The Centre on Wednesday approved Rs 850 crore development package and adhoc support to Andhra Pradesh as also tax sops to help the state attract investments in the industrial sector.
Under the Andhra Pradesh Reorganisation Act, 2014, the Centre is committed to support state, providing special development package to backward areas and Rayalaseema and North coastal region of the state.
“It has now been decided that funds amounting to Rs 350 crore (@ Rs 50 crore per district) in seven Backward Districts of Andhra Pradesh may be provided to Government of Andhra Pradesh during 2014-15 for its development activities,” the Finance Ministry said in a statement.
It further said an inter-ministerial Joint Committee, constituted by Home Ministry, is also taking stock of the situation of the state government to make recommendations to bridge the likely resource gap in the Central Budget 2014-15.
“However, an adhoc support of Rs 500 crore for current financial year will be provided to Andhra Pradesh, pending recommendations of the Committee,” the statement added.
The Centre has to also provide fiscal measures, including offer of tax incentives, to the successor States, to promote industrialisation and economic growth in both the
States. “The manufacturing industries set up in the backward region, as notified, would be given 15 per cent additional depreciation on new plant and machinery in the first year of installation,” the Finance Ministry said.
Also, an additional investment allowance of 15 per cent would be given to industries set up in the backward regions for investments made in new plant and machinery in any of the five years for which additional concession would be notified.
Even if the investment is made in the fifth year, the investment allowance would be available, it added.
“The additional depreciation allowance, and investment allowance will be provided without insisting on an investment of above Rs 25 crore,” the Ministry said.
It further said several other proposals including proposals of Department of Industrial Policy & Promotion (DIPP) are under examination.
Telangana was carved out as a separate state from Andhra Pradesh in June 2014.