Bifurcation of AP PDF

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AP STATE REORGANISATION ACT, 2014

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 All the acts are published in the Government Gazette  Ministry of Law and Justice
(Legislative Department) is responsible for the same
 Received the assent of the President of India on March 1, 2014

 Enacted by the Parliament in its 65th year of the Republic of India
Section 1
 This Act may be called the Andhra Pradesh Reorganisation Act, 2014
Section 2 (Terms  MEANING )

a) ‘Appointed day’ means the day notified in the gazette

b) “article” means an article of the Constitution

c) “assembly constituency”, “council constituency” and “parliamentary constituency” have
the same meanings as in the Representation of the People Act, 1950
d) “Election Commission” Election Commission appointed by President under art 324
e) “existing State of Andhra Pradesh”  State of Andhra Pradesh as existing immediately

before the appointed day
f) “law” includes any enactment, ordinance, regulation, order, bye-law, rule, scheme,
notification or other instrument having  force of law in the whole or in any part of
the existing State of Andhra Pradesh
g) “notified order”  order published in the Official Gazette

h) Population ratio  AP: Telangana - 58.32:41.68 (2011 census)
i) “Sitting member”, in relation to either House of Parliament or of the Legislature 

person who immediately before the appointed day, is a member of that House
j) ‘Successor states’ means both AP and TS from the appointed day
k) ‘Transferred Territory’ means area transferred from AP to TS
l) “Treasury” includes a sub-treasury
m) any reference to a district, mandal, tehsil, taluk or other territorial division of
the existing State of Andhra Pradesh shall be construed as a reference to the area
comprised within that territorial division on the appointed day
Section 3 (Formation of Telangana State)
 New state is known as State of Telangana (from the appointed day)

 From Bhurgumpadu mandal of Khammam district few revenue villages were not
ceased, but continued to be a part of AP. (Bhurgumpadu, Seetharamanagaram and
Kondreka)
Comprises the following territories of the existing state of AP
Adilabad
Karimnagar
Medak
Nizamabad
Warangal
Rangareddy
Nalgonda,
Mahbubnagar
Khammam (but excluding the revenue villages in the Mandals specified in G.O.Ms. No.
111 Irrigation & CAD (LA IV R&R-I) Department, dated the 27th June,2005

Section 4 (State of AP and terrirtorial divisions thereof)
 On and from the appointed day, AP shall comprise the territories of the existing State
of Andhra Pradesh other than those specified in section 3
Section 5 (Common Capital  Hyderabad)
1) Hyderabad  common capital of the State of Telangana and the State of Andhra
Pradesh for such period not exceeding ten years
2) After expiry of the period referred to in sub-section (1), Hyderabad  capital of the
State of Telangana and there shall be a new capital for the State of Andhra Pradesh
Note: Common capital includes the existing area notified as the Greater Hyderabad Municipal
Corporation under the Hyderabad Municipal Corporation Act, 1955


Section 6 (Expert Committee for setting up of a capital for AP )
 Expert committee to study various alternatives regarding the new capital for the successor
State of Andhra Pradesh
 recommendations in a period not exceeding six months

Section 7 (Governor of existing state of AP to be common Governor)
o From appointed day Governor of the existing State of AP shall be the Governor for both the
successor States of Andhra Pradesh and Telangana for such period as may be determined by
the President
Section 8 (Responsibility of Governor to protect residents of common capital of Hyderabad)
o 8(1): for the purposes of administration of the common capital area, the Governor shall have
special responsibility for the security of life, liberty and property of all those who reside in such
area
o 8(2): responsibility of the Governor shall extend to matters such as law and order, internal
security and security of vital installations, and management and allocation of Government
buildings in the common capital area
o 8 (3): In discharge of the functions, the Governor shall, after consulting the Council of Ministers
of the State of Telangana, exercise his individual judgment as to the action to be taken
If any question arises whether any matter is or is not a matter as respects which the Governor
is under this sub-section required to act in the exercise of his individual judgment, the decision
of the Governor in his discretion shall be final, and the validity of anything done by the
Governor shall not be called in question on the ground that he ought or ought not to have acted
in the exercise of his individual judgment

o 8(4): Governor shall be assisted by 2 advisors to be appointed by the Central Govt
Section 9 (Assistance of Police Forces from Central Govt to successor states)
o 9(1): Central Government shall assist the successor States of Andhra Pradesh and Telangana to
raise additional police forces
o 9(2): Central Government shall, for a period of three years, on and from the appointed
day, maintain and administer the Greyhound Training Centre in Hyderabad which shall
function as a common training centre for the successor States and, at the expiry of the said
period, the existing Greyhound Training Centre in Hyderabad shall become the training
centre of the State of Telangana
o 9(3): Central Government shall assist the successor State of Andhra Pradesh to set up a similar
state-of the-art training centre at such place as the State Government of Andhra Pradesh may
by order notify
o 9(4): Central Government shall provide financial assistance to the successor States in setting up
new operational hubs for Greyhounds at such locations as the successor States may by order
notify
o 9(5): Greyhound and OCTOPUS forces of the existing State of Andhra Pradesh
shall be distributed between the successor States after seeking options from the personnel
and, each of these forces, on or after the appointed day shall function under the respective

Director General of Police of the successor States
Section 10 (Amendment of FIRST Schedule of Constitution)
 First Schedule to the Constitution, under the heading “I. THE STATES’’
 In the place of “Second Schedule to the Andhra Pradesh and Madras

(Alteration of Boundaries) Act, 1959” he following shall be inserted, namely:—
“and the territories specified in section 3 of the Andhra Pradesh Reorganisation Act, 2014”;
 After entry 28, the following entry shall be inserted, namely:— “29. Telangana: The territories
specified in section 3 of the Andhra Pradesh Reorganisation Act, 2014.”

Section 11 (Saving powers of State Governments)
 Nothing in the foregoing provisions of this Part shall be deemed to affect the power of the
Government of Andhra Pradesh or the Government of Telangana to alter, after the appointed
day, the name, area or boundaries of any district or other territorial division in the State
Section 12 (Amendment of 4th Schedule to Constitution)
 in entry 1, for the figures “18”, the figures “11” shall be substituted;
 entries 2 to 30 shall be renumbered as entries 3 to 31, respectively;
 after entry 1, the following entry shall be inserted, namely:—
“2. Telangana.......................................... 7”
Section 13 (Allocation of sitting members)
 13(1): 18 sitting members of the Council of States representing the existing State of Andhra
Pradesh shall be deemed to have been elected to fill the seats allotted to the States of Andhra
Pradesh and Telangana, as specified in the First Schedule to this Act
 13(2): term of office of such sitting members shall remain unaltered
Section 14 (Representation in House of the People)
 Allocated 25 seats to the successor State of Andhra Pradesh, and 17 seats to the successor
State of Telangana, in the House of the People, and the First Schedule to the Representation of
the People Act, 1950 shall be deemed to be amended accordingly
Section 15 (Delimitation of Parliamentary and Assembly Constituencies)
15(1): Delimitation of Parliamentary and Assembly Constituencies Order, 2008, shall stand amended as
directed in the Second Schedule

15(2): Election Commission may conduct the elections to the House of the People and the Legislative
Assemblies of the successor States of Andhra Pradesh and Telangana as per the allocation of seats
specified in the Delimitation of Parliamentary and Assembly constituencies Order, 2008 as amended by
this Act
Section 16 (Provision as to sitting members)
16(1): Every sitting member of the House of the People representing a constituency which, on the
appointed day by virtue of the provisions of section 14, stands allotted
16(2): The term of office of such sitting members shall remain unaltered
Section 17 (Provisions as to Legislative Assemblies)
Number of seats in the Legislative Assemblies of the States of Andhra Pradesh  175 and Telangana
119
Section 18(Representation of Anglo-Indian community)
Governor of the State may nominate 1 member each to the Legislative Assemblies of the successor
States to give representation to the Anglo-Indian community in accordance with article 333
Section 19 (Allocation of sitting members)
Every sitting member of the Legislative Assembly of the existing State of Andhra Pradesh elected to fill a
seat in that Assembly from a constituency which on the appointed day by virtue of the provisions of
section 17 stands allotted, with or without alteration of boundaries
Section 20 (Duration of Legislative Assemblies)
Period of five years referred to in clause (1) of article 172
Section 21 (Speaker, Deputy Speaker and rules of procedure)
21(1): Speaker of the Legislative Assembly of the existing State of Andhra Pradesh shall continue to be
the Speaker of that Assembly
21(2): Deputy Speaker of the Legislative Assembly of the existing State of Andhra Pradesh shall become
the Deputy Speaker of the Legislative Assembly of the successor State of Telangana

21(3): rules of procedure and conduct of business of the Legislative Assembly of Andhra Pradesh 
under clause (1) of article 208
Section 22 (Legislative Council for successor States)
22(1): Not more than 50 members in the Legislative Council of Andhra Pradesh; 40 members in the
Legislative Council of Telangana in accordance with the provisions contained in article 169
22(2): two Legislative Councils of the successor States and the existing members shall be allotted to the
Councils as specified in the Fourth Schedule
Section 23  Provisions as to Legislative Councils
Section 24 (Amendment of Delimitation of Council Constituencies Order)
24(1): Delimitation of Council Constituencies (Andhra Pradesh) Order, 2006 shall stand amended as
directed in Part I of the Third Schedule
24(2): Delimitation of Council Constituencies (Telangana) Order, 2014, as specified in Part II of the
Third Schedule shall apply to the successor State of Telangana
Section 25 (Chairman, Deputy Chairman and rules of procedure)
25(1): The person who immediately before the appointed day is the Chairman of the Legislative Council
of the existing State of Andhra Pradesh
25(2): Deputy Chairman of the Legislative Council of the existing State of Andhra Pradesh shall become
the Deputy Chairman of the Legislative Council of the successor State of Telangana
25(3): Rules of procedure and conduct of business of the Legislative Council of Andhra Pradesh  under
clause (1) of article 208
Section 26 (Delimitation of constituencies)
Subject to the provisions contained in article 170 of the Constitution and without prejudice to section
15 of this Act, the number of seats in the Legislative Assembly of the successor States of Andhra
Pradesh shall be increased from 175 to 225 and Telangana from 119 to 153

Section 27 (Power of Election Commission to maintain Delimitation Orders up-todate)
correct any printing mistakes in any order made under section 26
Section 28 (Amendment of Scheduled Castes Order)
Constitution (Scheduled Castes) Order, 1950, shall stand amended as directed in the Fifth Schedule to
this Act
Section 29 (Amendment of Scheduled Tribes Order)
Constitution (Scheduled Tribes) Order, 1950, shall stand amended as directed in the Sixth Schedule to
this Act
Section 30 (High Court of Judicature at Hyderabad to be common High Court till establishment of High
Court of Andhra Pradesh)
30(1): High Court at Hyderabad shall be the common High Court for Telangana and Andhra Pradesh till
a separate High Court for AP is constituted under article 214 of the Constitution
30(2): Expenditure in respect of salaries and allowances of the Judges of the common High Court shall
be allocated amongst the States of Andhra Pradesh and Telangana on the basis of population ratio

Section 34 (Special provision relating to Bar Council and advocates)
34(1): In the Advocates Act, 1961, in section 3, in sub-section (1), in clause (a), for the words
“Rajasthan,Uttar Pradesh”, the words “Rajasthan, Telangana, Uttar Pradesh” shall be substituted
Section 44 (Authorisation of expenditure of Telangana)
Governor  authorise such expenditure from the Consolidated Fund of Telangana as he deems
necessary for any period not more than six months
Section 45 (Reports relating to accounts of Andhra Pradesh)
Reports of the Comptroller and Auditor-General of India referred to in clause (2) of article 151  shall
be submitted to the Governor of each of the successor States of Andhra Pradesh and Telangana
Section 46 (Distribution of Revenue)
46(1): The award made by 13th Finance Commission to the existing State of Andhra Pradesh shall be
apportioned between the successor States by the Central Government on the basis of population ratio
and other parameters

46(2): Central Government  make appropriate grants and also ensure that adequate benefits and
incentives in the form of special development package are given to the backward areas: adequate
incentives, in particular for Rayalaseema and north coastal regions
Section 47: (Application of part)
47(1): apportionment of the assets and liabilities
47(4): Any dispute regarding the amount of financial assets and liabilities shall be settled through
mutual agreement, failing which by order by the Central Government on the advice of the Comptroller
and Auditor-General of India
Section 48: (Land and Goods)
All land and all stores, articles and other goods belonging to the existing State of Andhra Pradesh shall

(a) if within the transferred territory, pass to the State of Telangana; or
(b) in any other case, remain the property of the State of Andhra Pradesh
Properties situated outside existing AP  properties shall be apportioned between the successor States
on the basis of population ratio
Expression “land” includes immovable property of every kind and any rights in or over such property,
and the expression “goods” does not include coins, bank notes and currency notes
Section 49 (Treasury and bank balances)
Cash balances in all treasuries - credit balances  divided between the States of Andhra Pradesh and
Telangana onthe basis of population ratio
There shall be no transfer of cash balances from any treasury to any other treasury and the
apportionment shall be effected by adjusting the credit balances of the two States in the books of the
Reserve Bank of India on the appointed day
Section 50 (Arrears of taxes)
 Right to recover arrears of the tax or duty on property, including arrears of land revenue, shall
belong to the successor State in which the property is situated
 Right to recover arrears of any other tax or duty shall belong to the successor State in whose
territories the place of assessment of that tax or duty is included on the appointed day
Section 51 (Right to recover loans and advances)
51(1): Recover any loans or advances made before the appointed day to any local body, society,
agriculturist or other person in an area within that State shall belong to the successor State in which
that area is included on that day
51(2): The right of the existing State of Andhra Pradesh to recover any loans or advances made before
the appointed day to any person or institution outside that State shall belong to the State of Andhra
Pradesh

Section 52 (Investments and credits in certain funds)
52(1): Securities held in respect of the investments made from Cash Balances Investment Account or
from any Fund in the Public Account ‘’specified in the Seventh Schedule shall be apportioned on the
basis of population ratio
Securities held in investments made from the Calamity Relief Fund of the existing State of Andhra
Pradesh shall be divided in the ratio of the area of the territories occupied by the successor States
Investments in such special funds on multiple entities  apportioned between the successor States on
the basis of population ratio
Investments of the existing State of Andhra Pradesh in any private, commercial or industrial
undertaking, the objects of which are confined to a local area, shall belong to the successor State in
which such area is included -- investments in such entities, having multiple units  apportioned
between the successor States on the basis of population ratio
Body corporate constituted under a Central Act, State Act or ProvincialAct  divided between the
States of Andhra Pradesh and Telangana in the same proportion in which the assets of the body
corporate are divided under the provisions of this Part
Section 53 (Assets and liabilities of State undertakings)
Assets and liabilities relating to any commercial or industrial undertaking
 Operational units of the undertaking shall be apportioned between the two successor States on
location basis
 Headquarters of such undertaking shall be apportioned between the two successor States on
the basis of population ratio
 Assets and liabilities shall be transferred in physical form on mutual agreement or by making
payment or adjustment through any other mode
Section 54 (Public Debt)
All liabilities on account of Public Debt and Public Account  apportioned on the basis of population
ratio of the successor States unless a different mode of apportionment is provided under the provisions
of this Act

