Personal Attacks On Stalwarts Like YV Reddy, Misplaced Focus In New State  

In this chapter the former senior civil servant outlines attendant problems which cropped up on account of the bifurcation of the state.

The A.P. Reorganisation Act also provided for financial assistance to the new state as well as starting of some new institutions in addition to the procedures to be followed in division of employees, institutions, assets and liabilities. These are covered in different sections of the Act.

The first and most important issue was making a reference to the 14th Finance Commission to consider the new states while giving their award. This was incorporated in section 46 of the act. The President of India was to make a reference to the Finance Commission to pass separate awards for each of the successor states. Accordingly a reference was made and the Finance Commission planned their visit to Andhra Pradesh. This visit was very crucial for us since the award of the commission can have a bearing on the finances of the new state. Mr CS Rao, former finance secretary, Government of India, was appointed as advisor in the finance department exclusively to deal with the Finance Commission. He had a long experience in the finance department and is well respected. In fact some of the members of the Finance Commission like Ms. Sushma Nath worked with him when he was the finance secretary at the Centre. The fact that the chairman of the 14th Finance Commission, Dr Y Venugopal Reddy, was from Andhra Pradesh made things easier since he had first-hand knowledge of the division of the state and its problems. Tirupati was indicated as the place to meet the Finance Commission by the Chief Minister and accordingly arrangements were made. We made a forceful presentation for giving us a fair dispensation by the Finance Commission and they were also very reasonable and considerate. When the final award came, Andhra Pradesh was the only state other than the North-eastern states to get revenue deficit grants for all the five years of the 14th Finance Commission’s award. They gave an award for Rs 21,113 crores as revenue deficit grants for the five-year period.

We as officers were very happy that we could successfully get a good deal for Andhra Pradesh from the Finance Commission. But the Chief Minister was not happy. He held a series of meetings and telephone conferences on this issue with officers, MPs and started crying, stating that nothing had come for the capital and what has been given is only a pittance. In one meeting Mr CS Rao, who by then lost his patience had to remind the Chief Minister that the Finance Commission goes by its terms of reference, and the issues Sri Naidu was raising do not come within the terms of reference of the commission. He said the award was generous with reference to the state of Andhra Pradesh.

The matter did not end there. In the legislative Assembly, the Revenue Minister started making a personal attack against Dr Y Venugopal Reddy. Mr CS Rao rang me up and said that Dr Venugopal Reddy was pained by these comments and requested me to bring it to the notice of the Chief Minister. Accordingly I informed the CM that Dr Venugopal Reddy was feeling bad that he should be targeted when he did his best for the state. The Chief Minister told me to convey to Dr Reddy that he holds him in high regard and he would be talking to him personally. The same was conveyed to Mr CS Rao with a request to convey it to Dr Venugopal Reddy as it was he who rang me up and informed about this. Subsequently when I enquired with Sri CS Rao whether there was any such call from the CM to Dr Venugopal Reddy, he checked with him and told me there was no such call. In our use and throw policy both Dr Venugopal Reddy and Sri CS Rao had no relevance once the 14th Finance Commission gave its award. Sri CS Rao also left the post after some time as there was no work for him before completing his tenure.

The award of the 14th Finance Commission takes care of AP’s revenue deficit from 2015 to 2020. That still left the revenue deficit gap for the 10-month period from June 2014 to March 2015. The statement of the Prime Minister on the floor of Parliament covered this issue. He said the resource gap that may arise in the successor state of Andhra Pradesh in the very first year especially during the period between the appointed day and the award of finance commission would be compensated in the Union budget for 2014-15. Even before the division of the state, the Governor made a calculation of what could be this deficit and sent his report to the Union government indicating Rs 16,000 crores as the possible revenue deficit. Contrary to the assessment made by the Governor, the revenues were very buoyant and expenditure under control, and by December 2014 we knew the deficit will not cross Rs 3,000 to 4,000 crores. By January the Chief Minister started concentrating on this and was particular that higher revenue deficit be built up. He was very confident that with his political connections he would be able to get any amount from the Union government. I am sure his expectations were based on his experience when he was earlier part of NDA-1 when he used to have his way through. So, a huge expenditure was incurred in the last few months of the financial year to build up a higher revenue deficit. Certain industrial incentives which were not being sanctioned for years together were discovered and released, and industrialists who never expected it were too happy to oblige. Expenditure on the electoral promises like loan waiver, and higher amounts for pensions were all booked under this account. Accordingly a revenue deficit of Rs 16,078 crores was incurred for the year 2014-15 and the same was certified by the CAG. Stating that these are CAG-certified figures, the state government made a plea to the Centre to reimburse Rs 16,078 crores. The central Government took the view that like the 14th Finance commission they would only fill the normal revenue gap which is the result of the division of the state, but not amounts incurred on fulfilling electoral promises made by the new government. Their argument was that if they sanction the expenditure incurred on the electoral promises they will get similar demands from other states as well. The state government’s argument that the figures were certified by the CAG did not cut any ice with the Union government as they clearly said only eligible portion out of the amount certified by the CAG would be reimbursed and accordingly the deficit was determined as Rs 4,117 crores. I felt the argument of Government of India was very valid. However the state government kept on repeatedly raising this issue with no success. The Centre was willing to consider 2015-16 revenue deficit grant, as sanctioned by the 14th Finance Commission which was coming to about Rs 6,609 crore and were willing to give that amount proportionately for the 10 month period for which the state government was not agreeable. Finally the central government has gone on record through an affidavit before Supreme Court in a case filed by an individual stating that the amount that is due on this account is only Rs 4,117 crores which is the normal deficit incurred by the state government. Right from the beginning, the state government’s stand on this issue was not correct and by stretching it too far they lost the possibility of getting more by making a reference to the 14th Finance commission revenue deficit grant for 2015-16.

