The NDA government on Wednesday night announced a `special financial assistance measure' in lieu of the special category status for Andhra Pradesh. The quantum and details of the package will be announced on Thursday .

HYDERABAD:The NDA government on Wednesday night announced a `special financial assistance measure' in lieu of the special category status for Andhra Pradesh. The quantum and details of the package will be announced on Thursday .

The special package that has been on the cards for over two years now is likely to ease the severe financial crisis afflicting the truncated state.The Centre made it clear that there will be no special category status. It however, said the demand for separate railway zone is under consideration. The Centre will also bear the cost of external-aided projects to compensate for the special category status.

The late night announcement by Union finance minister Arun Jaitley was preceded by a series of meetings all through the day between Union minister for science and technology YS Choudhary with Jaitley and Union minister for urban development M Venkaiah Naidu. AP chief minister N Chandrababu Naidu met with his cabinet colleagues in Vijayawada twice to take stock of the developments in Delhi. Venkaiah Naidu called up the AP CM twice to apprise him of the special package. Chandrababu Naidu, however, objected to the use of terms like "shall be, will be, will look into" in the seven-page draft package and sought a categorical assurance from the Centre. The draft was then forwarded to the prime minister's office for final approval.

With Chandrababu Naidu raising objections and the PMO taking its own time, Jaitley, who was supposed to announce the package at 6.30 pm, put it off twice. Finally , the package was announced at 11.00 pm.

Jaitely listed out the financial aid extended to the state thus far and reiterated that all the promises made in the AP Reorganisation Act, 2014 will be honoured in phases. He said the Centre will partly bear the cost of the external-aided projects for a period of five years. The Central assistance for these projects will be equivalent to the financial aid AP would have received if it were granted the special category status. The Centre will reimburse the expenditure on Polavaram project since April 1, 2014 as it was declared a national project that day. This in effect means, Polavaram will get 100 per cent assistance from the Centre.

He said the Centre had taken into consideration four sets of documents while arriving at the special financial package. They are the AP Reorganisation Act, 2014, the 14th Finance Commission report, statement of then Prime Minister Manmohan Singh in Parliament on February 20, 2014 and the recommendations of the Niti Ayog. The special package will be placed before the Union Cabinet for necessary approvals. The Central Board for Direct Taxes will issue notification in a couple of days to give effect to the already announced 15 per cent capital allowance and accelerated appreciation.

The package is likely to include assistance for centrally-sponsored projects, development of Vizag-Chennai and Chennai-Bangalore industrial corridors, construction of government offices in the capital city, and Polavaram project. The disbursement will be made in a phased manner with most of the projects planned for completion by 2019, ahead of the general elections.

"States that have been granted special category status are getting 30 per cent more funds from the Centre compared to other states. This gap will be bridged for AP through this package," Jaitley said.

The Centre will also provide special fund for development of infrastructure in institutes of excellence and technical education. Special funds will be granted to IIM, IIT, IISC, central university and tribal and petroleum universities, IIIT and customs institute.

Earlier, Venkaiah Naidu invited Chandrababu Naidu to join Jaitley in Delhi for the announcement of the package. Naidu said he would decide only after going through the contents.The draft package was sent to the AP CM after which it was sent to the PMO.As Prime Minister Narendra Modi is away in Laos to attend ASEAN meeting, the PMO examined the draft proposals and sent it to PM for his approval. Jaitely and senior finance officials waited for almost six hours to hear from the PMO.

Sources said with regard to the new railway zone in AP, the railway ministry asked the state government to propose another city , preferably Vijayawada, in the wake of lack of technical and commercial viability for the proposed headquarters at Visakhapatnam. Though, railway minister Suresh Prabhu represents the state in Rajya Sabha, the commercial committee refused to give approval for Vizag citing viability issues. This has forced the Centre to seek alternative proposal from the state.But the proposal was not received well by people of Vizag, who launched protests.

YSRCP came down heavily on Naidu for "dropping" the special status demand. YSRCP legislator RK Roja said "we demanded special status for the over all development of the state. But TDP and Naidu are more interested in 'commissions' than in special status.They have thus settled for the special package. Our fight for the special status will continue".