Liability on account of loan raised from any source and re-lent by the existing State of Andhra Pradesh
 whose area of operation is confined to either of the successor States shall devolve on the respective
States
“Government security” means a security created and issued by a State Government for the purpose of
raising a public loan and having any of the forms specified in, or prescribed under, clause (2) of section 2
of the Public Debt Act, 1944.
Section 55 (Floating Debt)
Floating loan to provide short term finance to any local body, body corporate or other institution, shall
be determined on the following basis, namely
 Exclusive floating loan purposes of either of the successor States

 divided on the basis of population ratio
Section 56 (Refund of taxes collected in excess)
 Liability of the existing State of Andhra Pradesh to refund any tax or duty on property,
including land revenue, collected in excess shall be the liability of the successor State in whose
territories the property is situated
 Refund of any other tax or duty collected in excess shall be apportioned between the Successor
States of Andhra Pradesh and Telangana on the basis of population ratio
Section 57 (Deposits)
 Liability in respect of any civil deposit or local fund deposit shall, as from the appointed day, be
the liability of the successor State in whose area the deposit has been made
 Liability in respect of any charitable or other endowment  liability of the successor State in
whose area the institution entitled to the benefit of the endowment is located
Section 58 (Provident Fund)
Liability in respect of the Provident Fund account of a Government servant in service  liability of the
successor State to which that Government servant is permanently allotted
Section 59 (Pensions)
Liability in respect of pensions  apportioned in accordance with the provisions contained in the
Eighth Schedule to this Act.
Section 64 (Residuary Provisions)
Benefit or burden of any asset or liability  pass to the State of Andhra Pradesh in the first instance,
subject to such financial adjustment as may be agreed upon between the States of Andhra Pradesh and
Telangana

Section 66 (Power of Central Government to order allocation or adjustment in certain cases)
Andhra Pradesh and Telangana becomes entitled to any property or obtains any benefits or becomes
subject to any liability, and the Central Government is of opinion, on a reference made within a period
of three years from the appointed day by either of the States  benefits should be transferred to, or
shared with, the other successor State
Section 67 (Certain expenditure to be charged on Consolidated Fund)
All sums payable  charged on the Consolidated Fund of the State by which such sums are payable or,
as the case may be, the Consolidated Fund of India
Section 68 (Provisions for various companies and corporations)
 Companies and corporations specified in the Ninth Schedule  continue to function in those
areas in respect of which they were functioning immediately before appointed day
 Assets, rights and liabilities of the companies and corporations shall be apportioned between
the successor States in the manner provided in section 53.
Section 69 (Continuance of arrangements in regard to generation and supply of electric power and
supply of water)
Generation or supply of electric power or the supply of water for any area or in regard to the execution
of any project for such generation or supply has been or is likely to be modified to the disadvantage of
that area  Central Govt directs State Govt so far as practicable, of the previous arrangement and the
State to which such directions are given shall comply with them
Section 70 (Provisions as to APSFC Andhra Pradesh State Financial Corporation)
70(1): Andhra Pradesh State Financial Corporation established under the State Financial Corporations
Act, 1951 shall, on and from the appointed day, continue to function in those areas in respect of which
it was functioning immediately before that day, subject to the provisions of this section and to such
directions as may, from time to time, be issued by the Central Government
70(3): Board of Directors of the Corporation  if a scheme is approved at the general meeting by a
resolution passed by a majority of the shareholders present and voting, the scheme shall be submitted
to the Central Government for its sanction
70(5): If the scheme is not so approved or sanctioned, the Central Government may refer the scheme
to such Judge of the High Court of Andhra Pradesh or the High Court of Telangana  scheme shall be
final and shall be binding on the Corporations affected by the scheme

Section 72 (Temporary provisions as to continuance of certain existing road transport permits)
72(1): Notwithstanding anything contained in section 88 of the Motor Vehicles Act, 1988, a permit
granted by the State Transport Authority  deemed to continue to be valid and effective in that area
after appointed day till its period of validity subject to the provisions of that Act
72(2): No tolls, entrance fees or other charges of a like nature shall be levied after the appointed day
in respect of any transport vehicle for its operations in any of the successor States under any such
permit
Section 73 (Special provisions relating to, retrenchment compensation in certain cases)
Corporate body – Cooperative society – workman in corporate body  notwithstanding anything

contained in section 25F or section 25FF or section 25FFF of the Industrial Disputes Act, 1947, such
transfer or re-employment shall not entitle him to any compensation
Section 74 (Special provision as to income-tax)
Assets, rights and liabilities of any body corporate carrying on business  transferred to any other
bodies corporate which after the transfer carry on the same business, the losses or profits or gains
sustained by the body corporate first-mentioned which, but for such transfer, would have been allowed
to be carried forward and set off in accordance with the provisions of Chapter VI of the Income tax Act,
1961, shall be apportioned amongst the transferee bodies corporate
Section 75 (Continuance of facilities in certain State institutions)
Institutions specified in the Tenth Schedule to this Act, located in that State, continue to provide
facilities to the people of the other State
Section 76 (Provisions relating to All-India Services)
Expression “State cadre” - two separate cadres
(a) in relation to the Indian Administrative Service, has the meaning assigned to it in the Indian
Administrative Service (Cadre) Rules, 1954;
(b) in relation to the Indian Police Service, has the meaning assigned to it in the Indian Police Service
(Cadre) Rules, 1954; and

(c) in relation to the Indian Forest Service, has the meaning assigned to it in the Indian Forest Service
(Cadre) Rules, 1966
Nothing in this section shall be deemed to affect the operation, on or after the appointed day, of the
All-India Services Act, 1951, or the rules made thereunder
Section 78 (Other provisions relating to services)
Nothing in this section or in section 77 shall be deemed to affect, on or after the appointed day, the
operation of the provisions of Chapter I of Part XIV of the Constitution in relation to determination of
the conditions of service of persons serving in connection with the affairs of the Union or any State
Provisions of section 77 shall not apply in relation to members of any All-India Service
Section 80 (Advisory committees)
Central Govt may, by order, establish one or more Advisory Committees, within a period of 30 days
from the date of enactment of the Andhra Pradesh Reorganisation Act, 2014
Section 81 (Power of Central Government to give directions)
Central Government may give such directions to the State Government of Andhra Pradesh and the
State Government of Telangana
Section 82 (Provision for employees of Public Sector Undertakings)
Employees of State Public Sector Undertakings, corporations and other autonomous bodies shall
continue to function for a period of one year and during this period the corporate body concerned shall
determine the modalities for distributing the personnel between the two successor States.

Section 83 (Provisions as to State Public Service Commission)
83(1): Public Service Commission for the existing State of Andhra Pradesh shall, on and from the
appointed day, be the Public Service Commission for the State of Andhra Pradesh
83(2): There shall be constituted a Public Service Commission in accordance with article 315 of the
Constitution by the successor State of Telangana, and until such Commission is constituted, the Union
Public Service Commission may, with the approval of the President, agree to serve the needs of the
State of Telangana in terms clause (4) of that article
83(4): Every person who becomes the Chairman or other member of the Public Service Commission for
the State of Andhra Pradesh - subject to the provison to clause (2) of article 316, hold office or continue
to hold office until the expiration of his term of office as determined under the provisions
applicable to him immediately before the appointed day
83(5): The report of the Andhra Pradesh Public Service Commission as to the work done by the
Commission in respect of any period prior to the appointed day shall be presented under clause (2) of
article 323 to the Governors of the States of Andhra Pradesh and Telangana
Section 84 (Apex Council for Godavari and Krishna river water resources and their Management
Boards)
84(1): The Central Government shall, on and from the appointed day, constitute an Apex Council for the
supervision of the functioning of the Godavari River Management Board and Krishna River
Management Board
84(2): The Apex Council shall consist of–––
(a) Minister of Water Resources, Government of India—Chairperson;

(b) Chief Minister of State of Andhra Pradesh—Member;
(c) Chief Minister of State of Telangana—Member

84(3): The functions of the Apex Council shall include––
(i) supervision of the functioning of the Godavari River Management Board and Krishna River
Management Board;
(ii) planning and approval of proposals for construction of new projects, if any, based on Godavari or
Krishna river water, after getting the proposal appraised and recommended by the River Management
Boards and by the Central Water Commission, wherever required;
(iii) resolution of any dispute amicably arising out of the sharing of river waters through negotiations
and mutual agreement between the successor States;
(iv) reference of any disputes not covered under Krishna Water Disputes Tribunal, to a Tribunal to be
constituted under the Inter-State River Water Disputes Act, 1956.
Section 85 (Constitution and functions of River Management Board)
85(1): Central Government shall constitute two separate Boards to be called the Godavari River
Management Board and Krishna River Management Board (to be known as the Board), within a
period of sixty days from the appointed day

85(2): Headquarters of Godavari River Management Board  Telangana and of the Krishna River
Management Board  Andhra Pradesh
85(3): Godavari River Management Board and Krishna River Management Board shall be autonomous
bodies under the administrative control of the Central Government
85(4): Each Board shall consist of the following Chairperson and Members, namely:––
(a) 1 Chairperson appointed by the Central Government

(b) 2 members – Technical member + Administrative member nominated by each of the
successor States
(c) 1 expert to be nominated by the Central Government
85(5): Each Board shall have a full-time Member Secretary
85(6): Central Government shall create such number of posts of the rank of Chief Engineer in the
Central Water Commission
85(7): Each Board shall be assisted in the day to day management of reservoirs by the Central Industrial
Security Force constituted under the Central Industrial Security Force Act, 1968, on such terms and
conditions as the Central Government may specify

Section 86 (Staff of the Management Board)
86(1): Board shall employ staff for the efficient discharge of its functions under this Act and such staff
shall, at the first instance, be appointed on deputation from the successor States in equal proportion
86(2): Government of the successor States shall at all times provide the necessary funds to the Board to
meet all expenses (including the salaries and allowances of the staff) required for the discharge of its
functions and such amounts shall be apportioned between the States
Section 87 (Jurisdiction of Board)
Board shall ordinarily exercise jurisdiction on Godavari and Krishna rivers in regard to any of the
projects over headworks as may be notified by the Central Government, having regard to the awards, if
any, made by the Tribunals constituted under the Inter-State River Water Disputes Act, 1956
Section 88 (Power of Board to make regulations)
Board may make regulations consistent with the Act and the rules made thereunder
Section 89 (Allocation of water resources)
Term of the Krishna Water Disputes Tribunal shall be extended with the following terms of reference,
namely:
(a) shall make project-wise specific allocation, if such allocation have not been made by a Tribunal
constituted under the Inter-State River Water Disputes Act, 1956;
(b) shall determine an operational protocol for project-wise release of water in the event of deficit
flows
Section 90 (Polavaram Irrigation Project to be a national project)
90(1): Polavaram Irrigation Project is hereby declared to be a national project
90(2): It is hereby declared that it is expedient in the public interest that the Union should take under
its control the regulation and development of the Polavaram Irrigation Project for the purposes of
irrigation

90(3): The consent for Polavaram Irrigation Project shall be deemed to have been given by the successor
State of Telangana
90(4): Central Govt shall execute the project and obtain all requisite clearances including
environmental, forests, and rehabilitation and resettlement norms
Section 91 (Arrangements on Tungabhadra Board)
91(1): Governments of the successor States of Andhra Pradesh and Telangana shall replace the existing
State of Andhra Pradesh on the Tungabhadra Board
91(2): Tungabhadra Board shall continue to monitor the release of water to High Level Canal, Low Level
Canal and Rajolibanda Diversion Scheme
Section 92 (Successor States to follow principles, guidelines, etc., issued by Central Government)
Principles, guidelines, directions and orders issued by the Central Government, on and from the
appointed day, on matters relating to coal, oil and natural gas, and power generation, transmission
and distribution as enumerated in the Twelfth Schedule shall be implemented by the successor States
Section 93 (Measures for progress and development of successor States)
Central Govt shall take all necessary measures as enumerated in the Thirteenth Schedule for the
progress and sustainable development of the successor States within a period of ten years from the
appointed day

Section 94 (Fiscal measures including tax incentives)
94(1): Central Govt shall take appropriate fiscal measures, including offer of tax incentives, to the
successor States, to promote industrialisation and economic growth
94(2): Central Govt shall support the programmes for the development of backward areas in the
successor States, including expansion of physical and social infrastructure
94(3): Central Govt shall provide special financial support for the creation of essential facilities in the
new capital of the successor State of Andhra Pradesh including Raj Bhawan, High Court, Government
Secretariat, Legislative Assembly, Legislative Council, and such other essential infrastructure
94(4): Central Government shall facilitate the creation of a new capital for the successor State of
Andhra Pradesh, if considered necessary, by denotifying degraded forest land
Section 95 (Equal opportunities for quality higher education to all students)
Ensure equal opportunities for quality higher education to all students in the successor States, the
existing admission quotas in all government or private, aided or unaided, institutions of higher, technical
and medical education in so far as it is provided under article 371D of the Constitution, shall continue as
such for a period of ten years during which the existing common admission process shall continue

Section 96 (Amendment of article 168 of the Constitution)
In sub-clause (a) of clause (1) of article 168 of the Constitution, for the word “Tamil Nadu”, the words
“Tamil Nadu, Telangana” shall be substituted
Section 97 (Amendment of article 371D)
for the words “the State of Andhra Pradesh”, the words “the State of Andhra Pradesh or the
State of Telangana” shall be substituted
Section 98 (Amendment of section 15A of Act 43 of 1951)
In section 15A of the Representation of the People Act, 1951, after the words and figures “under the
Tamil Nadu Legislative Council Act, 2010”, the words and figures “and constituting the Legislative
Council of the State of Telangana under the Andhra Pradesh Reorganisation Act, 2014” shall be inserted
Section 99 (Amendment of section 15 of Act 37 of 1956)
On and from the appointed day, in section 15 of the States Reorganisation Act, 1956, in clause (e), for
the words “Andhra Pradesh”, the words “Andhra Pradesh and Telangana” shall be substituted
Section 100 (Territorial extent of laws)
Provisions of Part II shall not be deemed to have affected any change in the territories to which the
Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973
Section 101 (Power to adapt laws)
For the purpose of facilitating the application in relation to the State of Andhra Pradesh or the State of
Telangana of any law made before the appointed day, the appropriate Government may, before the
expiration of two years from that day, by order, make such adaptations and modifications of the law
Section 102 (Power to construe laws)
Notwithstanding that no provision or insufficient provision has been made under section 102 for the
adaptation of a law shall construe the law
Section 103  Power to name authorities, etc., for exercising statutory functions
Section 104  legal proceedings with respect to any property, rights or liabilities subject to
apportionment between the States
Section 105  Transfer of pending proceedings -- If any question arises as to whether any proceeding ,it
shall be referred to the High Court at Hyderabad and the decision of that High Court shall be final
Section 106  Right of pleaders to practise in certain cases -- for a period of one year from that day,
continue to be entitled to practise in those courts
Section 107  Effect of provisions of the Act inconsistent with other laws

