Jaitley’s formula

New Delhi/Hyderabad: In an attempt to douse flames of rancor, mainly in TDP, NDA’s biggest ally in the south, Union Finance Minister Arun Jaitley on Tuesday promised that the Centre would come out with a formula that would help the state to avail financial benefits under ‘special package’ offered to the state in September 2016 in lieu of Special Category Status.

The Finance Minister, making a statement in both the houses of Parliament, said that to overcome technical issues that had come in the way in implementation of the package, an alternative mechanism would be worked out.

The minister made the statement with MPs from TDP, YSRC and Congress staging protest in Parliament over the raw deal meted out in the national budget for the state and seeking immediate measures for implementation of special package, honouring of all the commitments made in the AP State Reorganisation Act, 2014. 

When the special package was announced in 2016, Jaitley had said that it was as good Special Category Status and in fact even better.  He had said that the state would get Externally Aided Projects in lieu of Centrally sponsored schemes in the ratio of 90:10, admissible in the states where Special Category Status is in force.

Since no Special Category Status was being bestowed on the state, EAP would substitute the Centrally sponsored schemes for which loan would be raised from overseas funding agencies. The state would have to repay only 10 per cent of the loan as the Centre would take care of the remaining 90 per cent.

Jaitley told the House that as bearing 90 per cent of loan posed a technical problem since there was no Special Category Status, rules allowed only upto 60 per cent which left loan commitment upto 40 per cent for the state. 

Visualising this problem Andhra Chief Minister N Chandrababu Naidu had sought sanction of the 30 per cent loan component as grant from NABARD. Though the Centre could do this, this again would become part of total borrowings of the sate on which the Fiscal Responsibility and Budget Management Act has imposed a limit that it should not be more than four per cent of the state GSDP. That means the fiscal deficit of the state would go up, preventing it from going in for loans to this extent. 

Addressing this issue in the House on Tuesday, Jaitely said that he had asked the expenditure secretary to immediately call the finance secretary of Andhra Pradesh to Delhi and work out procedural formalities, so that it can be done.  “We are committed to all the provisions of the AP State Reorganisation Act”, he said.