CM Chandrababu Naidu requests Nirmala Sitharaman for enhanced assistance under Purvodaya, SASCI schemes

The request by Andhra Pradesh Chief Minister N. Chandrababu Naidu to Union Finance Minister Nirmala Sitharaman for a substantial allocation of ₹10,054 crore under the Scheme for Special Assistance to States for Capital Investment (SASCI) for FY 2025-26, along with enhanced assistance under 'Purvodaya' schemes, brings to the forefront critical aspects of India's fiscal federalism and state development strategies.

**Background Context: Understanding Fiscal Federalism and State Needs**

India operates under a quasi-federal structure, where both the Union and State governments have distinct responsibilities and sources of revenue. However, states often face a vertical fiscal imbalance, meaning their expenditure responsibilities exceed their revenue-generating capacities. This structural gap necessitates financial transfers from the Centre to the states. Historically, these transfers were primarily channelled through the Planning Commission (now NITI Aayog) and the Finance Commission. Post-2015, with the abolition of the Planning Commission, NITI Aayog took on a more advisory role, while the Finance Commission's recommendations became even more crucial for statutory grants. Andhra Pradesh, having undergone bifurcation in 2014, has faced unique fiscal challenges, including the need to build a new capital and develop infrastructure from scratch, making central assistance particularly vital.

**What Happened: A Strategic Plea for Capital Investment**

Chief Minister Naidu's request is a direct appeal for funds designed to boost capital expenditure within the state. The Scheme for Special Assistance to States for Capital Investment (SASCI), launched by the Union government, aims to provide long-term interest-free loans to states specifically for capital projects. These projects typically include infrastructure development in sectors like roads, bridges, irrigation, power, health, and education, which have a significant multiplier effect on economic growth and job creation. The request for such a large sum underscores the ambitious development agenda of Andhra Pradesh and its reliance on central support to achieve these goals. The mention of 'Purvodaya' schemes, while primarily focused on the industrial development of eastern India, suggests a broader appeal for similar capital investment support mechanisms that can benefit AP's industrial and economic growth.

**Key Stakeholders Involved**

1. **Andhra Pradesh Government (CM N. Chandrababu Naidu)**: As the primary requester, the state government aims to secure funds to accelerate its development projects, improve infrastructure, and address the fiscal deficit. This is crucial for fulfilling electoral promises and ensuring the welfare of its citizens.

2. **Union Ministry of Finance (FM Nirmala Sitharaman)**: The central authority responsible for the nation's finances, including allocation of funds to states. The Ministry evaluates such requests based on state needs, national priorities, and overall fiscal health of the Union. The decision will involve balancing the needs of one state against those of others and the Centre's own fiscal constraints.

3. **NITI Aayog**: While not directly sanctioning funds, NITI Aayog plays a crucial role in policy formulation, strategic planning, and fostering cooperative federalism. Its recommendations can influence the Union government's decisions regarding state development initiatives and special assistance schemes.

4. **The People of Andhra Pradesh**: Ultimately, they are the beneficiaries of any sanctioned funds, as capital investments lead to improved public services, infrastructure, and economic opportunities.

**Why This Matters for India: Pillars of Development and Governance**

This request is significant for several reasons. Firstly, it highlights the operational dynamics of **fiscal federalism** in India. The Centre's ability to support states through schemes like SASCI is critical for ensuring balanced regional development and reducing inter-state disparities. Secondly, **capital investment** is a cornerstone of long-term economic growth. Investments in infrastructure, education, and health not only create immediate jobs but also enhance productivity and competitiveness over time. Thirdly, it underscores the **political economy** of centre-state relations. Requests for financial assistance often become points of negotiation and cooperation, especially when different political parties govern at the Centre and in the states. The success of such schemes can foster **cooperative federalism**, a concept championed by the current government.

**Historical Context and Constitutional Provisions**

The framework for financial relations between the Union and states is enshrined in **Part XII of the Indian Constitution**, specifically Articles 268 to 281. Key among these are:

* **Article 275**: Provides for grants from the Union to certain states, as Parliament may determine, often based on the recommendations of the Finance Commission. These grants are crucial for financially weaker states.

* **Article 280**: Mandates the President to constitute a Finance Commission every five years (or earlier) to make recommendations on the distribution of net proceeds of taxes between the Union and states (vertical devolution) and among the states themselves (horizontal devolution), as well as principles governing grants-in-aid to states. The 15th Finance Commission's recommendations are currently in effect (for 2021-26).

The SASCI scheme itself is a non-statutory grant, operating outside the Finance Commission's direct purview but aligning with the broader objective of strengthening state finances and promoting capital expenditure. Historically, schemes like the Gadgil Formula and various centrally sponsored schemes have been mechanisms for central assistance, evolving over time to address changing development priorities and fiscal realities.

**Future Implications**

If the requested funds are sanctioned, it would significantly boost Andhra Pradesh's capacity to undertake critical infrastructure projects, potentially leading to faster economic growth, job creation, and improved living standards. It would also set a precedent for other states seeking similar assistance, intensifying the demand for central funds. Conversely, a denial or partial allocation could strain state-centre relations and delay vital development projects. The long-term implication is a continuous evolution of fiscal federalism, with states increasingly seeking greater financial autonomy while remaining dependent on central support for large-scale capital investments. The emphasis on capital expenditure through such schemes aligns with the national vision for a $5 trillion economy, where robust state-level infrastructure is paramount.