Section 108 (Power to remove difficulties)
If any difficulty arises in giving effect to the provisions of this Act, the President may, by order do
anything not inconsistent with such provisions  Provided that no such order shall be made after the
expiry of a period of three years from the appointed day
Every order made under this section shall be laid before each House of Parliament


Schedule 11 (Principles governing the functioning of the River Management Boards)
 The operation protocol notified by the Ministry of Water Resources with respect to water
resources arrived at based on appropriate dependability criteria after the adjudication by the
Krishna Water Disputes Tribunal shall be binding on both the successor States.
 In the event of conflicting demand of water for irrigation and power  requirement of water
for irrigation shall take precedence.
 In the event of conflicting demand of water for irrigation and drinking water  requirement of
water for drinking water purpose shall take precedence.
 The allocations made by the River Water Tribunals with regard to various projects on Godavari
and Krishna Rivers or for the regions of the existing State of Andhra Pradesh, in respect of
assured water shall remain the same.
 Allocations, if any, to be made on excess flows by any Tribunal in future shall be binding on both
the State of Telangana and the successor State of Andhra Pradesh.
 While the successor State Governments shall be responsible for managing natural calamities,
the Boards shall advise the two State Governments on the management of disaster or drought
or flood in the rivers of Krishna and Godavari, particularly in reference to release of water for
the management and mitigation of the natural calamities. The Boards shall have the full
authority to get their orders implemented by the two successor State Governments promptly
and effectively in respect of operation of the head works of the dams, reservoirs or head works
of canals and works appurtenant thereto including the hydel power projects, as notified by the
Central Government, on Krishna and Godavari Rivers.
 No new projects based on water resources arrived at based on appropriate dependability
criteria on Godavari or Krishna rivers can be taken up by the State of Telangana or the State of
Andhra Pradesh without obtaining sanction from the Apex Council on River water resources.
All such proposals shall be first appraised and technically cleared by the respective Board,
before sanction by the said Apex Council.
 Execution of ongoing projects and future new projects on Godavari and Krishna rivers shall be
the responsibility of the State Government concerned where the project is located.
 In case of non-implementation of the decision by either of the States, the defaulting State shall
bear the responsibility and shall face financial and other penalties imposed by the Central
Government.
 The following irrigation projects which are under construction shall be completed as per the
plan notified by the existing State of Andhra Pradesh and the water sharing arrangement shall
continue as such:— HTV KGN

(i) Handri Niva

(ii) Telugu Ganga
(iii) Galeru Nagiri
(iv) Venegondu
(v) Kalvakurthi
(vi) Nettempadu
Schedule 12
Coal
1. Of the total equity of Singareni Collieries Company Ltd. (SCCL), 51% shall be with the Government of
Telangana and 49% with the Government of India.
2. Existing coal linkages of SCCL shall continue without any change.
3. New linkages shall be allotted to the successor States as per the New Coal Distribution Policy by
Government of India.
4. End use plants of the allocated coal blocks shall continue with coal from the block to be supplied in
proportion to their respective capacities.

Oil and Gas
1. Allocation of natural gas will continue to be done as per the policies and guidelines issued by the
Government of India from time to time.
2. The royalties payable on domestic onshore production of oil and gas shall accrue to the State in
which such production takes place
Power
1. Units of APGENCO shall be divided based on geographical location of power plants.
2. Existing Power Purchase Agreements (PPAs) with respective DISCOMS shall continue for both on-
going projects and projects under construction.
3. The existing Andhra Pradesh Electricity Regulatory Commission (APERC) shall function as a joint
regulatory body for a period not exceeding six months within which time separate SERCs will be
formed in the successor States.
4. The existing State Load Despatch Centre (SLDC) shall function for both successor States for a period
not exceeding two years within which time separate SLDC shall be set up for each successor State.
During this period, the existing SLDC shall function under the direct administration and control of the
Southern RLDC at Bengaluru.
5. Transmission lines of APTRANSCO of 132 KV and higher voltage cutting across the successor States
shall be deemed as Inter-State Transmission System (ISTS) lines. The transmission lines falling within
the territory of each successor State shall be transferred to the respective State Transmission Utilities.
The maintenance of ISTS lines shall also be done by successor States in their respective jurisdictions.
6. The power of the Central Generating Stations will be allotted in such ratio to the State of Telangana
and the State of Andhra Pradesh based on the actual energy consumption of the last 5 years of the
relevant DISCOMS in the respective successor State.

7. For a period of ten years, the successor State that has a deficit of electricity shall have the first right
of refusal for the purchase of surplus power from the other successor State.
8. The districts of Anantapur and Kurnool which fall within the jurisdiction of the AP Central Power
Distribution Company Ltd. will now be reassigned to the AP South Power Distribution Company Ltd.
Schedule 13:
Education
1. The Government of India shall take steps to establish institutions of national importance in the 12th
and 13th Plan periods in the successor State of Andhra Pradesh. This would include one IIT, one NIT,
one IIM, one IISER, one Central University, one Petroleum University, one Agricultural University and
one IIIT.
2. The Government of India shall establish one AIIMS-type Super-Specialty Hospital cum-Teaching
Institution in the successor State of Andhra Pradesh.
3. The Government of India shall establish a Tribal University each in the State of Andhra Pradesh and
in the State of Telangana.
4. A Horticulture University shall be established in the successor State of Telangana.
5. The Government of India shall establish the National Institute of Disaster Management in the
successor State of Andhra Pradesh.
Infrastructure
1. The Government of India shall develop a new major port at Duggirajupatnam in the successor
State of Andhra Pradesh to be completed in phases with Phase I by end-2018

2. SAIL shall examine, within six months from the appointed day, the feasibility of establishing an
integrated steel plant in Khammam district of the successor State of Telangana;
3. SAIL shall, within six months from the appointed day, examine the feasibility of establishing an
integrated Steel Plant in YSR District of the successor State of Andhra Pradesh;
4. IOC or HPCL shall, within six months from the appointed day, examine the feasibility of establishing a
greenfield crude oil refinery and petrochemical complex in the successor State of Andhra Pradesh and
take an expeditious decision thereon;
5. The Government of India shall, within six months from the appointed day, examine the feasibility of
establishing a Vizag-Chennai industrial corridor along the lines of Delhi-Mumbai Industrial Corridor
and take within such period an expeditious decision thereon;
6. The Government of India shall, within six months from the appointed day, examine the feasibility of
expanding the existing Visakhapatnam, Vijayawada and Tirupati airports to international standards
and take an expeditious decision thereon;

7. NTPC shall establish a 4000 MW power facility in the successor State of Telangana after establishing
necessary coal linkages;
8. Indian Railways shall, within six months from the appointed day, examine establishing a new railway
zone in the successor State of Andhra Pradesh and take an expeditious decision thereon;
9. NHAI shall take necessary steps to improve road connectivity in the backward regions of the
successor State of Telangana;
10. The Indian Railways shall, within six months from the appointed day, examine the feasibility of
establishing a Rail Coach Factory in the successor State of Telangana and improve rail connectivity in
the State and take an expeditious decision thereon


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BIFURCATION OF ANDHRA PRADESH AND ITS

ADMINISTRATIVE, ECONOMIC, SOCIAL, CULTURAL,
POLITICAL, AND LEGAL IMPLICATIONS/PROBLEMS
Andhra Pradesh Reorganisation Act, 2014
ARRANGEMENT OF SECTIONS
PART I
PRELIMINARY
SECTIONS
1. Short title.
2. Definitions.
PART II
REORGANISATION OF THE STATE OF ANDHRA PRADESH
3. Formation of Telangana State.
4. State of Andhra Pradesh and territorial divisions thereof.
5. Hyderabad to be common capital for States of Telangana and Andhra Pradesh.
6. Expert Committee for setting up of a capital for Andhra Pradesh.
7. Governor of existing State of Andhra Pradesh to be common Governor.
8. Responsibility of Governor to protect residents of common capital of Hyderabad.
9. Assistance of police forces from Central Government to successor State, etc.
10. Amendment of First Schedule to Constitution.
11. Saving powers of State Governments.
PART III
REPRESENTATION IN THE LEGISLATURES
12. Amendment of Fourth Schedule to Constitution.

13. Allocation of sitting members.
14. Representation in House of the People.
15. Delimitation of Parliamentary and Assembly Constituencies.
16. Provision as to sitting members.
17. Provisions as to Legislative Assemblies.

18. Representation of Anglo-Indian community.

19. Allocation of sitting members.
20. Duration of Legislative Assemblies.
21. Speaker, Deputy Speaker and rules of procedure.
22. Legislative Council for successor States.
23. Provisions as to Legislative Councils.
24. Amendment of Delimitation of Council Constituencies Order.
25. Chairman, Deputy Chairman and rules of procedure.
26. Delimitation of constituencies.
27. Power of Election Commission to maintain Delimitation Orders up-to-date.
28. Amendment of Scheduled Castes Orders.
29. Amendment of Scheduled Tribes Order.
PART IV
HIGH COURT
30. High Court of Judicature at Hyderabad to be common High Court till establishment of High Court
of Andhra Pradesh.
31. High Court of Andhra Pradesh.
32. Judges of Andhra Pradesh High Court.
33. Jurisdiction of Andhra Pradesh High Court.
34. Special provision relating to Bar Council and advocates.
35. Practice and procedure in Andhra Pradesh High Court.
36. Custody of seal of Andhra Pradesh High Court.
37. Form of writs and other processes.
38. Powers of Judges.
39. Procedure as to appeals to Supreme Court.
40. Transfer of proceedings from Hyderabad High Court to Andhra Pradesh High Court.
41. Right to appear or to act in proceedings transferred to Andhra Pradesh High Court.
42. Interpretation.
43. Savings.
PART V
AUTHORISATION OF EXPENDITURE AND DISTRIBUTION OF REVENUES
44. Authorization of expenditure of Telangana State.

45. Reports relating to accounts of Andhra Pradesh State.
46. Distribution of revenue.

PART VI
APPORTIONMENT OF ASSETS AND LIABILITIES
47. Application of Part.

48. Land and goods.
49. Treasury and bank balances.
50. Arrears of taxes.
51. Right to recover loans and advances.
52. Investments and credits in certain funds.
53. Assets and liabilities of State undertakings.
54. Public Debt.
55. Floating Debt.
56. Refund of taxes collected in excess.
57. Deposits, etc.
58. Provident Fund.
59. Pensions.
60. Contracts.
61. Liability in respect of actionable wrong.
62. Liability as guarantor.
63. Items in suspense.
64. Residuary provision.
65. Apportionment of assets of liabilities by agreement.
66. Power of Central Government to order allocation or adjustment in certain cases.
67. Certain expenditure to be charged on Consolidated Fund.
PART VII
PROVISIONS AS TO CERTAIN CORPORATIONS
68. Provisions for various companies and corporations.

69. Continuance of arrangements in regard to generation and supply of electric power and supply of
water.
70. Provisions as to Andhra Pradesh State Financial Corporation.
71. Certain provisions for companies.
72. Temporary provisions as to continuance of certain existing road transport permits.
73. Special provisions relating to, retrenchment compensation in certain cases.
74. Special provisions as to income-tax.
75. Continuance of facilities in certain State institutions.

PART VIII
PROVISIONS AS TO SERVICES
76. Provisions relating to All-India Services.

77. Provisions relating to other services.
78. Other provisions relating to services.
79. Provisions as to continuance of officers in same post.
80. Advisory committees.
81. Power of Central Government to give directions.
82. Provisions for employees of Public Sector Undertakings.
83. Provisions as to State Service Commission.
PART IX
MANAGAMENT AND DEVELOPMENT OF WATER RESOURCES
84. Apex Council for Godavari and Krishna river water resources and their Management Boards.
85. Constitutional and functions of River Management Board.
86. Staff of the Management Board.
87. Jurisdiction of Board.
88. Power of Board to make regulations.
89. Allocation of water resources.
90. Polavaram Irrigation Project to be a national project.
91. Arrangements on Tungabhadra Board.
PART X
INFRASTRUCTURE AND SPECIAL ECONOMIC MEASURES
92. Successor States to follow principles, guidelines, etc., issued by Central Government.
93. Measures for progress and development of successor States.
94. Fiscal measures including tax incentives.
PART XI
ACCESS TO HIGHER EDUCATION
95. Equal opportunities for quality higher education to all students.
PART XII
LEGAL AND MISCELLANEOUS PROVISIONS
96. Amendment of article 168 of the Constitution.

