Finance Minister Arun Jaitley’s Union Budget for 2018-19 presented in Parliament on Thursday has put the ruling NDA-BJP alliance to test.
In spite of Andhra Pradesh Chief Minister N Chandrababu Naidu’s hectic lobbying with the NDA government, the Budget speech has turned a blind eye to five major promises made in the AP Reorganisation Act, 2014. These commitments intended to make up for the losses suffered by the state due to the bifurcation in terms of revenues. They include a special assistance package extended by the Centre as a substitute to the special category status, deficit financing, funding for the new capital in Amaravati, the Polavaram project and a railway zone in Visakhapatnam.
It crucial for the NDA to honour the commitments it has made, especially with its alliance partners – including the Telugu Desam Party (TDP) – to keep its credibility intact. It is also crucial for Naidu to make or mar his own winning prospects in the coming election and his relations with the BJP as well.
With the general election around the corner, the current Budget could be the last full-fledged one made by the NDA government. Jaitley is likely to be left with a Vote-on-Account budget for the 2019-20 fiscal year, which gives him no elbowroom whatsoever to help AP. Therefore, it is now or never for Naidu. If the NDA government failed to deliver on its promises now, it is clear that the state will not receive any assistance in the next financial year too – also the election year.
Naidu has demonstrated utmost patience since Prime Minister Narendra Modi assumed office in May 2014 with regard to receiving Central assistance in a bid to keep intact his alliance with the BJP. He settled for a special package when the NDA government had backed out from its promise of giving the state special category status on technical grounds.
Since the Budget was announced, the mood in the TDP is stormy and belligerent. The CM has convened a party coordination committee meeting and a Cabinet meeting on Friday, and a Parliamentary Party meeting on Sunday, fuelling speculations over the possible breakup of his three-and-a-half-year-long honeymoon with Prime Minister Narendra Modi.
Party MPs such as YS Chowdary (Union Minister of State for Science and Technology) and JC Diwakar Reddy, known to be a vocal leader, aired their displeasure even as Jaitley’s Budget presentation was in progress.
Naidu has been under pressure from his party MPs to snap ties with the BJP and go it alone in the upcoming general elections. Public sentiment in the truncated state is seemingly brewing against the Modi government for his non-performance with regard to soothing AP’s bifurcation wounds.
Given how hostile the public mood is, it was almost suicidal of the Centre to not listen to AP’s demand. The shrewd politician in Naidu could lead him to presenting himself a martyr at the hustings and capitalize on the anti-Modi sentiment.
Naidu has been patiently waiting all these days, after facing a lukewarm response from his ally. He often says at media conferences, “What should I do if I pull out from the NDA now?” It obviously means he intends to sustain the heat of his party’s break-up with the BJP, and the accompanying public sympathy in his favour until the next election and that he is waiting for an opportune time.
The Arun Jaitley Budget may have been the last straw on the camel’s back. The talk of early elections being batted by the Prime Minister has been doing the rounds for some time now, and is considered to be an opportune time for Naidu to strike back.
This is a tough time for the TDP to contest an election in view of Naidu’s strenuous efforts to rebuild a truncated state that needs the Centre’s largesse.
The Polavaram project is unlikely to become a reality by 2018 as promised by both Modi and Naidu at the time of elections. Amaravati is still under construction, even as Modi laid the foundation stone in 2016 on Vijayadasami day by presenting Naidu with a container with soil collected from the Parliament and water from the Yamuna.
The state continues to reel under mounting fiscal deficit following the failure of the NDA government to bridge the revenue resource gap of Rs 16,000 crore. As per the Centre’s promise, the bridging was supposed to have become realty by the end of the financial year (2014-15) in which the state was divided. Four years on and the Centre is still to dole out Rs 7,500 crore for deficit financing.
According to a letter personally presented by Naidu to the Finance Minister on January 5 this year, AP is due to receive Rs 2,516 crore from the Centre in the ratio of 10:90 in 2015-16 and 2,854 crore in 2016-17 under centrally sponsored schemes (CSS). The amount for the remaining two financial years –2018-19 and 2019-20 is estimated at Rs 3673 crore and Rs 4,166 crore respectively.
The Centre has evolved a formula to arrive at these figures, assuming a growth of 13.43% in sharing pattern of funds year on year. Special category states are eligible for grants under CSS as well as externally aided projects (EAP) at a 90:10 ratio.
Naidu is pitching to avail funds under the CSS and EAP for the truncated AP state as per the special package. He is seeking this special dispensation amount for a period of five years from 2014-15 to 2019-20 for the specified projects from the NABARD in the form of grants instead of a loan.
“The projects under EAP will consume a lot of time for grounding and completion, considering the elaborate procedures involved in getting clearances and the approvals from the external agencies. The state will not be in a position to consume the entire special assistance amount within the five year period ending with 2019-20, including the projects signed after 2015-16,” asserts the letter.
But, shockingly for Naidu, Jaitley’s Budget speech failed to mention any of these issues. AP under Naidu’s stewardship is waging a grim battle to script a double-digit growth story competing with neighbouring Telangana, Tamil Nadu and Karnataka, and the bifurcation troubles hit his growth agenda hard.