UPA to grant special status to Seemandhra

The UPA government is all set to grant special category status to the residual state of Andhra Pradesh, which would allow it to avail a major chunk of central funds in the form of grants instead of loan.

Prime Minister Manmohan Singh had told the Rajya Sabha that special category status would be granted to Seemandhra for five years.

Rural Development Minister Jairam Ramesh, who is the Centre’s key interlocutor on the Telangana issue, held a meeting with Planning Commission Deputy Chairman Montek Singh Ahluwalia to streamline the process of granting the special category status to Seemandhra.

The Centre requires approval of the National Development Council to grant special status to any state. The status enables a state to avail 90 per cent of the central funds in the form of grant and 10 per cent as loan. For other states, the ratio is 70 per cent loan and 30 per cent grant.

The special status to Seemandhra would put the state’s finances on a firmer footing, sources said.

A cabinet note is being prepared to implement the prime minister’s assurance. It may be left to the next government at the Centre to take a post-facto approval from the NDC.

A special unit is being set up in the Planning Commission under the deputy chairman to address developmental needs of the successor state of Andhra Pradesh.

Bihar’s request for special category status was referred by the Centre to a group of experts. Chief Minister Nitish Kumar has called for a statewide bandh on March 2 to protest against the Centre’s denial of the status to Bihar.