97. Amendment of article 371D of the Constitution.

98. Amendment of section 15A of Act 43 of 1951.
99. Amendment of section 15 of Art 37 of 1956.
100. Territorial extent of laws.
101. Power to adapt laws.
102. Power to construe laws.
103. Power to name authorities, etc., for exercising statutory functions.
104. Legal proceedings.
105. Transfer of pending proceedings.
106. Right of pleaders to practice in certain cases.
107. Effect of provisions of the Act inconsistent with other laws.
108. Power to remove difficulties.
Implementation of AP Reorganisation
Act, 2014 and the Connected Assurances
 Andhra Pradesh Reorganisation Act, 2014 (Act 6 of 2014) was notified on March 1, 2014
 2nd June 2014 was notified as the Appointed Day
Injustices done to Andhra Pradesh:
 The state received only 46% of the estimated revenues of the combined State while
accounting for the 58% of its population which was also confirmed by the 14th Finance
Commission
 Assets were allocated on location basis whereas debt liabilities were distributed on population
basis
 In power sector, power consumption has been adopted as the basis of distribution which is
detrimental to AP state
 Refund of taxes is to be shared between Andhra Pradesh and Telangana on population basis
(58.32 : 41.68) whereas deferred tax collections have been allocated on location basis. This has
caused a loss of about Rs.3,800 Crores
 No capital city for the residuary State of Andhra Pradesh
 Undivided loan liability of more than Rs.33,478Cr. has been put in the books of accounts of
Andhra Pradesh, burdening the State with discharge of liability along with interest, pending
division. This has adversely impacted FRBM limits of Andhra Pradesh as well
 Despite Singareni Collieries being a Schedule IX Company, Telangana State has been allocated
51% equity of the company on location basis

Status of Implementation of Provisions of the Andhra Pradesh Reorganisation Act 2014
Main Sections of the Andhra Pradesh Reorganisation Act, 2014
There are 14 assurances in the main sections of the Andhra Pradesh Reorganisation Act, 2014.
1) Fully implemented – 0
2) Partly implemented –5 (Special Development Package for 7 districts; Polavaram; Educational
Institutions and Infrastructure Projects; Tax incentives, Support for Capital)
3) Not implemented –9 (Greyhounds; APLA seats; Division of properties of A.P. Bhavan;
Apportionment of Tax arrears, loans and refunds; Government of India reference under Sec. 66;
Apportionment of Schedule IX Government Companies and Corporations; Bifurcation of
Schedule X Institutions; Bifurcation of Schedule X Institutions; River Management Boards)
Establishment of Greyhounds Training Centre [Section 9]
Section 26 of Andhra Pradesh Reorganisation Act, 2014 provides for increase of existing seats
from 175 to 225 in the A.P. Legislative Assembly
Development Grant for 7 backward districts of the State covering Rayalaseema and North
Coastal Region [Section 46(2) & (3) and 94(2)]  special development package on the lines of
K-B-K and Bundelkhand model
Polavaram Project [Section 90]
 Total expenditure incurred on Polavaram project under National Project upto 15th
December 2018 is Rs.10,069.66 Crores
 Out of this, an amount of Rs.6727.26 Cr has been released to Govt. of Andhra Pradesh
by Government of India.
 The balance amount of Rs.3,342.40 Cr. is still to be reimbursed by the Government of
India.
 Government of India has been requested to approve revised cost estimates for
Rs.57,940.86 crores
Tax incentives [Section 94 (1) and (2)] :
 Government of India vide CBDT Notification issued in September 2016, notified seven districts
for availing tax incentives - 15% of higher additional depreciation and 15% of investment
allowance on the cost of plant and machinery acquired under section 32(1)(iia) and section
32AD of the Income-tax Act, in respect of any manufacturing undertaking set up during the

period from 01.04.2015 to 31.03.2020. However, these incentives come under Section 94 (2) of
the Andhra Pradesh Reorganisation Act, 2014
 These benefits given under Income tax Act have been extended for development of backward
areas across various States like Telangana (9 Districts) West Bengal (11 Districts) and Bihar (17
Districts), that too before giving the benefit to 7 backward districts of Andhra Pradesh.
State Government requested Government of India to give Tax incentives
These incentives include
1.GST-Reimbursement up to the extent of Central Govt. share of CGST and IGST for 5 Years
2. Reimbursement of Centre's share of income tax for first 5 years;
3. 30% of the investment in Plant & Machinery with an upper limit of Rs.5 Crore;
4. 3% on working capital credit advanced;
5. Reimbursement of 100% insurance premium on insurance for 5 years; and
6. Transport and Employment subsidy etc. These incentives are being provided to all the 11 Special
category States
Central Support for creation of new Capital City [Section 6 and 94(3) & (4)]
 Under a unique ‘Land Pooling Scheme’ devised by Government of Andhra Pradesh, farmers
handed over 33,000 Acres of land valued at more than Rs.50,000 Cr. for the construction of
greenfield capital Amaravati.
 Provisional estimates indicate that it would require about Rs.1,09,023 Cr. to construct
Greenfield Amaravati City including the Raj Bhavan, Secretariat, High Court, Legislative
Assembly and Council along with trunk infrastructure and land development.
 Detailed Project Report for the Amaravati Government Complex and Infrastructure including
the Legislative Assembly, High Court, Raj Bhavan, residential quarters for Ministers,
Secretariat, Government housing for employees and other infrastructure for a total of
Rs.39,937 Cr. was submitted to Government of India, for release of funds under Section
94(3) of Andhra Pradesh Reorganisation Act, 2014.
 Currently, 56 projects costing Rs.48,115 crores are taken up in the Capital City region and
32 projects costing Rs.26,600 crores are under execution, 6 projects costing Rs.10,167 crores
are at tendering stage and 18 projects costing Rs.11,352 crores are at pre-tender stage.
 Government of India has released Rs.1,500 Cr. during the years 2014-17 and no funds were
released in 2017-18.
 Even the assured amount of Rs.1000 crores more is not released so far. State Govt.
submitted utilisation certificates for Rs.1632.48 Cr.
 Government of India was requested to provide adequate funds for the development of
Capital city of Amaravati as there is a statutory duty cast on it under section 94(3) of the
Andhra Pradesh Reorganisation Act, 2014
Schedule XIII – Educational Institutions
Status of 11 Institutions:

o 5 Institutions (IIT, NIT, IIM, IISER and IIITDM) are functioning from temporary campuses since
2015-16
o 2 Institutions (IIPE and NIDM) are functioning from temporary campuses since 2016-17.
o 2 Institutions (Central University and AIIMS) are functioning from temporary campus from 2018-
19.
o One Institution i.e. Tribal University is not yet established
o As per the provisions of the Andhra Pradesh Reorganisation Act, 2014, Government of India
should have established a Central Agricultural University but this is not done. Instead
Government of India has released Rs.135 crore to existing Acharya N.G. Ranga Agricultural
University
o As against the Rs. 12,746.38 crore required for setting up 11 Institutions Government of India
has released Rs.845.42 crore (6.63% of required funds), during 2014-19.
Schedule XIII – Infrastructure Projects:
o Eight (8) Infrastructure projects are assured in Schedule XIII – read with Section 93
o Five (5) projects are not implemented, namely establishment of Dugarajapatnam Port,
Establishment of Integrated Steel Plant, establishing Greenfield crude oil refinery and
petrochemical complex, establishing a new railway Zone, Metro rail facility in Visakhapatnam
and Vijayawada-Guntur-Tenali.
o Three (3) projects are at initial stages of implementation. These are establishing Vizag-Chennai
industrial corridor, expanding existing Visakhapatnam, Vijayawada and Tirupati Airports to
international standards and establishing rapid rail and road connectivity from new Capital.
Establishment of Dugarajapatnam Port
 There is very clear provision in the Andhra Pradesh Reorganisation Act, 2014 making it
mandatory for Government of India to develop a new major port at Dugarajapatnam with a
target to complete phase-I by the end of 2018.
Establishment of Integrated Steel Plant at Kadapa
 In July, 2017, MECON has submitted a preliminary feasibility report indicating a pre-tax
IRR of 18.95%, which implies that the steel plant is highly feasible
Establishment of Cracker and Petroleum Complex in Kakinada
 A Cracker and Petrochemical Complex is proposed to be established by the GAIL-HPCL

consortium at Kakinada as per Schedule XIII of the Andhra Pradesh Reorganisation Act,
2014

1) GAIL-HPCL consortium after discussions with Government of Andhra Pradesh suggested a

viability gap funding of Rs.1,238 crores per annum for 15 years from zero date, to be provided
by the State Government, repayable over the next 15 years. On net present value basis it
amounts to onetime payment of Rs.5615 crores. It is pertinent to note that this amount was
quantified at 14% IRR whereas in some other projects done by public sector units and supported
by Government of India, 9% IRR has been norm
2) The estimated gross tax revenue to the Government of India would be Rs.1,750 crores per
annum, which includes CGST of Rs.350 crore and retained IGST of Rs.1,400 crore.
3) The estimated forex savings due to import substitution of the petrochemicals produced in
this complex, would be to the tune of Rs.6,500 crore
4) Government of Andhra Pradesh agreed to subsidize power (Rs 577 Cr. per annum), water (Rs.
51Cr. per annum) and all external infrastructure support.
Establishment of Vizag-Chennai Industrial Corridor (VCIC):
 Asian Development Bank (ADB) is partnering with the Government of Andhra Pradesh in
developing the VCIC.
 Government of India was requested to consider VCIC also under the purview of National
Industrial Corridor Development and Implementation Trust (NICDIT) to leverage and
benefit from the experience and expertise of planning and developing industrial corridors in
India and avail financial assistance from Government of India, and the matter is pending
with Government of India since June, 2017.
 State Government requests development of VCIC on the lines of DMIC through 100% grant
funding by NICDIT
Expanding the existing Visakhapatnam, Vijayawada and Tirupati airports to international standards:
 International flights from Vijayawada to Singapore under VGF model from Government of
Andhra Pradesh commenced from 4th December, 2018.
 Ministry of Civil Aviation, Government of India has been requested to accord status of ‘Port of
Call’ to Vijayawada and Tirupati airports by including them in existing bi-lateral agreements
Establishment New Railway Zone:
 The assurance relating to establishment of a new Railway Zone in the successor State of Andhra
Pradesh remained unfulfilled so far.
 The Government of Andhra Pradesh has requested the Govt. of India for formation of a new
Railway Zone with Visakhapatnam as headquarters
Establishment of Rapid Road & Rail Connectivity from New Capital Rail Connectivity:

 Approved Errupalem-Nambur via Amaravati single line track (56.53 Km)
1) Hyderabad-Suryapeta-Kodada-Nandigama-Vijaywada / Amaravati (NH-65) – 275 Km
2) Hyderabad-Nagarjunasagar -Macharla (Covered by NH-565)-RentachintalaDachepalli-Piduguralla-

Sattenapalli-Perecharla-Guntur-Amaravati– 290 Km
3) Amaravati/Vijayawada–Ibrahimpatnam–Tiruvuuru- Bhadrachalam- Jagdalpur (NH-30)- 171 Km

upto Bhadrachalam
4) Anantapuramu -Amaravati Express way (Greenfield Expressway)
5) Amaravati Outer Ring Road– 180 Km
Establishment of Metro Rail Facility in Visakhapatnam and Vijayawada
Schedule IX – Government Companies and Corporations
 There are 89 Institutions listed under Schedule IX

 Expert Committee headed by Ms. Sheela Bhide is constituted to give recommendations on
demerger
 Two more state level institutions which were not included under Schedule IX were entrusted
to the Expert Committee for giving recommendations on demerger with the consent of
Govt. of Telangana
 Ms. Sheela Bhide committee term extended up to 31st December, 2018
 Expert Committee has given recommendation for division of assets and liabilities for 85
institutions and division of employees for 60 Institutions. Out of these 60, Government of
Andhra Pradesh issued orders for division of assets, liabilities and employees in respect of
41 institutions accepting the recommendations of the Expert Committee and Govt. of
Telangana has been requested to communicate consent. Expert Committee has been
requested to revise recommendations of 13 institutions duly pointing out certain
deficiencies. Remaining 6 are under examination at Government level.
 The assets of the Schedule IX institutions are tentatively valued at Rs.1,58,508 crore
 However, no institution is so far bifurcated due to non-cooperation from Government of
India and Govt. of Telangana
Schedule X - State Institutions
 There are 142 Institutions in Schedule X

 The assets of the Schedule X institutions are tentatively valued at Rs.38,772.85 crore.
 The issue regarding division of 142 State institutions remained unsettled till date due to non-
cooperation from Government of India and Govt. of Telangana.
Schedule XI – River Management Boards
 The headquarters of the Krishna River Management Board which is presently in Telangana
State has to be shifted to Andhra Pradesh, in tune with the provisions of the A.P.
Reorganisation Act.
 Krishna River Management Board and Godavari River Management Board are not given
assistance of the Central Industrial Security Force
Removal of Anomaly in Taxation Matters
 A new anomaly which did not exist in the earlier reorganisation legislations crept into Andhra
Pradesh Reorganisation Act 2014, regarding matters dealing with taxation (Section-50, 51 & 56
of A.P. Reorganisation Act).
 If the amendment is not made to the Act immediately, the state would be put to a loss of Rs.
3820 crores.
Prime Minister’s assurances – Status on implementation including Special Category Status:
 Fully implemented – 0
 Partly implemented – 5 (Tax Incentives; Special Development Package; Polavaram; Personnel,
Assets & Liabilities distribution; Resource Gap)
 Not implemented – 1 (Special Category Status)
Resource gap [Section 46(2)]
 The Comptroller and Auditor General of India (CAG) has furnished the audited finance accounts
for 2014-15 financial year, indicating a revenue deficit of Rs. 13,775.76 Cr. This is after
excluding the grant of Rs.2,303 Cr. received from Government of India for 2014.15. Therefore,
the total revenue deficit comes to Rs. 16,078.76 Cr
 Towards resource gap, Government of India released so far Rs. 3,979.50 Cr (Rs. 2,303 Cr. in
2014-15, Rs. 500 Cr. in 2015-16 and Rs. 1,176.50 Cr. in 2016-17)
Utilisation Certificates
 Government of India has released an amount of Rs.14,259.32 Cr. to Government of Andhra

Pradesh under various provisions of the Andhra Pradesh Reorganisation Act, 2014 and
Utilisation certificates have been submitted for an amount of Rs.13,620.79 Cr

Committees constituted for resolving the issues under A.P.Reorganisation Act
 Sheela Bhide Committee to recommend the bifurcation of assets and employees of Schedule-IX
institutions
 Kamalanathan Committee to divide the allocable State level employees
 A ministerial committee of Sri Yanamala Ramakrishnudu, Sri K.Atchannaidu and Sri Kalva
Srinivasulu has been constituted to hold discussions with Telangana counterpart before the
Hon’ble Governor
 Government of Andhra Pradesh has so far mobilized Rs.6,610 crore so far, for the construction
of Capital Amaravati whereas the Govt of India gave only Rs.1,500 crore during 2014-17
 When an amount of Rs.5732.40 crore is due by Telangana DISCOMs to AP GENCO for the
power supplied by APGENCO, the issue was taken up with the Govt. of India. Till today this has
not been resolved. APGENCO filed a case in National Company Law Tribunal, Hyderabad in this
regard.
 The assets and liabilities of IX Schedule institutions and Schedule-X institutions amounting to
Rs 1,97,000 crore are not divided between A.P. and Telangana States and the request for
division of these institutions was referred to Government of India under Section 66
 Hon’ble Supreme Court of India, yet another Constitutional Authority, had clearly ordered that
all assets and liabilities of Schedule-X institutions are divisible on population ratio in APSCHE
case. But the Union Home Ministry has passed a different order allocating assets on location
basis.
 Comptroller and Auditor General has clearly certified the revenue deficit at Rs.16078.76 crore
for the year 2014-15
 Reimbursement of revenue deficit and sanction of backward areas development package on
KBK and Bundelkhand models -- When under Bundelkhand package, the per head cost of
release was Rs.4,115/- whereas in respect of A.P., it is hardly Rs.428/-
 While computing resource gap for the year 2014-15, according to the pension rates fixed by the
Government of India, the pension amount for 10 months would be Rs 946.90 crore. However,
Government of India calculated this entitlement at Rs. 93.34 crore only.
 Amount of Rs.5732.40 crore is due by Telangana DISCOMs to AP GENCO for the power supplied
by APGENCO, as per the provisions of Andhra Pradesh Reorganisation At, 2014
 The assets and liabilities of IX Schedule institutions and Schedule-X institutions amounting to
Rs1,97,280 crore are not divided between A.P. and Telangana States
 For Amaravati city an amount of Rs.1,500 Cr. was released

