurus is becoming like any other with biased thought process?

      Please remove this article to save your face PGURUS.

      • While we appreciate the candor of the readers’ comments, pl. keep in mind that in politics not everything is as it seems. You can agree or disagree with an author but do so on facts. An emotional outburst about the author is unwarranted. Mr. Lavakare has been writing for over 60 years and is a well-respected author.

        • Thanks pGURUS for the reply. Neither I am concerned with Mr Lavakare’s writing or with AP special status. When I first read the article, first thing came to my mind is that this article neither presenting right information and spoiling PGURUS reputation. As I always believe this website holds truth as Mr Sree Iyer and Mr Subramanya Swamy holds. But today my thoughts are different. I might try couple more articles but this article definitely changed my view about you PGURus. I can say in few weeks I will start looking for other better source of information as I believe with this today’s article, PGURUS is just like others.

  11. Chandra Babu is putting all money in Amaravati and neglecting backward areas like Rayalaseema. BJP will be benefitted if it splits residual AP further and forms Rayalaseema state to meet aspirations of the local people. Modi needs to act fast.

  12. Thank you for publishing a simple,clear lucid explanation of Special Category status and what it means, and other related matters.
    It is indeed a relief to read the note. TV news channel panelists make so much noise. Did not get to see anyone explaining the special category status. Wonder why?

  13. Well written. No one in our country wants to go deep into the issue and analyse. Andhra Pradesh is not a fledgling state. It was a mistake to have bifurcated the state. Having done this, one cannot reward the residual portion of the state. One has only to visit AP to see the development there vis a vis states that have been granted special status. Give special status to AP and the floodgates will open.

  14. The simple fact in all this is that the common man will never get to know the TRUTH behind any matter. For that matter in any issue ,be it cauvery, Kashmir , Doklam, Scandals , Corruption!!! Politics takes over and shouting match in Parliament House , TV debates obfuscate the issues. One thought that with the NDA government taking over in 2014 one would see the end of this continuous joke. But Alas the game goes on and on.

  15. What’s up with these authors? Don’t write half baked articles. You clearly don’t know the complete information about the issue. Don’t let your leanings for Modi/BJP undermine the truth. Even i’m a staunch supporter of Modi and will vote for Modi in 2019 but what he did for AP is injustice and doing it deliberately.

    • Naidu is a crooked politician who will not hesitate to back-stab anyone as he has done with his own father-in-law. Have an open mind to look facts. AP bi-furcation was more to do with Chandrababu Naidu greed to make money by making Vijayawada, Guntur selling lands at high price. He forcefully took lands from farmers i.e. fertile lands.
      Naidu did the same thing in Hyderabad & division happened. Vijayawada -Visakhapatnam belt has rich agricultural land where no farmer is willing to sell nor can anyone build industry there. The only option left is Rayalseema area only, where there is no water.
      Andhra Pradesh does not deserve to have special status & it is politician greed & telling lies is the main cause.

  16. Cannot hide behind 14th Finance Commission. If something was promised before 14th FC came in to effect, that should have been accommodated. AP is not asking for permanent special status. It is only for next decade or so to attract industries.

  17. For asking our right and promises made to us in parliament(which liar modi said temple of democracy) we are being called sycophants. wow modi bhakts in full action here

  18. The problem with people like ‘Arvind Lavakare’ they think everyone who is opposing Modi are ” hugely egoistic Chandrababu Naidu – and his sycophants”. I am posing few questions here to people like ‘Arvind Lavakare’ should answer to AP people.
    1) lets forget about ‘Special Status’ who is stopping modi for giving ‘Railway zone to vizag’ which is promised in bifurcation act.
    2) what happen to the ‘dugarajapatnam port’ promised in act.
    3) what happen to steel plant in kadapa promised in act.
    4) why sufficient funds not allocated to Chennai-vizag corridor same like delhi-mumbai corridor.
    5) what happen to central institutes promised in act. if each institute need more than 1000 cr. if allocates 10 or 100 cr by when those will finish.
    6) for patel /Sivaji statues they can spend thousands of crores but for andhra capital they can’t give more than 1500 crores.
    7) they can built bullet trains and for banglore metro they given 17000 crores in recent budget they vizag they gave 25 lakhs(what is this)
    like above I can tell many promises made to Andhra not only special status. I voted for modi in 2014 thinking that he will at least fulfill some of the promises made. But today we are being called psychopaths by modi bhakths. Don’t forget that all non congress governments formed at center are with the help of AP. Now it is time to form non BJP government in Delhi.

    • Be sensible to note the facts. The state has to propose a project & get the basic homework done.
      Bullet train between your home & my house is possible only when it is feasible & state govt has to give land. Farmers are unwilling to give land to capital city Amravati & forget about bullet train & other space dream projects.
      First do your homework on what you want to have in the state & then submit the proposals. Without a proposal do not expect God to come & tell you in your ears about what he can give to you !!!

      • I can understand the homework you have done by your comments above .
        1) What kind home work you and your modi want to grant special status which promised by the then P.M. and person who is going to become P.M.(Your swamy liar Modi).
        2) What home work needed to sanction railway zone to vizag(who will do home work for this your swamy govt. doing home work from last four yrs even lord Ram don’t know by when it will finish).
        3) What home work needed for special package for backward districts(which is promised in act same as like Bundelkhand) when they give 1050 cr for Bundelkhand and only 350 cr for A.P.
        4) I have seen your comment that babu forcefully taken land from farmers. You might be dreams go and enquire in CRDA excpet 3 or 4 village farmer(which are support to ysrcp) every one volunteerly given land. People who don’t have eyes can’t see this anyway.
        5) A.P. people are not fools to believe your comments like “back-stab anyone as he has done with his own father-in-law” people overwhelmingly voted for him in the very next general election( if you know telugu remember this prover “pacha kamerla vadiki lokamantha pachagane kanipistundi anta)
        6) Whey center taken back the money which is already credited in state acnt by saying no approval from PMO.

        I have many list to say, But I don’t list all those here because you people don’t understand because you are not here to discuss and understand A.P. you are here to bully you ever oppose modi and lable them as back stabbers and sychopaths.

  19. The net result is Andhra Pradesh the fledgling new State without a Capital, Infrastructure,and Industries is the
    loser. Why did the NDA Government promise Special Category Status prior to the Elections for the sake of Votes. Don’t tell me the Finance Commission cannot be influenced and is sacrosanct.


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