North AP and Rayalaseema Need Public Investment

Request for sanctioning a special financial package for public investment for creating assets in irrigation, education, health, social empowerment and other development sectors in North AP and Rayalaseema

To

Smt Nirmala Sitharaman

Union Finance Minister

Dear Smt Sitharaman,

Kindly refer to my earlier letter of August 27th 2024 addressed to you on the above subject 
seeking your Ministry’s intervention for sanctioning special financial assistance for north Andhra Pradesh and Rayalaseema regions of Andhra Pradesh, as envisaged in the AP Reorganisation Act, 2014 (APRA)
Section 46 of APRA reads as follows:

“Section 46;

(2) Notwithstanding anything in sub-section (1), the Central Government may, having regard to the resources available to the successor State of Andhra Pradesh, make appropriate grants and also ensure that adequate benefits and incentives in the form of special development package are given to the backward areas of that State. 

(3)The Central Government shall, while considering the special development package for the successor State of Andhra Pradesh, provide adequate incentives, in particular for Rayalaseema and north coastal regions of that State“

According to the latest indications from the State government (https://www.business-standard.com/india-news/around-rs-60-000-cr-to-be-spent-on-developing-amaravati-as-andhra-s-capital-124110500027_1.html), it is planning to spend Rs 60,000 Crores on Amaravati project works within a short timeframe of 3 years. Irrespective of the source of funds for such a massive investment, unless the Centre covers the major portion of it from grant assistance, the burden of repaying loans would fall on the people of AP across all regions of the State. 
The entire investment on Amaravati would flow into one district, namely, Guntur in AP, which implies diversion of resources from the other regions of the State, especially the two backward regions of north AP and Rayalaseema regions, who play an important role in the generation of tax revenues for the State. 
This is likely to impact the overall development of the State in the following ways.

1. Presently, due to overall fiscal scarcity, not enough budgetary allocations are being made for the welfare of SCs/STs/OBCs, especially for the tribal tracts in the State and the traditional fishing communities along the coast and any diversion of funds from the State’s tax revenues for concentrated investment on Amaravati would further aggravate the fiscal constraint on allocating enough funds for social welfare and social empowerment.  
2. Crucial development projects such as major and minor irrigation projects are not being maintained properly due to inadequate allocation of maintenance funds annually, as a result of which they are not yielding their expected outcomes. 
3. There is a shortage of funds in the public sector for creating additional capacity in important sectors such as education, health, irrigation, which is likely to be aggravated further as a result of diversion of funds from those sectors
4. There are existing inequities in regional development in AP, as for example, the unequal development in north AP and Rayalaseema vis-a-vis the other parts of the State. Focussed expenditure of public funds in one or two districts in the central region of the State will increase those inequities further, unless corrective measures are adopted simultaneously.

In this connection, I invite your attention to  Article 38 [Directive Principles] of the Constitution, which reads as follows:

Article 38:(1)The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life, 

(2) The State shall, in particular, strive to minimise the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations.

Both under the Constitution and in view of Section 46 of APRA, the Centre has the responsibility of ensuring that such inequalities do not persist. If the Centre fails to take corrective steps on this in consultation with the State, I am afraid it would amount to committing a breach of its mandate under the Constitution.

In the erstwhile undivided AP State, such regional inequalities forced the then government at the Centre to intervene and constitute regional Boards to ensure justice to all regions. On the same lines, the Centre should, in my view, intervene now, request an institution such as Niti Ayog to assess the magnitude of regional inequities, inequities in access to natural and fiscal resources and the ways and means to minimise the same, if necessary, by exploring the scope for optimising expenditure and sanctioning a special financial package for north AP and Rayalaseema regions, after holding consultation with the people in those regions.

Let me make it clear that what is urgently needed for north AP and Rayalaseema are public investments, not private investments, as the latter preclude justice to those belonging to SCs/STs/OBCs by closing doors to reservations. Privatisation of an important CPSE like RINL would cause enormous harm to the development of north AP as indicated in a separate letter addressed to you recently (https://countercurrents.org/2024/12/drop-rinl-privatisation-forthwith/)

I request you to treat this matter with the degree of seriousness it calls for and make urgent interventions.

Regards,

Yours sincerely,

E A S Sarma

Former Secretary to the Government of India

Visakhapatnam

1st January 2025