 Andhra Pradesh has been adjudged as No.1 State in India for Ease of Business for the year
2018, on 10.07.2018, in the ranking conducted by DIPP, Ministry of Commerce & Industry,
Government of India and World Bank
 AP Ranks 1st in 14 Schemes
1) MGNREGA
2) National Rural Livelihood Mission-DDUGKY
3) PMAY-U
4) National Urban Livelihood Mission
5) AMRUT
6) Pradhan Mantri Krishi Sinchayi Yojana – Per Drop More Crop
7) Rashtriya Krishi Vikas Yojana
8) National Project on Soil Health and Fertility
9) National Mission on Oil Seed and Oil Palm
10) Assistance to Voluntary Organisations for Programmes relating to Aged
11) Pradhan Mantri Matru Vandana Yojana
12) Development of PVTGs
13) PRASAD
14) National Health Mission

IMPACT OF STATE REORGANISATION
1. The Gazette of India No 6 dated 01 March, 2014 notified the Andhra Pradesh Reorganization
Act 2014 (Act 6 of 2014), upon receiving the President of India’s assent. The Gazette of India No
560 dated 04 March 2014, notified 02 June 2014, as the Appointed Day, the day on which the
State of Andhra Pradesh was bifurcated into the State of Telangana and the residuary State of
Andhra Pradesh.
2. Lack of adequate and serious consultations with the key stakeholders, absence of consensus
amongst key political parties, lack of transparency and cloak and dagger mode of drafting the
Bill, the insane pace with which the Bill was pushed through the State Legislature and the
parliament, woefully inadequate discussion and debate that characterized the passage of the
Bill, albeit with notable exceptions, are well known to the world.
3. However, what is not well known to the public include a number of contradictions, omissions,
commissions and inadequacies embedded across the Andhra Pradesh Reorganization Act 2014
that have adverse impact on the health and well being of both successor States. The Act, by its
conception and content, has created disequilibrium, with negative consequences to the
residuary Andhra Pradesh. In a tearing hurry to please and placate certain sections of the State,
the UPA government had inflicted a serious blow to the fiscal health, developmental integrity of
Telugu community.
4. For a decade preceding the reorganization of the State, the Andhra Pradesh citizens were
subjected to an endless saga of mis-governance, corruption, lack of development. Which were
further compounded by endless procession of agitations, strikes, and civil strife, all of which
caused a major setback to the growth momentum and poverty alleviation efforts. The overall
slowdown in the economy, contraction of job opportunities, high levels of inflation had created
a sense of gloom and doom in the minds of Telugu people.
5. The alienation and despondency of the Andhra Pradesh public was reinforced by the manner in
which the State was reorganized without consideration for the disastrous economic and
financial consequences on the residuary Andhra Pradesh. The UPA II government had failed to
foresee the difficulties and deliberately ignored the complications that would befall both the
States in the aftermath of reorganization. No action was taken to prepare and equip the
government machinery, let lone the citizens at large, to effectively manage the reorganization
process or mitigate the reorganization process or mitigate its adverse consequences. Lack of
transparency surrounding the reorganization process and the frenetic pace with which the
process was carried out by the then central government had caused serious disenchantment
amongst citizens.

6. In this context, this paper seeks to catalogue the defects intrinsic to the Andhra Pradesh
Reorganization Act, identify the trauma inflicted on different sectors of the economy, analysis
the disequilibrium created in the residuary Andhra Pradesh and identify measures by which a
level playing platform can be created for the residuary State. The intention of this paper is to
address the concerns institutions has been seriously undermined during the past decade and to
instill a sense of optimism, hope and purpose in the future and help alleviate the sense of
cynicism and despondency.
Andhra Pradesh Reorganization Act 2014 – The Fountainhead of Problems
7. A careful reading and analysis of the Act reveals that it was the principal source of unfair and
unjust treatment to both successor States, with the residuary Andhra Pradesh being the worst
sufferer. Some of its provisions are having – and would continue to have – adverse impact in the
short-term as well as the medium-term on the residuary Andhra Pradesh. Some have been
inserted with a deliberate intention to create friction and conflict between the two successor
States and ensure protracted litigation to the determent of all concerned. Some of the glaring
defects and shortcomings of the Act that have a negative impact on the residuary Andhra
Pradesh are outlined in the following paragraphs.
Part II & Section 3 – Territorial Area of Andhra Pradesh
8. Only those villages specified in G.O.Ms. No. 111 of Irrigation & CAD (LA IV R&R-1) Department
dated 27 June 2005 and the revenue villages of Bhurgampadu, Seetharamanagaram and
Kondreka in Bhurgampadu Mandal of Khammam district were included in Andhra Pradesh
State, along with thirteen districts. This entailed that several villages that would be submerged
once the Polavaram multipurpose irrigation project gets completed would remain in Telangana
State. This would have resulted in protracted litigation, virtual blockage of Polavaram project,
and above all, made the resettlement and rehabilitation of project affected families an
impossible task.
9. This calamitious scenario however has been mitigated to some extent, thanks to the action of
the new NDA government that amended Section-3 of the Act and included seven Mandals of
Khammam district in Andhra Pradesh. Nevertheless, the integration of these villages with the
neighboring districts of Andhra Pradesh and establishments of effective governance institutions
would encounter sacral operational challenges. The misunderstanding and heart burning that
have been avoided if only the UPA government acted with foresight and exercised due diligence.

Section 5 & Section 8: Common Capital & Its Governance
10. The Act has ordained that the Hyderabad city would be the common capital of the successor
States of Andhra Pradesh and Telangana for a period of ten years. The Act has empowered the
Governor with ‘special responsibility for the security of life, liberty and property of all those
who reside in the Greater Hyderabad Municipal Corporation (GHMC) area’. However, it has
made it ‘mandatory for the Governor to consult the Council of Ministers of the State of
Telangana’ while discharging this responsibility. It is evident that the UPA government had
neither created an institutional framework essential for effective governance of the common
capital nor put in place standard operating procedures that would provide equitable platform to
both State Governments and ensures safety and security of the citizens, and fair and equitable
treatment of all concerned. The simple principles of good governance, it appears, were
abandoned with an eye on political dividends.
11. It is well known that knowledge, talent, skills, capital, and hard work of all Telugu people and
people from across the nation and beyond have contributed to the creation of Brand
Hyderabad. The world class infrastructure, industrial parks, Information Technology and
knowledge networks, research and development hubs, international educational institutions,
and the dynamic urban megalopolis that Hyderabad is under pressure because the previous
government had failed to put in place an effective institutional mechanism and sustain the
enabling environment essential for capital city governance.
12. To make matters worse, the State of Andhra Pradesh has not even been assigned a location for
its capital city thus far. Instead, an expert committee has been set up by the central government
to give its recommendation in six months from the appointed day. Yet another efforts to snatch
away the authority and the right of the new State to determine its own capital city. To
compound the problem, the perambulations of the expert committee to different parts of the
residuary State has given rise to contending claims, conflicting pronoun-cements, speculations,
expectations and avoidable disappointment.
Section 9: Assistance to Grey Hounds and OCTOPUS
13. Andhra Pradesh has been vulnerable to left wing extremist activity for several decades. Though
the left-wing movement has been subdued largely because of the measures taken during the
second half of 1990s and first half of the last decade essentially through intensive training and
strategic deployment of Greyhounds and OCTOPUS, it could re-emerge with vengeance if there
is any step-down in vigilance and enforcement by the Greyhound and OCTOPUS units. Similarly,
the terrorist activity has become ubiquitous and no region or place can be immune from this
scourge. Therefore, this provision that envisions three years of common training for Greyhound

forces and OCTOPUS could prove to be a disaster for the control and containment of both left
wing extremists and terrorist organizations.
Part V & VI : Apportionment of Revenue & Expenditure / Assets & Liabilities
14. Section 46(1) of the Act orders for the distribution of tax devolutions from the centre in
accordance with the dictates of the 13th Finance Commission to the combined State of Andhra
Pradesh and thereafter apportioned between the two successor States in the population ratio.
This entails that residuary Andhra Pradesh would receive above Rs 840 crores less during 2014-
15 financial year than if both successor States were allocated central revenue based on the 13
th FC formula. This provision has been disadvantageous to the residuary Andhra Pradesh, which
has substantial resource gap to finance its expenditure.
15. The provisions of the Act provide for apportionment of assets based on geographical location,
while the liabilities are apportioned on population ratio (58.32 per cent Andhra Pradesh; 41.68
per cent Telangana). Considering that all the major assets are located in the around Hyderabad
city, Andhra Pradesh has forfeited all major economic assets and inherited huge liability without
having the wherewithal to service the debt. Further, the fact the residuary Andhra Pradesh
State, by virtue of its location, is vulnerable to serious cyclones, floods, Tsunamis, etc., and
therefore would have to incur huge expenditure on relief and rehabilitation several times every
year has not been considered, even remotely, while formulating the Act.
16. Section 50 of the Act confers the ‘right to recover arrears of the tax or duty on property,
including arrears of land revenue, to the successor State in which the property is situated, and
the right to recover arrears of any other tax or duty would belong to the successor State in
whose territories the place of assessment of that tax or duty is included on the appointed day’.
Considering that Hyderabad was the principal place of assessment for taxes and duties,
including that of oil marketing companies and the Beverages Corporation, which together
contributed nearly forty five per cent of VAT to the united AP, this provision would deprive the
residuary State of its share in tax arrears amounting State of its share in tax arrears amounting
to hundreds of crores.
17. Section 51 of the Act deals with the principles relating to the recovery of loans and advances
made prior to the appointed day, which is as follows:
a. The right of the existing State of Andhra Pradesh to recovery any loans or advances made
before the appointed day to any local body, society, agriculturist or other persons in an area
within that State shall belongs to the successor State in which that area is included on the
day.

b. The right of the existing State of Andhra Pradesh to recover any loans or advances made
before the appointed day to any person or institution outside that State shall belong to the
State of Andhra Pradesh.
c. Provided that any sum recovered in respect of any such loans or advance shall be divided
between the States of Andhra Pradesh and Telangana on the basis of population ratio.
18. Section 51 of the Act deals with deferment of tax granted as an incentive to the industrial
units, usually for a period of fourteen years. In order to enable the industrial units to claim
deduction under the Income Tax Act, the deferred tax is deemed to have been paid and offered
as interest free loan, repayable in annual installments, after the expiry of the period of 14 years.
19. By applying the Section 51(1) of the Act, the right to recover the deferred taxes accrues to the
State where the industrial unit is located. However, since the deferred tax relates to the
transactions effected by the industrial units all over the composite State prior to bifurcation, it is
just and equitable that they should be apportioned between the two successor States in the
ratio of population.
20. Section 56 of the Andhra Pradesh Reorganization Act 2014 provides for refund of taxes
collected in excess, which is as follows:
1) The Liability of the existing State of Andhra Pradesh to refund any tax or duty on property,
including land revenue, collected in excess shall be the liability of the successor State in
whose territories the property is situated, and the liability of the successor State in whose
territories the property is situated, and the liability of the existing State of the Andhra
Pradesh to refund any other tax or duty collected in excess shall be apportioned between
the Successor State of Andhra Pradesh and Telangana on the Basis of Population ratio and
the State discharging the liability shall be entitled to receive from the other State its share of
the liability, if any
2) The liability of the existing State of Andhra Pradesh to refund any other tax or duty collected
in excess on the appointed day shall be the liability of the successor State of Andhra Pradesh
to refund any other tax or duty collected in excess shall be apportioned between the
Successor States of Andhra Pradesh and Telangana on the Basis of Population ration and the
State Discharging the liability shall be entitled to receive from the other State its share of
the Liability, if any.
21. Prima facie, the above two sections are mutually contradictory; in case of tax arrears, the State
having the place of assessment will have the right to recover. However, in case of refund, the
burden would have to be shared by both the States on the basis of population ratio though the
liability is discharged initially by the States having the place of assessment.

22. The quantum of arrears and refunds is likely to increase in future on completion of pending
assessments, re-assessments, revisions and disposal of pending appeals at various levels. It can
be seen that in case arrears are not apportioned between the two successor states in the ratio
of population, the state in which the place of assessment is located, which is Hyderabad for
most of the large tax payers, will be to the disadvantage of residuary Andhra Pradesh.
23. Is it apparent from the above that the AP Reorganization Act is riddle with anomalies,
contradictions and inconsistence. It has not applied principles uniformly and failed to apply the
norms of equity and fairness.
Schedule IX & X – State Undertakings & Institutions
24. Section 68 catalogues 89 State Undertakings have been specified in the Ninth Schedule of the
Act. Section 53 of Andhra Pradesh Reorganization Act that deals with the apportionment of
assets and liabilities relating to the State undertaking is as follows:
a. The assets and liabilities relating to any commercial or industrial undertaking of the existing
State of Andhra Pradesh, where such undertaking or part thereof is exclusive located in, or
its operations are confined to, a local area, shall pass to the State in which that area is
included on the appointed day, irrespective of the location of its headquarters:.
b. Provided that where the operation of such undertaking becomes inter-State by virtue of the
provisions of part II, the assets and liabilities of---
i. the operational units of the undertaking shall be apportioned between the two
successor State on location basis; and
ii. the headquarters of such undertaking shall be apportioned between the two
successor States on the basis of population ratio.
25. Though 89 state undertakings were included in the Ninth Schedule, only 70 are incorporated
society or companies, rest being subsidiary entities. The previous central government has not
paid adequate attention to the principles and the methodology for reorganization of state
enterprises and apportionment of assets and liabilities between the two states while
formulating the Act. Though subsequently the undivided Andhra Pradesh government has
constituted an expert committee for apportionment of assets and liabilities of the state
undertaking, including the staff, it is far from completion its task. This has created uncertainty in
the management of the state undertaking during the interregnum.

26. The section 75 of the Act, cited below, has provided for the continuation of facilities in 107
institutions specified in the Tenth Schedule to the Act.
75. (1) The Government of the State of Andhra Pradesh or the State of Telangana, as the case
may be, shall, in respect of the institutions specified in the Tenth Schedule to this Act, located in
that State, continue to provide facilities to the people of the other State which shall not, in any
respect, be less favorable to such people than what were being provided to them before the
appointed day, for such period and upon such terms and conditions as may be agreed upon
between the two State Governments within a period of one year from the appointed day or, if
no agreement is reached within the said period, as may be fixed by order of the Central
Government.
27. However, a careful analysis of the institutional listed in the Schedule-X indicate that 22 are
government departments, 10 are statutory bodies, 17 are societies bodies, 17 are societies
and 2 are categorized as board/ council. All these 55 entities are required by both States in
their entirety and not amenable to sharing between the two States. Further, 4 of the 107
institutions are not functional, 9 are universities and 16 others are integral part of government
departments.
28. Consequently, the Act has created a curious situation by including the heads of departments
(HOD) and regulatory agencies that are integral to the governance of every State in the
Schedule-X, while excluding several other entities that have been established under the central
and state statues. Further, the Act has remained silent on the apportionment of staff, assets,
etc., of these institutions between the two States. Above all, since majority of the institutions
included in the Tenth Schedule are headquartered in Hyderabad, the residuary Andhra Pradesh
would take a long time to replicate them. The Act has not provided any provision to replicate
these valuable institutions in the residuary State.
29. Moreover, several institutions established under the statute, like the Information Commission,
State Election Commission, Lokayuktha, Human Rights Commission, etc., have not found place
anywhere in the Act. Therefore, it is crystal clear that the Act was designed without adequate
attention to the details.
Part VIII – Provisions as to Services
30. Part VIII of the Act that encompasses Sections 76 to 83 deal with the apportionment of
employees – All-India Services and State Government Employees in local, district, zonal, multi-
zonal and state cadres- between the two States. The States that were reorganized in the past
had their staff apportioned between the successor States on or before the appointed day.

