Lok Sabha Question No. 3302 (UNSTARRED), answered on 2015-12-18
Subject: Funds for Andhra Pradesh and Telangana
Ministry: FINANCE
Asked by: MIDHUN REDDY, KAVITHA KALVAKUNTLA, GEETHA KOTHAPALLI

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF EXPENDITURE PLAN FINANCE-I DIVISION

## LOK SABHA UNSTARRED QUESTION NO. 3302

TO BE ANSWERED ON FRIDAY THE 18 th  DECEMBER 2015/27 AGRAHAYANA, 1937 (SAKA)

## FUNDS FOR ANDHRA PRADESH AND TELANGANA

## 3302.  SHRI P.V. MIDHUN REDDY: SHRIMATI KAVITHA KALVAKUNTLA: SHRIMATI KOTHAPALLI GEETHA:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Union  Government  is  providing  funds/proposes  to  provide  funds  for various  schemes  /  programmes  for  technological  enhancements,  Industrial  and Infrastructural development to Andhra Pradesh and Telangana; and
- (b)  if so, the details thereof and the actions taken by the Union Government thereon?

## ANSWER

## MINISTER OF STATE IN MINISTRY OF FINANCE (SHRI JAYANT SINHA)

- (a) and (b): Transfer  of  Plan  funds  to  the  State  Governments  including  Andhra Pradesh and Telangana, are mainly through Central Assistance to State Plans and Central Sector Scheme of various line Ministries annually assessed within the availability of Gross Budgetary Support for various schemes/ programmes including for technological enhancements, Industrial and Infrastructural development.
2. In terms of AP Reorganisation Act 2014, an amount of Rs. 4403 crore was released to the successor state of Andhra Pradesh during 2014-2015 which included Rs. 350 crore @  Rs.  50  crore  per  district  for  the  development  of  7  backward  districts  covering Rayalaseema & North Coastal region, Rs. 2303 core for bridging resource gap, Rs. 1500 crore for construction of Raj Bhavan & for creating infrastructure facilities in the new capital of the State and Rs. 250 crore for Polavaram irrigation project.
3. The Central Government has continued to support the programmes for the successor States of Andhra Pradesh and Telangana and approved one time assistance for 2015-16 towards support for States covered by Andhra Pradesh Re-organization Act under Demand No. 37 of Ministry of Finance. The 'Special Assistance' of Rs. 700 crore has already been released  to  the  State  of  Andhra  Pradesh  during  the  current  Financial  Year  2015-16 including special assistance of Rs.350  crore (@Rs.  50  crore per district) for the development of 7 backward districts covering Rayalaseema & North Coastal region and Rs. 350 crore for new capital of the state under Demand No. 37 of Ministry of Finance. Further, Rs. 300 crore has been earmarked for Polavaram irrigation project.
4. Further, in order to encourage the setting up of industrial undertakings in the notified backward areas of certain States including  the successor States of Andhra Pradesh and Telangana, the Income-tax Act was amended vide Finance Act, 2015 to provide following direct tax incentives:
- (i) Investment allowance of an amount equal to 15% of the cost of specified plant and machinery acquired and installed by an assessee is provided as per section 32AD of the Income-tax Act, if-
- a.  the sets up an undertaking or enterprise for manufacture or production of any article or thing on or after 1 st April,  2015  in  any  notified  backward  areas of these states; and
- b. the specified plant and machinery are acquired and installed for the purposes of the said undertaking or enterprise during the period beginning from the 1 st April, 2015 and ending with  31 st March, 2020.

This  deduction  is  available  over  and  above  the  existing  deduction  for  investment allowance available under section 32AC of the Act. Accordingly, if a company sets up an undertaking  in  the  notified  backward  areas  in  these  States,  it  shall  be  eligible  to  claim deduction under the existing provisions of section 32AC of the Income-tax Act as well as under this newly inserted section 32AD of Income-tax Act subject to fulfilling of specified conditions.

- (ii) For investment in new plant or machinery, additional depreciation of 20% is allowed under the existing provisions of section 32(1)(iia)  of the Income-tax Act in respect of the cost of plant or machinery acquired and installed by certain assessees. The provisions of section 32(1)(iia) of the Act was amended to allow higher additional depreciation at the rate of 35% (instead of 20%) in respect of the actual cost of new specified machinery or plant acquired and installed by a manufacturing undertaking or enterprise which is set up in the notified backward areas of certain states including the successor States of Andhra Pradesh and Telangana on or after the 1st day of April,  2015. This higher  additional  depreciation shall be available in respect of acquisition and installation of any new machinery or plant for the purposes of the said undertaking or enterprise during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020.
5. Besides,  some  of  the  programmes  for  technological  enhancement,  industrial  and infrastructure development for which the support of Central Government has already been provided as per the mandate of Andhra Pradesh Reorganisation Act, 2014 are as under:
- i. The  interest  subvention  to  new  greenfield  industries  has  been  extended  in  the successor States for which a corpus of Rs.100 crore has been created.
- ii. 5  institutes  of  Higher  Learning  and  Education  viz.  IIT  at  Tirupati,  NIT,  Andhra Pradesh  at  Tadepalligudem,  IIM,  Vishakhapatnam;  Indian  Institute  of  Science Education and Research, Tirupati and IIIT Kurnool  have started functioning from the temporary  campuses.
- iii. The allocation of coal block has been provided for establishing 600 MW power plant in Telangana.
- iv. Tirupati Airport has been upgraded.
- v. Road  connectivity  between  Karimnagar  and  Khamam  districts  in  Telangana  has been established.
- vi. A  sum  of  Rs.10.00  crore  to  establish  a  State  Agricultural  University  in  AP  and Rs.10.00 crore to State Horticultural University in Telangana has been released.