THE resignations of two Telugu Desam Party members from the Union Cabinet on March 8 signals the hastening of the political crisis within the National Democratic Alliance (NDA) at the Centre. The crisis has been precipitated by the alliance partners’ growing lack of confidence in the style and functioning of the Central government under the leadership of Narendra Modi. For the NDA, a TDP exit would mean the loss of its most powerful regional partner a year ahead of the general election.
The TDP’s main grouse is the short shrift the Centre has given Andhra Pradesh since its formation on June 2, 2014, which resulted in its main economic engine, Hyderabad, going to the newly formed State of Telangana. Chief Minister N. Chandrababu Naidu has repeatedly pointed to the “unscientific and irrational” manner in which the bifurcation of unified Andhra Pradesh happened amidst the “din of protest” in Parliament. The then Prime Minister Manmohan Singh announced in the Rajya Sabha on February 20, 2014, that following the division, the “successor State” of Andhra Pradesh would be treated as a “Special Category State” for five years from the date of its formation. The retraction of this assurance by the NDA government is at the crux of the political standoff between the BJP and the TDP.
The Modi government has argued that the 14th Finance Commission recommended a quantum leap in tax devolutions (from 32 per cent as recommended by the 13th Finance Commission to 42 per cent) from the Union to the States as the main measure to bridge the resource gap arising between them, replacing the earlier methods of Centrally Sponsored Schemes (CSS) and Special Category Status (SCS). The Modi government accepted most of the recommendations made by the Y.V. Reddy-led Commission in its report tabled in Parliament on February 24, 2015.
The Commission recommended restricting the SCS to the seven north-eastern States and hill States such as Uttarakhand and Himachal Pradesh, and Jammu and Kashmir. The SCS has been one of the ways to address glaring resource gaps for States such as Sikkim and Tripura where economic activities are low and the regions are remote and landlocked. It allows for major direct and indirect tax incentives, a greater measure of CSSs with funds distributed in the ratio of 90:10 as against 60:10 for other States, and actively seeks externally aided projects (EAP) such as those funded by the World Bank and the Asian Development Bank. The EAPs are usually treated as grants-in-aid, with the Centre bearing the loan and its interest.
Matters came to a head this year when there was no mention of Andhra Pradesh in Finance Minister Arun Jaitely’s 2018-19 Budget speech in Parliament on February 1, with Chandrababu Naidu threatening to quit the alliance.
Jaitely, defending his government’s position, argued that various other measures, termed as Central assistance, which included projects and assurances made in the Andhra Pradesh State Reorganisation Act, 2014, and revenue deficit bridging funds made up for the SCS. In his comments on March 7, Jaitley chided Chandrababu Naidu for constantly shifting the goal post on the demands of the State and argued that if Andhra Pradesh was granted SCS status other States, too, would ask for it.
The Finance Commission, a five-member expert body, is constituted every five years under Article 280 of the Constitution to address the resource gap between the Centre and the States. It also addresses the regional economic imbalance that might arise owing to endemic factors such as remoteness and lack of natural resources or a port-based commercial nerve-centre. The Finance Commission recommends SCS keeping these factors in mind. Andhra Pradesh did not figure in this list in the 14th Finance Commission’s report (for the period of 2015-2020). But it did find mention as one of the 11 “revenue deficit States”, which included West Bengal, Himachal Pradesh and Kerala. The report recommends “revenue deficit grants” to these States, which the Centre argues makes up for the loss in revenue that Andhra might incur without the SCS.
Andhra politicians unitedCutting across party lines, politicians of Andhra Pradesh argue that the State must be treated as separate even from the north-eastern and hill States as it has suffered a setback from the loss of a large chunk of revenue-generating entities such as public sector enterprises and other infrastructure going to Telangana. In a January 12, 2018, letter submitted by Chandrababu Naidu to Modi, accessed by a section of the media, Andhra Pradesh makes demands such as amending the Fiscal Responsibility and Budget Management Act, which limits the revenue deficit of a State to 3 per cent of the State Gross Domestic Product, which in effect constrains its capacity to borrow. It also points to the fact that Telangana has 42 per cent of the population of unified Andhra, but has been granted 54 per cent of the erstwhile State’s revenues.
