🔆 Key Takeaways: Andhra Pradesh’s Financial Distress and Special Dispensation ✅ Context and Background: • Andhra Pradesh faces deep financial distress post-2014 bifurcation with Telangana and loss of Hyderabad, the major tax hub. • Despite assurances by former PM Manmohan Singh, no ‘special category status’ (SCS) was provided in the bifurcation act. ✅ Special Category Status (SCS): • The Centre discontinued the traditional ‘special category’ scheme following the 14th Finance Commission’s advice. • SCS now mainly offers external loans on softer terms, unlike earlier substantial Plan assistance. ✅ Financial Strain on Andhra Pradesh: • Andhra Pradesh’s per capita own revenue fell by 23.2% post-bifurcation, whereas Telangana’s rose by 33.2%. ✅ Political and Economic Arguments: • State divisions post-1956 were based on political and administrative factors, causing uneven fiscal capacity distribution. ✅ Recommendations: • Andhra Pradesh could seek a special assistance package, similar to Odisha’s Koraput-Balangir-Kalahandi plan or Bundelkhand packages. • Finance Commission, as an apolitical and constitutional body, could recommend a special package with greater credibility. ✅ Comparative Insight: • In post-2000 state divisions, new states (Uttarakhand, Chhattisgarh, Jharkhand, Telangana) benefited, while rump states faced losses. • Fiscal loss over 10% could justify a special compensation package spread over time. #andhrapradesh #financecommission #specialcategorystatus #fiscalpolicy