Question on status of Andhra Pradesh 
Andhra Pradesh, post-bifurcation, needed a helping hand from the Centre. But the modalities of the special status the State wanted, needed to be worked out. Could it be declared a Special Category State or was the right way to grant it a special financial package was that it did not require meeting the mandated requirements for Special Category status?

Centre’s rationale for not assigning Andhra a special category state  
A.P. does not qualify as a Special Category State; it has neither geographical disadvantages such as hilly terrain nor historical disadvantages such as socio-economic and infrastructural backwardness and unviable finances.

The categorisation as special category state enables larger financial contributions from the centre and continuous financial support. For instance, on implementation of Central Programmes, Special Category states are required to contribute only 10% of total expenditure while other states are required to contribute 50% of the total expenditure.

On the other hand, the Central Assistance may or may not be lead to continuous financial support for the state. 

Centre’s assistance to Andhra Pradesh 
1. Eventually, the Centre announced a special package, the emphasis was on assisting the State on the basis of the road map laid down in the Andhra Pradesh Reorganisation Act, an oral commitment made in 2014 by Prime Minister Manmohan Singh, the report of the 14th Finance Commission and the recommendations of the Niti Aayog.
The package, valid for five years till 2020, meets most of the reasonable expectations of a State struggling to recover from bifurcation and dealing with the imminent loss of the capital city, Hyderabad.

2. The Polavaram irrigation project was declared a national project; a railway zone was to be formed in the State and the Central Board of Direct Taxes was to issue two notifications on tax concessions. 

Political battle in Andhra Pradesh over the Special Category status
The political battle over the Special Category status is not going to get over soon.
Opposition parties, led by the Congress and the YSR Congress, have targeted Mr. Naidu for failing to convince the Centre. That his Telugu Desam Party is in alliance with the Bharatiya Janata Party will invite charges of a sell-out of A.P.’s interests.

Way Ahead 
The TDP government must look ahead, and use the special package to boost growth and create conditions for employment generation. While concentrating resources on building the capital at Amaravati, Mr. Naidu must not lose sight of the immediate development goal: the livelihood concerns of ordinary people.