31. The All-India Services officers have not been apportioned between the two States until now and
less than ten thousand state cadre employees have been ‘provisionally ordered to serve the
State of Telangana’, which have had an adverse impact on the effectiveness of the governance
system and responsiveness of the official machinery in both the States.
Part – XI & Section 95 – Opportunities for Quality Education
32. Section 95 of the AP Reorganization Act states that “in order to ensure equal opportunities for
quality higher education to all students in the successor States, the existing admission quotas in
all government or private, aided or unaided, institutions of higher, technical and medical
education in so far as it is provided under article 371D of the Constitution, shall continue as
such for a period of 10 years during which the existing common admission process shall
continue”.
33. Notwithstanding the pious intentions of Section-95, which is essential for ensuring equal
opportunities to quality higher education to all students, the previous central government had
failed to foresee the problems that are likely to emerge in its operationalization and did not
create an institutional architecture essential for enforcement of Section- 95 of the Act. As a
result, several brilliant students were forced to seek admission to engineering and medical
courses in other States. Lack of clarity on this provision has given rise to insecurity, avoidable
conflict and litigation. Above all, like all other provisions vital to reorganization of any major
State, the previous central government failed to create the institutional mechanism for
operational zing this important provision.
Reorganization – Impact on Development
34. It is evident from the above paragraphs that the Andhra Pradesh Reorganization Act 2014
concocted in a breathless hurry, is filled with grave inadequacies, gross inequities, omissions,
commissions, errors, etc. this has placed the residuary Andhra Pradesh at a great disadvantage.
The reorganization of the State has created disequilibrium in terms of the developmental
dynamics and negatively impacted on a number of keys sectors. Some of them are summarized
in the following paragraphs.
Fiscal Situation:
35. A diligent analysis of the potential revenue receipts and expenditure for the 2014-15 financial
year and the subsequent years indicate that the residuary Andhra Pradesh is likely to face
monumental fiscal challenges. The total revenue receipts, including the State's own revenue,
Central taxes devolution, grants and market borrowings are likely to be less than fifty per cent of
the united State. However, on the expenditure side, due to the allocation of debt, salaries,

pension and subsidies based on population ratio, the residuary State of AP will have nearly
sixty per cent of the united Andhra Pradesh expenditure.
36. The result is an unprecedented high revenue deficit and fiscal deficit for the residuary state of
Andhra Pradesh. There has not been any revenue deficit for the State in the last decade and
fiscal deficit has never crossed 3% of GSDP so far. The expenditure on salaries and pensions in
the new State of Andhra Pradesh will be around 73% of its own revenues, a steep increase
from 58% in the combined State, leaving little scope for developmental expenditure.
37. Overall, the residuary Andhra Pradesh is at a significant disadvantage vis-à-vis Telangana State.
First, the GDSP of the AP State is only 55.7 per cent of the combined State’s GSDP, and the per
capita income of the residuary AP State is much below the Telangana State. More significantly,
the AP State’s own revenues are far lower than that of Telangana; Andhra Pradesh State with
58.32 per cent of the population earns only 46.6 per cent of the VAT of the combined State.
Further, Andhra Pradesh has a much higher debt burden compared to Telangana, as population
ratio was the sole criterion for apportionment of debt between the two States. The
Debt/GSDP ratio of AP is 19.4, compared to 18.1 of Telangana.
Agricultural Development :
38. One of the causalities of reorganization has been the agricultural research, development, and
above all, the training of new generation of agricultural scientists, as the only Agricultural
University in the united AP is in Hyderabad, which has since become an integral part of
Telangana state. To make matters worse, several important agricultural institutions like the DNA
Finger Printing, Tissue culture, and Oil analysis laboratories are located in Telangana state.
39. Further, the DNA finger printing & transgenic crops monitoring laboratory, Bio-pesticides
quality control laboratory and pesticide residue testing laboratory are located in Hyderabad.
The apex agricultural training institute, SAMETI, is also located in Hyderabad. It would be a
major challenge in terms of financial and human resources to replicate these institutions in the
State of Andhra Pradesh.
40. Significantly, Telangana districts have been the major producers of paddy seed production in the
united Andhra Pradesh. Telangana State has 969 private seed processing units, compared to 309
in Andhra Pradesh. The reorganization, therefore, has seriously affected the paddy seed
production and processing capacity that is essential for sustaining and accelerating agricultural
production and increasing productivity to ensure food security not only for the people of Andhra
Pradesh, but also for the rest of India.

41. Andhra Pradesh, by virtue of its location, is prone to floods and cyclones as well as drought.
During the period from 2008-09 to 2013-14, of the 20.18-lakh hectares of agricultural land
affected by natural calamities in the united Andhra Pradesh, 15.16-lakh hectares, i.e., more than
seventy five per cent was in the thirteen districts of residuary Andhra Pradesh.
Irrigation Sector :
42. The AP reorganization Act has brought the management and operational of projects in the
Krishna and Godavari basins serving the states of Andhra Pradesh and Telangana under the
control of River management boards. For the first time in the history of independent India, the
water resources management that has been in the exclusive domain of the States has been
taken over by the Government of India. This would has significantly reduced the authority and
the discretion of the successor States in matters relating to the quantum and timing of water
release, operation and maintenance of projects, etc.

LOSS OF CAPITAL CITY - HYDERABAD
 The bifurcation of Andhra Pradesh into two new States will have significant implications on
resource flow, economic development and the levels of publicly provided services for the two
new States. Resource allocation, as well as economic activities in the two regions will undergo
significant and dynamic changes because of the move.
 At the centre of this bifurcation is the capital city of Hyderabad, which has been declared as the
common capital of the two new States for 10 years. However, its revenue will belong to
Telangana. Being the hub of economic activities and the source of government finance,
Hyderabad will critically define the fiscal prospects of the two new States.
 Hyderabad is an information technology/ business hub. The city is estimated to have

contributed over 34,000 crore to the state’s total revenues of 70,548 crore during 2012-13. This
collectively includes the contribution of citizens and companies of both of the States. Of the 44
state-level public enterprises, the headquarters of 40 are located in Hyderabad. The
headquarters of a number of private companies are also located in Hyderabad. Many of them
may be paying a significant share of their State taxes in Hyderabad, though their activities may
be differentially spread across the two States.
 The division of mineral resources including coal and oil and gas was affect royalties.
Furthermore, offshore resources will go to new Andhra Pradesh, while Telangana will stand to
benefit from land-based mineral resources.
 The pattern of investment/expenditure will also be quite different for the two new States.
Telangana will have to devote more resources to developmental expenditure, including on
education and health, to uplift the economic development of districts other than Hyderabad. On
the other hand, the focus of new Andhra Pradesh will be on selecting the location of the new
capital city, which will require a massive flow of resources to cater to infrastructure and
construction-related activities.
Some of the important points related to capital city (Amaravati) in AP
 AP capital (Amaravati) was officially announced by Chandrababu Naidu on 1 st April 2015 but
Central government appointed a committee (Sivaramakrishnan committee) for capital
selection according to Section 6.
 Amaravati is called Deepala Dhinne (Lights of lamps) is also called Dhanyakataka and
Amareswara.

 For the construction of capital Amaravati Chandrababu Naidu collected 330000 acres of land
(Land Pooling and Land Acquisition)
Land Pooling:
 If farmers voluntarily gave lands to government for the development. It is called Land Pooling.
Single Crop: For single crop 1 acre of land 2000 square yards commercial land and 30000 rupees for
annual up to 10 years with 10% increment every year was given as compensation.
Double Crop: For double cropl acre of land 450 square yards commercial land and 50000 rupees per
year up to 10 years with 10% increment for everyone year is given as compensation.
Land Acquisition:
 If farmers involuntarily gave lands to development it is called Land Acquisition.

 Chandrababu Naidu gives a slogan to the people “My brick My Amaravati” and the price of 1
brick is 10/-
 In land acquisition (4*Government Rate) was given to the formers according to 2013 Land
Acquisition.
Capital planning:
 It has 3 stages seed capital (2022), Capital city (2029) and capital region (2050).
 It attracts 1.35 Crores population and provide employment for 1Crore People.
 Urban Planning Body is appointed on 3rd December 2014 chairman is Chandrababu Naidu and
executed head is C Sridhar.
 Under CRDA districts are only Guntur and Krishna. There are 58 mandals under CRDA. In that 29
are in Guntur and 29 are in Krishna.
Swiss challenge method:
 For the construction of capital city (Company name for the construction of capital is Ascendas-
Singbridge & Surbana Jurong.
Capital inauguration: 22nd October 2015.
 Guests are Yosuke Takagi (Japan) and Iswaran (Singapore) are trade and Commerce ministers
 Members are Narendra Modi, KCR and Governor.
 Water collected from 35 rivers like (Mecca water, Jerusalem water, Amritsar and Belgaum River)
and Putta Mannu from 13000 villages and 3000 words.
 Capital inauguration held at Uddandarayunipalem in seed capital.
 There are 3 villages which comes under seed capital are Uddandarayunipalem, Lingayapalem
and Tallayapalem.
 Architect is from UK (Normal poster).

 Rajamouli, Raghavendra Rao and Thota tharani gave their Advises for the capital selection.
 Outer Ring Road 89 villages with 210 KM
Amaravati significance:
 12 industrial clusters, 9 economic clusters, 6 growth corridor, 9 cities and 6 key factors.
 In 12 industrial clusters Guntur has industrial hub and Krishna has Pharmaceutical hub and food
processing units.
 In cities administration City, Judiciary City, Financial City, Knowledge City, Educational City,
Tourism City, Sports City, Electronic City and Health City.
 6 Key Factors are providing jobs and homes, World class infrastructure, Quality of living,
Protecting identify, Heritage & resources and environment & Management.
 In Amaravati speed capital Rail Network of 12 KM, Bus Rapid Transport of 15 KM, Arterial and
Sub Arterial Road Network.

DIVISION OF EMPLOYEES,
RELOCATION AND NATIVE ISSUES
Division of employees, relocation and native issues are done by following committees.
Committee Works On
VK Agarwal committee Secretariat employee division

Kamalanathan committee State Cadre
Pratyush Sinha committee All India services
 Majority of low Cadre is from Telangana and Majority of high Cadre is from Andhra Pradesh
 1253 people of GENCO & TRANSCO are relieved from Telangana Government, but again they are
relocated in Andhra Pradesh (By high court order).
 Employees salaries are divided between two States based on population.
 As per Central Government if a person studied 4 years in a location he is considered as local.
But, now taken 6th to 10th class where he studied that person belongs to that local region.
 But there is an issue for a person who studied in Telangana 6th to 8th and Andhra Pradesh 9th to
10th and vice versa.
 Pay Revision Commission salary is 42% (Andhra Pradesh) and 43% (Telangana).
 House Rent Allowance is 30% for employees of secretariat in Vijayawada who shifted from
Hyderabad.
 For IAS IPS officers House Rent Allowance is 40%.
 10000 houses are constructed by Housing and Urban Departments in Amaravati.
 Financial aid for students of Telangana (FAST) by Telangana state government 
reimbursement is only for the people who stayed from 1956 in Telangana.

ELECTRICITY DISTRIBUTION
 Power Purchasing Agreement (PPA) was cancelled by Chandrababu Naidu.

 There are 2 DISCOMS in Andhra Pradesh
 Andhra Pradesh East Power Distribution Company Limited (Visakhapatnam) and Andhra
Pradesh South Power Distribution Company Limited (Chittoor)
 APSEB started in 1959 and divided in 1999 as AP TRANSCO and AP GENCO
 Electricity division (Telangana state is 53.89% and Andhra Pradesh is 46.11%)
 Power governance is maintained by Chandrababu Naidu.
 Andhra Pradesh lost power/electricity due to division.
 1142 megawatts or 8700 million unit’s power was lost by Andhra Pradesh.
 Due to Power Purchasing Agreement (PPA) cancellation, surplus power in Andhra Pradesh is
used by Andhra Pradesh people only.

SOCIO-CULTURE AND DEMOGRAPHIC COMPOSITION OF

ANDHRA PRADESH-AMARAVATI
 Place Amaravati was discovered by Colin Macknzie.

 It is Centre for “Hinayana Buddhism”
 In 2006 “Kalachakra” is also founded by Dalai Lama in Amaravati
Buddhism types:
a. Mahayana: Tripitaka (is the earliest collection of Buddhist writings) which consists of Eightfold
Path.
b. Hinayana: Main statue workship is started in these because they worshipped Buddha idol.
 Amaravati is famous for Hinayana Buddhism.

 Amaravati Stupa is the largest Stupa in India.
 As per Buddhism, Andhra is also called as Andhra Nagari and Andhra Desam.
 Best example to show that relationship between Andhra Desam and Sri Lanka is Bhadrachalam
Temple.
Location Importance
Chandavarm (Prakasam district) Popular Buddhist place and Double terrace Stupa
was discovered (Made of Line)
Salihundam (Srikakulam district) Popular for Mahayana, Hinayana and Vajrayana
Bhattiprolu (Guntur district) Oldest Stupa in India was found here. Old name of
this village is Pratipalapura
Guntupalli (Krishna district) Horseshoe shaped ravine and Rock cut Buddhist
shrine is present here
Ghantasala (Krishna district) Kanthaka (Name of Buddha horse) is died here.
Then this place is called Ghantasala
Sankaram (Lingalametta, Vizag) 3 Chaitya hills were identified here
Geographic and Demographic profile of Andhra Pradesh
 With a geographical area of 1,62,970 sq km, Andhra Pradesh ranks as the 8th largest State in
the country.
 Situated in a tropical region, the state has the 2nd longest coastline in the country with a length
of 974 km.
 Andhra Pradesh is the 10th largest state in the Country, in terms of population. As per 2011
Census, the State accounts for 4.10% of the total population of the country.
 The decadal growth of population rose from 18.88% during 1961-71 to 21.13% during 1981-91.

 Subsequently a significant decline was observed in the rate of growth of population and decline
is even more prominent at 9.21% during 2001-11, lower than the All-India’s growth rate of 17.70
percent.
 The sex ratio in the state was up from 983 in 2001 to 997 in 2011 and is higher than all India
figure of 943 in 2011.
 The literacy rate of the State is 67.35 percent in 2011 as compared to 62.07 percent in 2001.
 The literacy rate of the State is lower than the all India literacy rate at 72.98% percent.
 Literacy in Andhra Pradesh increased over 37 percentage points from 29.94 percent in 1981 to
67.35 percent in 2011.
 Female literacy rate has gone up from 52.72 percent in 2001 to 59.96 percent in 2011.
 Urbanization has been regarded as an important component for growth realization.
 The percentage of urban population to the total population in the State is 29.47 percent in 2011
as compared to 24.13 percent in 2001.

