In order to fulfill its commitment to the people of Andhra Pradesh and to compensate the financial impact arising out of the bifurcation of Andhra Pradesh the Government of India has decided to provide further “Special Assistance” of ₹ 1,976.50 crore to the State during 2016-17. The amount includes ₹ 1176.50 for Resource Gap, ₹ 350 crore for the development of 7 backward districts covering Rayalaseema & North Coastal region and ₹ 450 crore as assistance for the capital city. Thus, with the current sanction of funds, the Central Government has so far provided Central assistance of ₹ 8379.50 crore to the State of Andhra Pradesh which includes ₹ 4403 crore released during 2014-15 and ₹ 2000 crore released during 2015-16 in terms of the provisions under the Andhra Pradesh Re-organisation Act, 2014.

The Andhra Pradesh Re-organisation Act, 2014 entrusts the Central Government to make appropriate grants in the form of special assistance to the backward areas of successor States, provide assistance for creation of new capital of Andhra Pradesh and to provide assistance to bridge the resource gap arising post-bifurcation.

Accordingly, cumulatively from the enactment of the Re-organisation Act i.e. 2nd June, 2014 till 2016-17, ₹ 3979.50 crore has been released to the successor State of Andhra Pradesh for bridging the resource gap for the financial year 2014-2015, ₹ 1050 crore @ ₹ 50 crore per district has been provided for the development of 7 backward districts covering Rayalaseema & North Coastal region, ₹ 2500 crore has been provided as assistance for the capital city which includes ₹ 1000 crore released by the Union Ministry of Urban Development (MoUD) for sewerage & drainage schemes at Guntur and Vijavada cities respectively and ₹ 850 crore released upto 2015-16 for the Polvaram Irrigation Project among others.

Special assistance to Andhra Pradesh bridges post bifurcation resource gaps and funds backward districts and capital development. Central Government provides special assistance to Andhra Pradesh to compensate fiscal impacts from bifurcation, allocating separate funds in 2016 17 to bridge the resource gap, develop backward districts, and assist capital city creation, supplementing prior disbursements made under the Andhra Pradesh Re organisation Act, 2014.