Section 93 of the act enjoins on the Central government to take all necessary measures as enumerated in the 13th Schedule for the progress and sustainable development of the Successor State within a period of 10 years from the appointed day. Accordingly a set of institutions are listed out in the 13th schedule. They are broadly divided into two categories: educational and infrastructure. While with reference to the institutions listed under the education category, it is specifically mentioned in the act that they “shall be” established, no such firm commitment is mentioned in the infrastructure category excepting with reference to one or two organisations. The mandate was only to examine the feasibility of setting up such industries and organisations.

Our first focus was on establishment of the education institutions with reference to which there was a firm commitment in the act. We were keen they should start functioning from 2015-16 academic year. We had a series of meetings with the Secretary, Higher Education, Government of India who was reluctant to start them until the total infrastructure was ready and wanted us to wait for three to four years before the infrastructure actually materialises. We were able to put enormous pressure on GOI politically to ensure that they start operating from 2015-16. Wherever the government was able to allot the land and make temporary buildings available for locating the institutions they started functioning from 2015 and others got delayed where we were not able to provide land immediately or there was a dispute about the location of the institution. One such institution that got delayed was NIT which finally got located at Tadepalligudem. The Endowments Minister wanted it to be located at TP Gudem while another lobby close to the power centre wanted it to be located at Eluru. Finally the minister prevailed. So also was the problem with Petroleum University since the state government was not able to decide whether to locate it in East Godavari or in Vizag. Most of the institutions started functioning from temporary accommodation in a record time before my retirement. Two institutions to establish which legislation was required, got delayed. It is a sad commentary on the manner in which the state government can behave when now they accuse the Central government of running these institutions in temporary accommodation when the fact is that we put pressure on them and got those institutions functioning when they were reluctant to start them until full infrastructure is available.

Regarding the infrastructure projects mentioned in the 13th Schedule, activity started in terms of examining the feasibility. The focus immediately was on Vizag - Chennai industrial corridor and Metro Rail for Vijayawada and Vizag. Regarding Vizag - Chennai industrial corridor, since funding was coming from Asian Development Bank, we had a series of meetings with them and the nodes were finalised. Since I dealt with Hyderabad Metro earlier as finance secretary and was associated with Sri Sridharan of Delhi Metro at that time, I revived my contact with him and brought him to meet the Chief Minister. By the time I retired, Vijayawada Metro project was progressing well and in fact preparations for land acquisition were being done. Subsequently both metros seem to have been stuck at some stage. Regarding the other infrastructure projects, feasibility studies were going on by the time I retired.

The “special category status” was on the agenda immediately after I took over as the Chief Secretary. I made a visit to Delhi and sought an appointment with Mr Subrahmanyam in the PMO who is from Jharkhand cadre but belongs to Andhra Pradesh. Presently he is the chief secretary of Jammu and Kashmir. When the issue of special category status was discussed, his immediate reaction was it is next to impossible and something which needs to be decided at a level much higher than that of officers. He said that this decision needs to be taken in the National Development Council where all Chief Ministers would be present and there is likely to be strong opposition from the other Chief Ministers. He suggested that it should be taken up at political level. I came back and informed the same to the Chief Minister and left it at that. The special package proposal was not initiated when I was in service.

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