ALLOCATION OF WATER RESOURCES
 The Ministry of Water Resources, Government of India, has the responsibility of constituting
Krishna River management Board and Godavari River management Board within 60 days from
the date of formal bifurcation. These boards will function as autonomous bodies under the
administrative control of the Central Government. These boards will be responsible for the
administration, regulation and maintenance of the head works of canals, as notified by the
Government of India on Krishna and Godavari Rivers. The boards will also be responsible for
appraising proposals to construct projects on the Krishna and Godavari rivers and provide
technical clearance.
 The headquarters of the Godavari River Management Board will be located in Telangana and
that of the Krishna River Management Board in new Andhra Pradesh. Furthermore, the term of
the Krishna Water Disputes Tribunal will also be extended. It will have the responsibility for
marking project-wise specific allocation of water.
 The Polavaram Irrigation Project has been declared as a national project. The Central
Government will execute the project in consultation with the Governments of the two new
States in consideration of all environmental, forest, and rehabilitation and resettlement norms.
 The Government of new Andhra Pradesh and Telangana will replace that of the existing state of
Andhra Pradesh on the Tungabhadra Board.
 The Tungabhadra Board shall continue to monitor the release of water to the High Level
Canal, Low Level Canal and Rajolibanda Diversion Scheme.
 New projects on water resources, based on appropriate dependability criteria, on the Godavari
or Krishna rivers can be taken up by Telangana or new Adhra Pradesh only after obtaining
sanction from the Apex Council on river water resources. All such proposals will have to be first
appraised and technically cleared by the respective board, before sanction by the Apex Council.
 The execution of ongoing projects and new ones on the Godavari and Krishna rivers will be the
responsibility of the concerned state government of the state where the project is located.

IMPLEMENTATION OF ANDHRA
PRADESH RE-ORGANIZATION ACT 2014
1. The Andhra Pradesh Reorganization Act, 2014 (Act 6 of 2014) was notified on 1st
March, 2014. 2nd June 2014 was notified as the Appointed Day, the day on which
the State of Andhra Pradesh was bifurcated into the State of Telangana and the
residuary State of Andhra Pradesh.
Bifurcation Process
2. Lack of adequate and serious consultations with the key stakeholders, absence of
consensus amongst key political parties, lack of transparency and cloak and dagger
mode of drafting the Bill characterized the process of drafting the Bill characterized
the process of drafting the Bill. Despite series of agitations from the people, scant
regard was shown to their feelings / aspirations. Lack of transparency surrounding the
reorganization process and the frenetic pace with which the process was carried out
by the then UPA led central government had caused serious disenchantment amongst
people of Andhra Pradesh.
Injustice to Andhra Pradesh
3. What is not well known to the people of Andhra Pradesh is the fact that a number of
contradictions, omissions, commissions and inadequacies are embedded across the
Andhra Pradesh Reorganisation Act 2014 that have adverse impact on the health and
well-being of Andhra Pradesh.
4. The Act, by its conception and content, has created inequality, with adverse
consequences to the residuary Andhra Pradesh. In a hurry, the UPA-II government had
inflicted a serious blow to the fiscal and economic health and developmental
opportunities of Andhra Pradesh. The provisions made in the A.P. Re-organization Act
2014 are wholly inadequate and cannot compensate for the loss of opportunity and
would leave the state severely disadvantaged.
5. Following are the inconsistencies in the Re-organization Act causing injustice to the
state of Andhra Pradesh.

a. The state was given 46% of the estimated revenue of the combined State while accounting
for the 58% of its population which was confirmed by the 14th Finance Commission.
b. Assets were allocated on location basis whereas debt liabilities were distributed on
population basis.
c. In power sector, power consumption has been adopted as basis of distribution
d. Refund of taxes (a liability) is to be shared between Andhra Pradesh and Telangana on the
ratio of 58.32 : 41.68 whereas deferred tax xollections (an asset) have been allocated on
location basis. This has caused a loss of about Rs.3,800 Crores to Andhra Pradesh.
e. The Finance Commission has estimated that the Andhra Pradesh State would have a net
revenue deficit of Rs.22,112 crores over the next five years even after the 42% devolution.
Andhra Pradesh would continue to be revenue deficit state even after the end of the
Fourteen Finance Commission period, i.e. 2020.
Statutory Provisions and implementation status
6. Despite the above injustices and humiliation, the State has strived hard and has made
significant efforts to improve the fiscal and economic conditions of the state. Major
thrust was given for implementation of assurances made in the A.P. Reorganization
Act, by Gol.
7. A) The status of each of the assurances in the APR Act, 2014 is mentioned in the
following statement:
Section in APR Act Nature of Assurance Status
9 (3) The Central Detailed proposal

government shall assist coasting Rs. 856.37
the successor state of crore sent to Ministry of
andhra pradesh to set Home affairs, Gol for
up a similar (Greyhound relocation of existing
Training Centre) state- greyhound
of-the-art training infrastructure and
center at such place as training of andhra
the state government pradesh may by order
notify. Facilities in
andhra pradesh. A team
from ministry of home
affairs has visited

hyderabad, greyhound
training centre in this
regard and the matter is
under active
consideration, of
ministry of home
affairs. Gol.
26 (1) Subject to the The matter is being
provisions contained in pursued with ministry
article 170 of the of home affairs.
constitution and
without prejudice to
section 15 of this act,
the number of seats in
the legislative assembly
of the successor or
states of andhra
pradesh and telangana
shall be increased from
175 and 119 to 225 and
153, respectively.
46 (3) The central An amount of Rs. 1050
government shall, while crores has been
considering the special released as special
development package package for the 7
for the successor state rayalaseema and north
of andhra pradesh, coastal districts and a
provide adequate further amount of Rs.
incentives, in particular 1050 crore would be
for rayalaseema and paid in the coming 3
north coastal regions of years.
that state.
90 (1) The Polavaram Government of India
irrigation project is reorganizing the
hereby declared to be a importance of the
national project project declared this
(4) The central project to be a national
government shall project and also
execute the project and declared that it is
obtain all requisite expedient in the public
clearances including interest that the union
environmental, forests, should take under its
and rehabilitation and control the regulation
resettlement norms. and development of the
polavaram irrigation
project for the purpose
of irrigation.
The central government

will fund the polavaram

irrigation project in the
following manner
(i) It will provide 100%
of the remaining cost of
the irrigation
component of the
project for the period
starting from 1.4.2014
to the extent of the cost
the irrigation
component on the date.
(ii) In view of the
recommendation of the
vice chairman, NITI
Aayog that it will be
appropriate for the
state of andhra pradesh
to execute this project
(as it is an important
project and the state
government is keen to
complete it at the
earliest). The
government of India has
agreed to the state’s
request for the
execution of the project
by the state
government on behalf
of the government of
India.
94 (1) The central Government of India
government shall take has sanctioned 15%
appropriate fiscal additional accelerated
measures, including depreciation and 15%
offer of tax incentives, additional investment
to the successor states, allowance, for
to promote industries, for 5 years
industrialization and
economic growth in
both the states.
94 (3) The central Government of India
government shall has already released Rs.
provide special financial 2,500 crore as support
support facilities in the for creation of new
new capital of the capital of state of
successor state of andhra pradesh and a

andhra pradesh balance Rs. 1,000 crore

including the raj would be paid in the
bhawan, high court, coming years.
government secretariat, Government of India
legislative assembly. has given permission for
Legislative council, and diversion of 2000
such other essential hectares of forest land
infrastructure. so far.
(4) The central
government shall
facilitate the creation of
a new capital for the
successor state of
andhra pradesh, if
considered necessary,
by denotifying
degraded forest land.

VARIOUS COMMITTEES UNDER APR ACT, 2014
 The state government made every effort to get the provisions of the APR Act, 2014
implemented by constituting committees at various levels, review of progress made on each of
the issue and regular consultations with Govt. of Telangana.
 These committees and consultation process initiated has helped in ironing out many ticklish
bifurcation issues. It is a matter of pride that in spite of the frayed tempers in both the states,
these committees did commendable job. The fact that the process of bifurcation of State Govt.
employees has been methodical and smooth and fewer court cases when compared to the
bifurcation issues still persisting w.rit. Uttarakhand, Jharkhand and Chattisgarh bifurcation made
in 2001.
a) An Expert Committee was constituted on 30.05.2014 headed by Dr. (Smt.) Sheela Bhide,
IAS (Retd.) with three other experts including a Finance Expert, to recommend demerger
proposals of 89 Institutions mentioned in Schedule IX of APR Act, 2014.
i. The Expert Committee has so far submitted its recommendations for bifurcation of
assets, liabilities of 69 institutions and with division of employees in respect of 49
institutions out of 69 institutions.
ii. Govt. of A.P. have so far approved recommendation pertaining to division of assets,
liabilities and employees of 22 institutions.
b) Govt. of A.P. have constituted a Committee with Sri Y. Ramakrishnudu, Hon’ble Minister for
Finance & Planning, Commercial Taxes and Legislative Affairs; Sri K. Atchannaidu, Hon’ble
Minister for Transport, BC Welfare and Empowerment, Handlooms and Textiles; Sri Kalava
Srinivaulu, Hon’ble Minister for Rural Housing and I&PR as members and Sri L.
Premachandra Reddy, IAS (Retd.), E.O. Prl. Secretary to Govt., G.A. (SR) dept. as convener to
negotiate with the Committee constituted by Govt. of Telangana on the issues arising out of
AP Reorganization Act, 2014 in the presence of H.E. the Governor of Andhra Pradesh and
Telangana Both the Committees met in the presence of H.E. the Governor of Andhra
Pradesh and Telangana and agreed to resolve certain issues.
c) An official committee consisting of the Chief Secretary, Sri Kutumba Rao, Vice Chairman, AP
State Planning Board, E.O. Prl. Secretary, GAD (SR) Department, Secretary, Law Department
and Sri S. Balasubramanyam, Consultant, AFRC was constituted in 2016 to closely monitor
the bifurcation issues on regular basis. This Committee in meeting regularly with special
focus to bring down substantially the area of difference between the two States.

Empowerment, Handlooms and Textiles: Sri Kalava Srinivaulu, Hon’ble Minister of Rural
Housing and I&PR as members and Sri L. Premachandra Reddy, IAS (Retd.), E.O. Prl.
Secretary to Govt., G.A. (SR) dept. as convener to negotiate with the Committee constituted
by Govt. of Telangana on the issues arising out of AP Reorganization Act, 2014 in the
presence of H.E. the Governor of Andhra Pradesh and Telangana Both the Committees met
in the presence of H.E. the Governor of Andhra Pradesh and Telangana and agreed to
resolve certain issues.
d) An official committee consisting of the Chief Secretary, Sri Kutumba Rao, Vice Chairman, AP
State Planning Board, E.O. Prl. Secretary, GAD (SR) Department, Secretary, Law Department
and Sri S. Balasubramanyam, Consultant, AFRC was constituted in 2016 to closely monitor
the bifurcation issues on regular basis. This Committee in meeting regularly with special
focus to bring down substantially the areas of difference between the two States
e) State Advisory Committee headed by Sri C.R.Kamalanathan, IAS (Retd). For employee
allocation amongst AP and Telangana and the Committee has completed the allocation of
55879 employees. Now the committee under the Chairmanship of Secretary, DOPT Govt. of
India is dealing with the division of remaining 1293 employee which have certain legal
hurdles.
f) Chief Secretaries of Andhra Pradesh and Telangana met on 18.06.2017 and 10.11.2017 to
arrive at an amicable settlement w.r.t. demerger of Schedule X institutions. To start with,
they took up Institutions which do not have any fixed assets and only have some funds and
few movable assets besides staff. They have so far agreed in principle for demerger of 45
Schedule X institutions.

DEMERGER OF INSTITUTIONS LISTED

UNDER SCHEDULE-IX
 There are 89 Institutions listed under Schedule IX.

 The assets and liabilities of these institutions are to be apportioned as stipulated in section 53 of
the Act.
 As per this section, where such undertaking or part thereof is exclusively located in or its
operations are confined to a local area the assets shall pass to the State in which that area falls.
Where operation of the undertaking become interstate on account of State Reorganization, the
assets and liabilities of the operational unit get apportioned on location basis and those at
headquarters get apportioned between the two States on population basis. However, the
word “Headquarters” is not defined in the Act.
 The State Government has taken up the matter with Govt. of India saying that the word
“Headquarters” in its meaning should encompass the assets and liabilities pertaining to Head
Office as well as its associated common centers/facilities established by the erstwhile State of
Andhra Pradesh for the use by the combined State and should be apportioned between both
the successor States on the basis of population ratio. Clarification received from Govt. of India is
being examined critically by the Departments concerned for preparation of demerger proposals
to be placed before the Expert Committee.
 The assets and liabilities and employees of Companies & Corporations listed under Schedule-
IX are being divided based on the recommendations of Expert Committee, headed by Smt.
Sheela Bhide, which was appointed by the combined State of Andhra Pradesh and later
extended by the Govt. of India.

BIFURCATION OF ASSETS AND LIABILITIES OF

INSTITUTIONS LISTED UNDER SCHEDULE-X
 There are 142 institutions listed under Schedule-X of the A.P. Reorganization Act, 2014.
 There are differences between Govt. of Andhra Pradesh & Telangana regarding division of
assets, liabilities and employees of these institutions.
 The stand of Govt. of Telangana is that the assets, liabilities and employees of these institutions
pass to respective States based on locations and that these institutions will provide only services
to the other State on mutually agreed terms.
 The stand of Govt. of Andhra Pradesh is that the assets, liabilities and employees of these
institutions are divisible.
 The stand of Govt. of Andhra Pradesh has been upheld by the Hon’ble Supreme Court in Civil
Appeal Nos. 3019-3021 of 2016 airing out of SLP © Nos. 14705-14706 of 2015.
 The Hon’ble Supreme Court has given the responsibility of implementation of the judgment of
Govt. of India.
 The Govt. of India constituted a Committee under the Chairmanship of Sri JaideepGovind, Addl.
Secretary (LWE), Ministry of Home Affairs and the Committee has heard the versions of
Governments of Telangana & Andhra Pradesh. The Additional Secretary (LWE) in the orders
Dt:18.04.2017 among other things has decided that all immovable and movable properties such
as land and all stores, articles and other goods etc., will be apportioned on location basis in
view of the provisions of Section 48(1) read with Section 48(4) of A.P. Reorganization Act,
2014. This order is not in accordance with the judgment of Hon’ble Supreme Court of India in
Civil Appeal Nos. 3019-3021 of 2016 arising out of SLP © Nos. 14705-14706 of 2015.


