"The Commission is working out a Cabinet proposal to accord 'special category state' status to Andhra Pradesh. The proposal is likely to be placed before the Cabinet on Friday," a source privy to the development said.
According to sources, the Commission's Deputy Chairman Montek Singh Ahluwalia met Rural Development Minister Jairam Ramesh this morning to fine tune the proposal. Ramesh was one of the key members of the Group of Ministers that drafted the Andhra Pradesh Reorganisation Bill popularly known as Telangana Bill.
Asked about his meeting with Jairam, Ahluwalia said, "He was informing me about what has been said about it (Seemandhra region)."
On the Commission moving Cabinet note for the purpose, he said, "I have read the Prime Minister's statement (in Rajya Sabha). I am finding out what they want...may be they want a Cabinet note."
Elaborating further, he said, "Prime Minister has said that for the purpose of central assistance, it (Seemandhra) will be treated like a special category state. That just require a Cabinet (approval)."
"Since it is part of major legislative action, technically it requires Cabinet approval. I will seek from the PM's office, directions, and if so, we will move a Cabinet note," he added.
According to Ahluwalia, the government intends to provide central assistance to the state in the ratio of 90:10, meaning that 90 per cent of the central funds would be given as grant and the remaining 10 per cent as loan.
As per the Gadgil-Mukherjee formula for devolution of central assistance for state plans, 30 per cent of the total funds is earmarked for Special Category States. As against the composition of Central assistance of 30 per cent grant and 70 per cent loan for major states, special category states receive 90 per cent plan assistance as grant and just 10 per cent as loan.
The special category status to various states in accorded by the National Development Council (NDC) based on consideration of a set criteria.
The criteria include hilly and difficult terrain; low population density and or sizeable share of tribal population; strategic location along borders with neighbouring countries; economic and infrastructure backwardness and non-viable nature of state finances.
At present, the existing 11 special category status states are Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Uttarakhand, Nagaland, Tripura, Himachal Pradesh, Jammu and Kashmir and Sikkim.