Centre to give Rs 850-cr package to Andhra

The Centre on Wednesday announced a Rs 850-crore package for Andhra Pradesh for the current financial year. It also announced several tax breaks for the new state.

This is a sequel of the state's partition, with the Centre having promised aid to compensate for the lost resources.

The announcement also hints at shift in jurisdiction over special packages. Even at the time of the new government, it was the erstwhile Planning Commission which was considering special category status for the state, as well as preparation for the package. NITI Aayog, the commission's new avatar, will hold its governing council meeting to be chaired by Prime Minister Narendra Modi.

BRIDGING THE GAP

• The Centre also announced several tax breaks for Andhra Pradesh
• The package will comprise Rs 350 crore for seven backward districts (Rs 50 crore each)
• The districts are Anantapur, Chittoor, Kadapa, Kurnool, Srikakulam, Vizianagaram and Visakhapatnam
• An inter-ministerial committee to make recommendations to bridge the likely resource gap
• Ad hoc support of Rs 500 crore will be provided to the state, pending recommendations of the committee

The package will comprise Rs 350 crore for seven backward districts (Rs 50 crore each) of Andhra, a statement by the finance ministry said.

The districts are: Anantapur, Chittoor, Kadapa and Kurnool, Srikakulam, Vizianagaram and Visakhapatnam.

An inter-ministerial committee, constituted by the ministry of home affairs, is also taking stock of the situation of the state government to make recommendations to bridge the likely resource gap.

"However, ad hoc support of Rs 500 crore for the current financial year will be provided to Andhra Pradesh, pending recommendations of the committee," the statement said.

Besides, various tax breaks would be given. These include 15 per cent additional depreciation on new plant and machinery in the first year of installation for the manufacturing of industries set up in the backward region.

An additional investment allowance of 15 per cent would be given to industries set up in the backward regions for investments made in new plant and machinery in any of the five years for which additional concession would be notified. Even if the investment is made in the fifth year, the investment allowance would be available. The Budget for the current financial year provides an investment allowance at the rate of 15 per cent to a manufacturing company that invests more than Rs 25 crore in new plant and machinery in any year till March 31, 2017.

However, investment allowance for the state will be provided without insisting on an investment of above Rs 25 crore. Several other proposals, including those by the Department of Industrial Policy & Promotion (DIPP), are under examination.