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Gist of White Paper on State Finances

 Andhra Pradesh  8th Largest State in terms of Area
 Andhra Pradesh  10th largest state in terms of population (4.10% of the total population of
the country – 2011 Census)
 Total Geographical Area  1,62,970 sq.km
 Density of Population @ Andhra Pradesh  304 persons per sq.km
 2nd longest coastline in the country [ Length : 974 kms]
 Literacy Rate  67.35 %
 Female literacy rate : 59.96 %
 Percentage of urban population to the total population : 29.47 %
 GSDP @ Current Prices for the year 2018-19 (Advance Estimates) : Rs.9,33,402 crores
 GSDP @ Constant Prices for the year 2018-19 (Advance Estimates) : Rs.6,80,332 crores
 Per Capita Income (NSDP) @ Current Prices : Rs.1,64,025 in 2018-19 ( 13.96 % Growth )
Analysis of the Economic and Financial trends:
Gross State Domestic Product (GSDP)
GVA + Product Taxes – Product Subsidies = GSDP @ Current Prices

 Highest Growth @ 2004-09

 CAGR (Compound Annual Growth Rate): 10.36 %
Agriculture :
 Agriculture growth declined by 4.12 % during the past five years

 Annual crop (agriculture) sub-sector registered negative CAGR during the last five years
 This growth was on the back of only two subsectors - livestock and fisheries
Industrial Sector:
 Share of manufacturing in GVA witnessed a continuous decline during the past five years

 Growth rate of manufacturing sector witnessed a continuous decline during the past five
years
Service Sector:
 Service sector stagnated in the state during the past five years
 Lowest contribution to GSDP among the peer states
 Under-employment and unemployment reached its heights during the past five years

Gross Value Added:
 Grown by only 5% annually between 2014 and 2017

 Andhra Pradesh ranked 13 of the 16 big states
 Share of manufacturing in the GVA has declined from 14.5% in 2012 to 10.2% by 2017
 The contribution of AP to national manufacturing GVA is insignificant at 2.7% of national
manufacturing GVA in FY 2017-18.

Inflation:
 Prices have gone beyond any other state

 During the period between 2014 and 2018, the average inflation in AP was around 7.6%
 Andhra Pradesh has had the highest level of consumer inflation, especially food inflation, for
any state in the country
Per Capita Income Growth:
 Per capita income growth of the past five years was grossly iniquitous, as it benefited only the
richer sections of the State living in few districts.


Geographic Disparities:
 Districts with low GDDP (Gross District Domestic Product) are the ones with low growth rate
as well
 The disparity is also visible in per capita income with Krishna district having almost double the
per capita income of YSR Kadapa district.

Human Development Indicators:
 Critical pre-requisites for human development  quality education, nutrition, health care, skills,
employment, etc
 The state witnessed serious decline in the quality of government managed health, education,
and nutrition delivery system
 Increased privatisation of these public goods in order to transfer public resources to the private
sector.
Education Outcomes:
 The net enrolment rate (NER) in primary education is the ratio of the number of children of
primary school age who are enrolled in primary education to the total population of children of
primary school age, expressed as a percentage.
 Andhra Pradesh is the bottom most state in the country in terms of NER at 72.1%
 Andhra Pradesh is the bottom most state in the country in terms of GER as well at 84.48%

 Andhra Pradesh features as a state which is 3rd from bottom in terms of NER in upper primary
education at 63.37%
 Andhra Pradesh features as a state which is 3rd from bottom in terms of GER, as well, in upper
primary education at 81.33%
 Andhra Pradesh records one of the highest proportions of girls not enrolled in schools, along
with other northern states.
Employment:
 According to the Periodic Labour Force Survey of 2017-18, unemployment rate amongst the
youth (in the age group of 15-29) in both urban and rural is high in Andhra Pradesh at 16.1 %
 Unemployment rate in urban regions (22.8 %) is higher than rural regions (13.4 %)  U > R
 In urban areas, the percentage of female unemployment rate (27 %) is higher than those of
males (20.4 %)  F > M @ Urban
 The highest unemployment percentage is amongst the graduates (23.6 %)
 The unemployment rate among the secondary and above educated (13.3 %) is higher than that
among those whose educational level is lower than secondary
 According to National Family Health Survey-IV, Percentage of males in the age group of 15-49
who are not currently employed increased from 0.8 percent in 2005-06 to 3.9 percent in 2015-
16, while the percentage of men in the same age group who were employed declined from 87.5
percent in 2005-06 to 79.6 percent in 2015-16
 According to National Family Health Survey-IV, Percentage of women in the age group of 15-49
currently employed came down from 50 percent in 2005-06 to 33 percent 2015-16

Health and Nutrition:
 AP performance in IMR is poor in relation to Kerala, Tamil Nadu and Maharashtra.

 Infant mortality rate (IMR) is the number of deaths per 1,000 live births of children under 1 year
of age.
 Maternal Mortality Rate (MMR) of AP has improved from 154 in 2004-06 to 74 in 2014-16. AP,
however, performs badly in comparison to Kerala, Tamil Nadu, Karnataka
 Maternal mortality ratio (per 100 000 live births)  Complications during pregnancy and
childbirth are a leading cause of death and disability among women of reproductive age in
developing countries. The maternal mortality ratio represents the risk associated with each
pregnancy, i.e. the obstetric risk. It is also a MDG indicator.
 Maternal Mortality  According to WHO, Maternal Mortality is death of a woman while
pregnant or within 42 days of termination of pregnancy, irrespective of the duration and site of
the pregnancy, from any cause related to or aggravated by the pregnancy or its management
but not from accidental or incidental causes.
 The health care reforms and Arogya Sri launched between 2004 and 2009 have yielded
dividends, though the benefits have not been harnessed during the past five years
 Andhra Pradesh performance in upgrading health facilities to IPHS standards is very poor. In
terms of CHCs and PHCs it is far behind than Tamil Nadu which has above 90% mark in meeting
IPHS standards

State Finances:
 Fiscal Responsibility and Budget Management Act (FRBM) in 2005 mandated elimination of
revenue deficit and contained fiscal deficit at 3 % of the GSDP
Fiscal situation of Andhra Pradesh since its bifurcation:


Back to Basics : Share of States in the Union Tax Revenue (Central Taxes)
14th Finance Commission has recommended a record 10% increase in the states' share in the Union
taxes revenue to 42% as compared to the 13th Finance Commission.


Back to Basics: Capital Expenditure
Capital Expenditure is that expenditure which results in increasing of government asset (giving out
loans) or reduce in some liability (paying back old loans)
Examples:
Loan disbursals  The loans given by the Government to the states, PSUs and other governments come
under Capital Expenditures because such loans are assets of the Govt.
Loan Repayments  The loans that were borrowed in past but are now returned back are included in
the capital expenditures; because they result in reduction of liability
Expenditures resulting in asset creation  The government’s budget expenditures on infrastructure,

machinery, land, roads, bridges etc. and purchase of arms and equipments, modernization of the army
etc. are also Capital Expenditures
Back to Basics: Revenue Deficit
Revenue deficit = difference between incoming vs outgoing Revenue
Incoming Revenue  Tax and Non-Tax revenue
Outgoing Revenue  Interest paid, Subsidies given, Salary, Pension, Office Expenditure, Grants to state
What is fiscal deficit and what is its impact on the GDP?
 Fiscal deficit is the difference of government expenditure and government revenue.(assume

that government expenditure is more than revenue).
 More fiscal deficit means government has no money, he has to borrow money from central
bank or through some bond/scheme.
 If government is borrowing from RBI, in other words RBI has to print more money, so it will
increase the liquidity of money in the market. So people will have more money in their
hand,but we have limited resources. For example, before there was 5 car buyers for 1 car, now
there is 10 car buyer for 1 car. So demand for car will increase and it will increase the price of
car. So price of everything will go up. Ultimately Inflation will go up.
 If government is borrowing money from people as bond or some scheme through,
government has to pay high interest after some year. So people will invest their money in
government schemes, so liquidity of the money will come down. Before we have 5 car buyer
for 1 car, now we have 2 car buyer for 1 car, so car price will go down. Price of everything will go
down, people will buy less things. It will slow down the industrial growth and it will be deflation
in the country. It will make economic growth sluggish. And in the situation of the deflation,
Government has to pay high interest to the people.

 Third case, government has to borrow money from world bank or from some other country.
Because of that Government has to devalue it’s currency.
 As government has no money, government can’t bring any new development scheme. It will
become difficult to tackle any crisis over country.
Back to Basics: Primary Deficit
Primary Deficit (PD) = Fiscal Deficit – Payment of Interests from previous loans
 It shows what the Fiscal Deficit would have been for this particular year if no interests were to
be paid. It ignores the loans taken by the previous Govt. in previous financial years.

 A key reason for the huge increase in the debt and inadequacy of the revenue deficit grant
provided by the 14th Finance Commission, is the underperformance by the State Government
with respect to tax collections.
 Finance Commission has projected own tax revenues at 10 % of the projected GSDP, however,
the State severely underperformed. Particularly with respect to non-tax revenues, the State’s
collection on per capita basis is one of the lowest in the Country.
Expenditure Trends:
o The unit cost of capital works had been exorbitant and the expenditure efficiency on
irrigation, roads and bridges, has been questionable, as most of the projects have not been
completed and remained without yielding returns.
o The State was awarded double whammy during the past five years; on one hand, reduced
capital investment and on the other hand inflated estimates

Fiscal Indicators:
 Fiscal Deficit ballooned to 4.42 % in 2016-17 in tandem with outstanding debt and liabilities
 Fiscal Deficit reached an unsustainable level of 27.87 % of GSDP by 2016-17
Revenue Deficit:
 Revenue deficit during first three months of 2014-15 financial year was Rs.16,078.76 crore
(excluding the RD grant of Rs. 2,303 crore)
 State Government could secure the release of only Rs. 3,979.50 crores

 14th Finance Commission estimated that post devolution revenue deficit for Andhra Pradesh
for the five-year period 2015-20 would be Rs. 22,113 crores
 In reality, State’s revenue deficit in the past five-year period stood at a whopping Rs. 66,362
crores
Fiscal Deficit:
 The fiscal deficit increased steeply from 2.11 % of GSDP in the pre-bifurcated Andhra Pradesh to
4.43 % in 2016-17 financial year
Public Debt:
 The debt of the residuary state which was Rs 97,000 crores at the time of bifurcation has
reached a whopping Rs. 2,58,928 crores in these five years by 2018-19.
 The interest on the debt alone is projected to be over Rs. 20,000 crores per annum, in addition
to the repayment of principal to the tune of another Rs. 20,000 crores.

Economic Development - Impact of Bifurcation:
 During the financial years 2015-16 and thereafter, the State’s own revenues of Telangana were
higher those of Andhra Pradesh by around 20 %
 14th Finance Commission had assessed that post-devolution revenue deficit for Andhra
Pradesh for the 2015-2020 period would be Rs 22,113 crores, while Telangana State would
have a post-devolution revenue surplus of Rs 1,18,678 crores
 After bifurcation, more than 25 per cent of residuary AP economy is derived from agriculture
 As a result of bifurcation, Andhra Pradesh has to incur huge capital expenditure to diversify the
State’s economy with emphasis on Industrial and Services Economy.
 The revenue disability of Andhra Pradesh is evident from the low tax to GSDP ratio
Back to Basics: Tax to GDP ratio
 Tax -to-GDP ratio is the ratio of total taxes (both direct and indirect) collected to the Gross
Domestic Product in a given financial period (typically one-year)
 One of the reasons for lower tax to GDP is due to pervasive structure of exemptions which
indirectly impacts the GDP growth
Central Assistance to Andhra Pradesh:
 Resource gap for 2014-15 would be assessed on the basis of standardized expenditure
 Despite the fact that the revenue deficit of the State was Rs 16,078.76 crores, the amount
released by the Government of India was only 3,979.50 crores

Special Category Status:
In the notification concerning Central Assistance to Andhra Pradesh, issued on 8th September, 2016,
point 10 relates to Special Category Status and it carries with it, the following two specifications:
1) Following the recommendations of the 14th Finance Commission, the class of Special Category
States ceases to exist
2) The compensation for Andhra Pradesh would have to be provided in the form of funding for
Externally Aided Projects


As seen from the above table, the per-capita figure for grants in aid other than revenue deficit grant is
significantly higher at Rs 4,997, when compared with the figure for the States not enjoying Special
Category Status
Mismanagement of Finances:
 The entire debt has gone to fund the excessive revenue expenditure. Therefore, the per-capita
debt has more than doubled but only a minuscule benefit of enduring nature has been created.
The debt to GSDP ratio has also swollen significantly. The figures are provided in the table
below.
 The agricultural advances outstanding on March 31, 2014, in accordance with the minutes of
the 184th SLBC meeting, was Rs. 87,612 crores
 Government limited the waiver amount to Rs. 24,000 crores duly imposing several conditions
 NABARD All India Rural Financial Inclusion Survey, 2016-17, indicates that indebtedness
amongst agricultural households in Andhra Pradesh was as high as 77%, when compared to
the National average of 47%
 As per the APERC Tariff Order from the year 2018-19, the revenue gap for both the distribution
utilities that cater to the entire distribution activity in Andhra Pradesh is Rs. 7,983.39 cr
 The total power dues on May 31, 2019 were astounding Rs 18,375 crores.
 Today, every citizen of the state, including the baby born today, on an average, has an
outstanding debt of Rs 42,500


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AP STATE REORGANISATION ACT, 2014

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 Received the assent of the President of India on March 1, 2014

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 Enacted by the Parliament in its 65th year of the Republic of India

Section 2 (Terms  MEANING )

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b) “article” means an article of the Constitution

e) “existing State of Andhra Pradesh”  State of Andhra Pradesh as existing immediately

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h) Population ratio  AP: Telangana - 58.32:41.68 (2011 census)

i) “Sitting member”, in relation to either House of Parliament or of the Legislature 

Section 3 (Formation of Telangana State)

 New state is known as State of Telangana (from the appointed day)

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Section 4 (State of AP and terrirtorial divisions thereof)

Section 5 (Common Capital  Hyderabad)

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Section 7 (Governor of existing state of AP to be common Governor)

Section 8 (Responsibility of Governor to protect residents of common capital of Hyderabad)

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o 8(4): Governor shall be assisted by 2 advisors to be appointed by the Central Govt

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Director General of Police of the successor States

Section 10 (Amendment of FIRST Schedule of Constitution)

 In the place of “Second Schedule to the Andhra Pradesh and Madras

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Section 11 (Saving powers of State Governments)

Section 12 (Amendment of 4th Schedule to Constitution)

Section 13 (Allocation of sitting members)

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Section 14 (Representation in House of the People)

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Section 16 (Provision as to sitting members)

Section 17 (Provisions as to Legislative Assemblies)

Section 18(Representation of Anglo-Indian community)

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Period of five years referred to in clause (1) of article 172

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Section 34 (Special provision relating to Bar Council and advocates)

Section 44 (Authorisation of expenditure of Telangana)

Section 45 (Reports relating to accounts of Andhra Pradesh)

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