In a late night press conference on March 7 at his makeshift capital near Vijayawada after a marathon meeting with party leaders, Chandrababu Naidu took umbrage at Jaitley’s comments earlier in the day and disclosed the frosty Centre-State relationship over the years saying, “I telephoned Prime Minister Modi out of courtesy as a senior politician would in order to convey our party’s decision [of ministerial resignations from the Union Cabinet], but he was unavailable. Despite being in politics for over two decades, I put aside my pride and attempted to meet the Prime Minister 29 times in the past three and half years, but to no avail.” The two leaders spoke the next day, in the evening, following dramatic developments in which Ministers of the TDP tendered their resignations to the Prime Minister in New Delhi and BJP Ministers in the State Cabinet gave their resignations to the Chief Minister in Andhra Pradesh.
Speaking to Frontline, Hari Babu, the BJP’s Lok Sabha member from Visakhapatnam, tried to make light of the drift by saying that Modi was busy preparing to leave for Rajasthan the next day and was caught up that evening in a Cabinet meeting when Chandrababu Naidu called. Hari Babu said: “They have spoken now and the conversation was very cordial, as you would expect at that level.”
A major issue for the TDP is that no fund has been allocated for the proposed metros in Visakhapatnam and the Vijayawada-Tenali-Amaravati region in the Union Budget while Mumbai's suburban train network has been granted Rs.40,000 crore and Bengaluru’s metro Rs.17,000 crore. Hari Babu claimed that the metro projects in Andhra were still at the DPR (detailed project report) stage. “If tenders are floated and bids are accepted, then complaining about non-allocation of funds is genuine. But we are at the stage where even the DPR has not been submitted. That alone takes quite some time, ” he said.
About the proposed port to come up at Duggarajapatnam in Nellore district, Hari Babu said, the region’s proximity to Pulicat Lake, an ecologically sensitive zone and designated bird sanctuary, and to ISRO’s spaceport at Sriharikota, necessitated a shifting of its location, but added that the Centre was fully committed to meeting the expenses for its construction.
Soon after submitting his resignation as Health Minister Kamineni Srinivas of the BJP took an entourage of reporters and partymen to the construction site of the All India Institute of Medical Sciences (AIIMS) hospital-cum-medical college near Guntur to show the “brisk pace of work”. “Seventeen levels of a building have been constructed and administrative offices have already begun functioning,” Hari Babu said.
The point that Modi is unavailable has been echoed by Chandrababu Naidu’s counterparts in other States as well. A senior bureaucrat in Hyderabad who did not wish to be named told Frontline that “the trigger for Telangana Chief Minister K. Chandrasekhar Rao’s third front idea was Modi’s refusal to give him an audience during his most recent visit to New Delhi despite requesting the Prime Minister’s Office at least five times.”
Chandrababu Naidu’s March 7 press conference was the second in a series of political messages meant for the people of the State. It was also an insurance to ensure that the blame for the dismal economic record of the State rests on New Delhi by projecting the TDP as a victim of an uncaring elder brother. Having faced flak from the opposition parties and his own party men for not being able to extract bigger fund allocations despite being in alliance with the BJP, and ahead of crucial Assembly elections in the State, Chandrababu Naidu’s tactic of reducing the alliance to one of symbolism, allows the TDP, as also other disgruntled NDA partners such as the Shiv Sena, to jump ship.
On how the BJP views the situation, Hari Babu said: “As far as the BJP is concerned we treat the TDP as a friendly party even now. Even if the TDP pulls out of this alliance, we will continue to fulfil all the projects that have been promised so far.”
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