Andhra Pradesh Chief Minister Chandrababu Naidu has directed TDP ministers Ashok Gajapathi Raju and YS Chowdary to resign as Union Ministers, as centre refuses to grant special status to the state.

Although the TDP ministers have been asked to withdraw from the NDA on Thursday morning, call on the party's alliance with the BJP will be decided later. “We have now come out of the NDA. Party-to-party (TDP-BJP ties) issue will be decided later,” the TDP chief said, hinting that their alliance may continue in the future.

The TDP took the “painful decision in the interest of the state” as it was left with “no other option”, party chief and Andhra Pradesh Chief Minister N Chandrababu Naidu said at an emergency press briefing.

Naidu alleged the centre did not fulfill its promises regarding special status to Andhra Pradesh, despite attemps to convice them for four years. Arun Jaitley's statement was the last straw, he said, calling them 'apparently predetermined.' They don't appear to help the state, Naidu said.

On the resignation of two of TDP ministers, Naidu said it was the first step. Further actions will be taken later.

In a tit-for-tat action, the two BJP ministers in the Naidu government--K Srinivasa Rao and T Manikyala Rao--too announced their decision to quit.

"When the intended purpose (of joining the Union Cabinet) has not been served, there is no point in continuing. For me the sole agenda is to safeguard the interests of the state,” he said.

The TDP has 16 MPs in the Lok Sabha.

The Telugu Desam Party chief said he tried to speak to Prime Minister Narendra Modi as a "courtesy" to inform him about the decision to quit but he did not come on line.

The Bharatiya Janata Party (BJP) and its Andhra ally Telugu Desam Party (TDP) have been sharing a sour relationship following the announcement of the Union Budget 2018-19 after the latter alleged that the Centre had not allotted 'enough fund' to the state in the budget.

Following Finance Minister Arun Jaitley's statement on granting 'special status' to Andhra Pradesh, the state's agriculture minister S Chandra Mohan Reddy claimed that even after nearly two years of promising special assistance, nothing has been done for the state.

Earlier yesterday, Jaitley said giving special category status, as demanded by Naidu, to any state apart from those in the North-East and three hill provinces was not constitutionally possible after the implementation of the 14th Finance Commission recommendations.

For special category status category states, the Centre meets 90 per cent of the funds required in a centrally sponsored scheme as against 60 per cent in case of normal category states. The remaining funds are provided by the state governments. However, to make up for that, the Centre would give Andhra Pradesh funds equivalent to what a special category status state gets, he said.

Naidu said Jaitley's announcement was the "last straw" for the TDP. Naidu had repeatedly insisted on special category state status for Andhra Pradesh following mounting pressure from the opposition.

“Jaitley’s statement was nothing but insulting us,” he maintained.

“I made every effort to get our issues resolved by the Centre in the last four years. I told them about the people’s sentiment and tried to convince them in every manner but to no avail,” he said.

“They (Centre) are with a predetermination…there appears to be no way they will help us. Under such inevitable circumstances, we have decided to come out of the NDA,” Naidu said, after a three-hour teleconference with party MPs and state ministers following Jaitley’s assertions.

He said the TDP joined the NDA government only to protect the state’s interests following its bifurcation but claimed the Centre was taking unilateral decisions without thinking about the solutions to the state’s problems.

Sentiment Does Not Decide Quantum Of Funds: Jaitley

Jaitley said the Centre had committed 90 per cent of the funds for centrally sponsored schemes in Andhra Pradesh, equivalent to special category states, through other means like external agencies like World Bank, but the state government wanted funds to be routed through agri-lending bank NABARD. The Centre is agreeable to even that provided a mechanism is worked out, he told reporters.

Asked about the threat of TDP to pull out of the NDA if more funds are not allocated, he said "political issue cannot increase the quantum of money because the Centre has no free floating funds".

"Every state in India has the right to the central fund in the same manner. Sentiment does not decide quantum of funds, it is the constitutional award of the Finance Commission which decides on the quantum of funds that the states get," he said.

Asked about Congress President Rahul Gandhi's promise to give the state the special category status if his party is voted to power, Jaitley said, "I still have to follow constitutional award" of the 14th Finance Commission.

He said the Centre is committed to give funds to Andhra Pradesh equivalent to what a special status state gets, he said.

The 14th Finance Commission raised the share of states in taxes collected by the Centre to 42 per cent from 32 per cent but abolished special category states.

"The principal issue relates to what is the implication of a special status. The special status was originally granted to states in North East because they have their own resources which were inadequate and the revenue was inadequate," he said.

Jaitley said while the promise of special category status to Andhra Pradesh was legally possible when the state was bifurcated, there is no such category after constitutional award by the 14 Finance Commission.

"Instead states which are in deficit in terms of revenue, we are compensating them because everyone gets a hike of 10 per cent to 42 per cent plus for a certain period; revenue deficit will be taken care of and a provision for revenue deficit was made in the case of Andhra Pradesh," he said.

For Andhra Pradesh, the 90:10 funding of schemes instead of usual 60:40 would be implemented "notwithstanding the fact that the word special status is not there", he said.

During consultations in 2016, it was proposed that grants given by external agencies like World Bank, ADB and JICA to Andhra Pradesh would be repaid 90 per cent by the Centre and remaining 10 per cent by the state.

However, in January this year, the state government modified the request and demanded the money through NABARD.

"Now if NABARD gives directly to the central government, it gets added to the fiscal deficit. If it gives to the state government, it will get added to the state's fiscal deficit, and therefore reduces the borrowing capacity of the state," he said.

To overcome this, it was proposed last month that a special purpose vehicle be created in the state which deals with the development work. The NABARD fund will come into that corporation and the money wold be repaid to NABARD 90:10 ratio.

"We are awaiting a response, I hope it is a positive response, and the state tells us in what manner they want," he said. "At no stage has the Centre said that we won't give it."

On revenue deficit, he said Rs 4,000 crore has already been paid for 2014-15 and only Rs 138 crore remains.

On the demand for tax incentives, he said in his Budget proposals he has already announced measures like investment and depreciation allowance.

"AP has suffered because of bifurcation and whatever support is required because of that (we will give)," he said, adding all issues have to be resolved within the framework of Centre and state relation.

(Inputs from agencies)

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