APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205

1. Examine the impact of the 2014 bifurcation of Andhra Pradesh on trade and commerce within the state.
Syllabus Paper II: Section II: Chapter 5
Keyword Examine: Here you can write why and how of the question by quoting examples. As it is examine
one can also criticise the policy or scheme.
Demand and  Demand is to write about the impact of 2014 bifurcation of Andhra Pradesh on trade and
Deviation commerce within the state.
 Deviation is lack of focus on the impacts in Trade and Commerce, Overemphasis on
Hyderabad’s Loss and Ignoring Government Initiatives.
Dimensions /  Introduction:
Sub-headings  Briefly introduce the bifurcation of Andhra Pradesh in 2014 under the Andhra Pradesh
Reorganization Act.
 Highlight the economic challenges faced by Andhra Pradesh after losing Hyderabad, its
former economic and trade hub.
 Impact on Trade and Industrial Growth:
 Loss of Hyderabad as a Business Hub
 Decline in Tax Revenues
 Rebuilding Industrial and Trade Sectors
 Impact on Key Economic Sectors:
 Agriculture and Agri-Based Trade
 Industrial Development
 Infrastructure and Connectivity Challenges:
 Need for a New Capital and Business Center
 Power and Water Resource Challenges
 Untapped Potential of Ports
 Government Policies to Boost Trade and Commerce:
 Conclusion:
 Emphasize the need for sustained policy support and infrastructure investments for long-
term trade and commerce growth.
The bifurcation of Andhra Pradesh under the Andhra Pradesh Reorganisation Act 2014, led to the
creation of Telangana and the residual Andhra Pradesh. With Hyderabad a major economic and
Introduction
trade hub remaining in Telangana, Andhra Pradesh faced challenges in revenue generation,
industrial investment, and infrastructure development.
 Impact on Trade and Industrial Growth:
 Loss of Hyderabad as a Business Hub:
 Hyderabad, renowned for its thriving IT and pharmaceutical industries, became the
capital of Telangana post-bifurcation. This transition led to a substantial loss of revenue
Body & and economic activity for Andhra Pradesh.
Infographic  Decline in Tax Revenues:
Representation  With Hyderabad becoming part of Telangana, Andhra Pradesh lost a major share of
corporate tax, service tax, and commercial taxes resulted in a significant decline in tax
revenues.
 The state received only 46% of the estimated revenues of the combined State while
accounting for the 58% of its population.

Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 1

 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
 Telangana enjoy revenue surplus due to large tax revenue from businesses with
registered offices in Hyderabad. Telangana’s own tax revenue (SOTR) accounted to
88% of its total tax revenue, according to the Economic Survey 2024-25.
 Impact on Industrial investments:
 Due to political uncertainty and lack of a capital city, industrial investors were hesitant
to set up units in Andhra Pradesh.
 In response to the economic challenges, Andhra Pradesh focused on developing new
industrial hubs and promoting sectors such as agriculture, textiles, and renewable
energy. Example. Visakhapatnam-Chennai Industrial Corridor (VCIC).
 Impact on Key Economic Sectors:
 Agriculture and Agri-Based Trade:
 Agriculture is a cornerstone of Andhra Pradesh's economy. The state’s financial
constraints led to reduced subsidies and delays in irrigation projects.
 The bifurcation led to water-sharing disputes with Telangana, affecting irrigation in
some regions.
 Hyderabad was a major agricultural trade hub, and its loss affected farmers access to
wholesale markets.
 Industrial Development:
 Uncertainty about capital city development and infrastructure gaps made investors
hesitant.
 In power sector, power consumption has been adopted as the basis of distribution
which is detrimental to AP state.
 Infrastructure and Connectivity Challenges:
 Need for a New Capital and Business Centre:
 The bifurcation necessitated the development of a new capital city. The Andhra
Pradesh government initiated the construction of Amaravati, aiming to create a
modern city that would serve as the state's political and economic centre.
 Power and Water Resource Challenges:
 Post-bifurcation, Andhra Pradesh faced challenges in managing power and water
resources. The state had to address issues related to resource allocation and
infrastructure development to meet the needs of its population and industries.
 Untapped Potential of Ports:
 Andhra Pradesh has third longest coastlines in India, but port utilization was
suboptimal. Krishnapatnam, Kakinada, and Gangavaram Ports needed better
infrastructure for exports and industrial cargo.
 Government Policies to Boost Trade and Commerce: The Andhra Pradesh government
implemented various policies to stimulate trade and commerce, that includes;
 New Industrial Policies: Andhra Pradesh Government unveils six policies to foster
economic growth, increase exports and create job opportunities for the period of 2024-
2029;
 AP Industrial Development Policy 4.0;
 AP MSME & Entrepreneur Development Policy 4.0;
 AP Food Processing Policy 4.0;
 AP Electronics Policy 4.0;
 AP Private Parks Policy 4.0;
 AP Integrated Clean Energy Policy 4.0.
Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 2
 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
 Incentives for Industries: Offering tax breaks and subsidies to attract investments.
 Financial incentives for industries, such as subsidies on power tariffs, tax exemptions,
and capital investment support.
 Fast-track approvals through the Single Desk Clearance system for business setup.
 Special Economic Zones (SEZs) and Industrial Corridors:
 A.P. Industrial Corridor Development Authority (A.P.-ICDA) notified Chennai-
Bengaluru, Hyderabad-Bengaluru and Visakhapatnam-Chennai Industrial Corridors
and respective nodes in Krishnapatnam, Orvakal and Kopparthy.
 AP Government enacted the Maritime Policy 2024 with a target to achieve at least one
port ranked among the top 20 global ports and to attain 20% of total cargo handled by
all Indian Ports by 2047.
The bifurcation of Andhra Pradesh in 2014 posed significant challenges to its trade and commerce
sectors, primarily due to the loss of Hyderabad as an economic hub. However, through strategic
Conclusion policy interventions and infrastructure development, the state has made notable progress in
revitalizing its economy. Sustained efforts in policy support and infrastructure investment are
essential for the long-term growth of trade and commerce in Andhra Pradesh.
The 2014 bifurcation of Andhra Pradesh, had significant socio-economic and political
Relevance of consequences. One major area of impact was trade and commerce, as the reorganization altered
the Theme economic linkages, market access, industrial distribution, and revenue sources. In that context
there may have a chance to ask in Examination.
 Amaravati the Capital City:
 Amaravati’s development offers an opportunity for fast-urbanizing India to model the
planning of an inclusive, climate-resilient city.
 Situated in a well-connected region along India’s East Coast Economic Corridor, Amaravati
Add-on Info
will be part of a broader metropolitan region that includes two cities, Vijayawada and
Guntur.
 The government has prepared the masterplan for a 217 sq km city to accommodate 3.5
million people by 2050. Currently, about 100,000 people live in the Amaravati area.
2. Assess the severity of the challenges faced in the reorganization of Andhra Pradesh, particularly concerning the
state's financial position immediately after bifurcation in 2014.
Syllabus Paper II: Section II: Chapter 5
Keyword Assess: Assess is kind of assessment of a topic. Here one should weigh the statement based on its
strengths and weakness and then forming conclusion.
Demand and  Demand of the question is to write about various challenges faced in the reorganization of
Deviation Andhra Pradesh, with a detailed description of challenges regarding state's financial position
immediately after bifurcation in 2014
 Deviation: Excessive Focus on Revenue Loss, Limited Mention of Fiscal Deficit Trends, Lack of
Specific Industrial Initiatives, Omission of Alternative Capitals Debate are the possible deviating
points.
Dimensions /  Introduction:
Sub-headings  Briefly introduce the Andhra Pradesh Reorganization Act, 2014, which led to the bifurcation
of the state into Andhra Pradesh and Telangana.
 Highlight that Andhra Pradesh faced serious financial distress post-bifurcation due to the
loss of its economic hub, Hyderabad.
 Immediate Financial Challenges Faced by Andhra Pradesh:

Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 3

 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
 Loss of Hyderabad and Revenue Deficit
 Decline in Own Tax Revenue (OTR)
 Increased Dependency on Central Assistance
 Financial Burden Due to Capital Formation:
 Need for a New Capital and Infrastructure Development
 Increased Public Debt and Borrowing
 Sectoral Challenges Post-Bifurcation:
 Power Sector Crisis
 Water Resource Disputes
 Industrial and Employment Challenges
 Steps taken by the Government to Improve Financial Stability:
 Promotion of Port-Based Economic Growth
 Investment in Infrastructure and Smart Cities
 Demand for Special Category Status (SCS)
 Conclusion:
 While government initiatives and central assistance helped mitigate some issues, long-
term financial stability depends on industrial growth, investment, and better fiscal
management.
The Andhra Pradesh Reorganisation Act, 2014, led to the bifurcation of the state into Andhra
Pradesh and Telangana. The bifurcation created severe economic, administrative, and
Introduction
infrastructural challenges for the reorganized state. This division particularly resulted in Andhra
Pradesh losing its economic hub, Hyderabad, which significantly impacted its financial position.
Immediate Financial Challenges Faced by Andhra Pradesh
 Loss of Hyderabad and Revenue Deficit:
 Post-bifurcation, Andhra Pradesh faced a substantial revenue deficit exceeding ₹15,000
crore, primarily due to the loss of Hyderabad, a major economic centre.
 Decline in Own Tax Revenue (OTR):
 The state experienced a decline in its Own Tax Revenue (OTR), affecting its fiscal health.
This decline was attributed to the loss of economic activities and industries that were
previously concentrated in Hyderabad.
 Increased Dependency on Central Assistance:
 To address the financial challenges, Andhra Pradesh became increasingly dependent on
Body & central assistance. The Government of India had promised special category status and
Infographic financial assistance to the state, but delays and insufficient funds hampered recovery
Representation efforts.
Financial Burden due to Capital Formation
 Need for a New Capital and Infrastructure Development:
 The necessity to establish a new capital city, Amaravati, and developing essential
infrastructure placed a significant financial burden on the state. This endeavour required
substantial investments in land acquisition, construction, and urban planning.
 Increased Public Debt and Borrowing:
 To finance the capital formation and infrastructure projects, Andhra Pradesh resorted to
increased borrowing, leading to a rise in public debt. This situation raised concerns about
the state's long-term fiscal sustainability.
 Public debt is estimated to increase to ₹1.02 lakh crore in 2025-26.

Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 4

 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
Sectoral Challenges Post-Bifurcation
 Power Sector Crisis
 The bifurcation led to challenges in the power sector, including the need to reallocate
power resources and manage the distribution of electricity between the two states. This
situation resulted in power shortages and increased costs for Andhra Pradesh.
 In power sector, power consumption has been adopted as the basis of distribution
which is detrimental to AP state.
 Water Resource Disputes:
 The division intensified disputes over water resources, particularly concerning the sharing
of river waters between Andhra Pradesh and Telangana. These disputes affected irrigation
and drinking water supply, impacting agriculture and daily life.
 Dispute over the water share of the Krishna River between Andhra Pradesh (A.P.) and
Telangana remains unresolved
 Industrial and Employment Challenges:
 The loss of Hyderabad, a major industrial hub, led to a decline in industrial activities and
employment opportunities in Andhra Pradesh. The state faced challenges in attracting new
industries and creating jobs for its growing population.
Steps Taken by the Government to Improve Financial Stability
 Promotion of Port-Based Economic Growth:
 The state government focused on developing port-based economic zones to boost trade
and industry. Initiatives like the development of the Krishnapatnam Port aimed to enhance
maritime trade and generate employment.
 Investment in Infrastructure and Smart Cities:
 Investments were made in infrastructure development, including the creation of smart
cities and industrial corridors, to attract investments and stimulate economic growth. The
Amaravati capital city project was a significant part of this strategy.
 Demand for Special Category Status (SCS):
 The state government advocated for Special Category Status (SCS) to secure additional
financial assistance from the central government. This status was expected to provide fiscal
benefits and support for infrastructure development.
While the government initiatives and central assistance have helped mitigate some of the financial
challenges faced by Andhra Pradesh post-bifurcation, achieving long-term financial stability
Conclusion requires sustained industrial growth, strategic investments, and prudent fiscal management.
Addressing sectoral challenges and ensuring equitable development across regions will be crucial
for the state's economic resilience.
The question focuses on the challenges faced during the reorganization of Andhra Pradesh (AP) in
Relevance of
2014, with a particular emphasis on the state's financial position. The theme is relevant as it aligns
the Theme
with issues of federalism, economic disparity, and governance challenges in post-bifurcation.
 Special Category Status:
 The parameters for Special Category Status (SCS) in India are:
 Hilly terrain
 Low population density
Add-on Info
 Tribal population
 Border location
 Economic backwardness
 Infrastructure backwardness
Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 5
 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
 State finances are non-viable
The National Development Council (NDC) grants SCS to states that meet these criteria. The Gadgil
formula, which was approved by the NDC in 1969, was the basis for the initial grants of SCS.
3. Analyse the principles outlined in Schedule Eleven of the Andhra Pradesh Reorganisation Act, 2014, concerning
the role and functioning of river management boards.
Syllabus Paper II: Section II: Chapter 5
Keyword Analyse: Break into fundamental parts and then write its impact on socio-economic and political
aspects.
Demand and  Demand is to write about the principles outlined in Schedule Eleven of the Andhra Pradesh
Deviation Reorganization Act, 2014, concerning the role and functioning of river management boards.
 Deviation: Excessive Historical Background, General Discussion on Inter-State Water Disputes,
Omission of Way Forward are the possible deviations here.
Dimensions /  Introduction:
Sub-headings  Briefly introduce the Andhra Pradesh Reorganization Act, 2014, which provided for the
division of resources, assets, and administration between Andhra Pradesh and Telangana.
 Mention that Schedule Eleven of the Act deals with the constitution and functioning of
river management boards to regulate the use of Krishna and Godavari waters.
 Principles Envisaged in Schedule Eleven:
 Establishment of River Management Boards
 Water Allocation and Regulation
 Control Over Water Infrastructure
 Financial and Administrative Autonomy
 Challenges in the Functioning of River Management Boards:
 Jurisdictional Conflicts
 Delayed Notification of Powers
 Unresolved Water-Sharing Disputes
 Power Generation Disputes
 Way Forward for Effective Functioning of River Boards:
 Strengthening the Authority of KRMB and GRMB
 Speeding Up Water Dispute Resolution
 Improved Technology and Monitoring
 Consensus-Based Approach
 Conclusion:
 Strengthening river management boards with binding legal authority, transparent
monitoring, and dispute resolution mechanisms is essential for long-term water security
and cooperative federalism.
The Andhra Pradesh Reorganisation Act, 2014, facilitated the bifurcation of Andhra Pradesh and
Telangana. The Act outlined the division of resources, assets, liabilities, and administrative
Introduction
structures between the two states. Schedule Eleven of the Act deals with the water resources
management in the Krishna and Godavari River waters between Andhra Pradesh and Telangana.
 Principles Envisaged in Schedule Eleven:
Body &  Establishment of River Management Boards:
Infographic  Boards are responsible for managing water resources of Krishna and Godavari Rivers.
Representation  Their decisions are binding on both Telangana and Andhra Pradesh.
 Water Allocation and Regulation:

Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 6

 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
 Water allocation follows adjudication by the Krishna Water Disputes Tribunal.
Priority in Water Usage:
 Drinking water takes precedence over irrigation.
 Irrigation takes precedence over power generation.
 Allocations of assured water remain unchanged.
 Future allocations of excess flows by any tribunal will be binding on both states.
 New projects require clearance from the Apex Council and technical appraisal by the
respective Board.
 Control over Water Infrastructure:
 Boards oversee the operation of dams, reservoirs, canals, and hydropower projects.
 In disaster situations (droughts, floods), Boards advise governments and have
authority to implement decisions.
 Ongoing irrigation projects (Handri Niva, Telugu Ganga, Galeru Nagiri, Venegondu,
Kalvakurthi, Nettempadu) will be completed as planned, with existing water-sharing
arrangements maintained.
 Financial and Administrative Autonomy:
 State governments are responsible for managing natural calamities, with Boards
providing guidance.
 Non-compliance by a state will lead to financial and other penalties imposed by the
Central Government.
 Challenges in the Functioning of River Management Boards
 Jurisdictional Conflicts:
 The overlapping jurisdictions of the Krishna River Management Board and Godavari
River Management Board often lead to conflicts between the two states. These
conflicts arise due to differences in water-sharing agreements and the interpretation
of tribunal awards.
 Delayed Notification of Powers:
 The delay in notifying the powers and functions of the boards by the central
government has hindered their effective functioning. This has led to confusion and
inefficiencies in water management.
 Unresolved Water-Sharing Disputes:
 The long-standing disputes over water-sharing between Andhra Pradesh and
Telangana remain unresolved. These disputes have resulted in legal battles and
hindered the boards' ability to manage water resources effectively.
 Power Generation Disputes:
 Conflicts over the use of water for power generation versus irrigation have also posed
challenges. The prioritization of water use for different purposes has led to
disagreements between the states
 Way Forward for Effective Functioning of River Boards:
 Strengthening the Authority of Krishna River Management Board and Godavari River
Management Board:
 Empowering the boards with binding legal authority and clear mandates can help
resolve jurisdictional conflicts and enhance their effectiveness.
 Speeding Up Water Dispute Resolution:
 Establishing a fast-track mechanism for resolving water disputes between the states
can help reduce conflicts and ensure timely water distribution.
Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 7
 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
 Improved Technology and Monitoring:
 Implementing advanced technology for real-time monitoring and management of
water resources can enhance the efficiency and transparency of the boards'
operations.
 Consensus-Based Approach:
 Encouraging a consensus-based approach to decision-making can foster cooperation
between the states and ensure equitable water distribution.
By Strengthening the river management boards with binding legal authority, transparent
monitoring systems, and effective dispute resolution mechanisms is essential for ensuring long-
term water security and promoting cooperative federalism. By addressing the existing challenges
Conclusion
and implementing the recommended measures, the boards can play a pivotal role in the equitable
and efficient management of the Krishna and Godavari River waters, benefiting both Andhra
Pradesh and Telangana.
The Andhra Pradesh Reorganisation Act, 2014, plays a crucial role in addressing the governance
Relevance of
and resource-sharing challenges between Andhra Pradesh and Telangana. So, there might have a
the Theme
chance to ask in examinations.
 River Boards Act of 1956
 The River Boards Act of 1956 was enacted in India to establish river boards to regulate and
develop rivers and river valleys that cross state borders.
 The Act also allows river boards to settle disputes between states over the use of river
Add-on Info
water.
 Inter-State River Water Disputes Act of 1956
 The Inter-State River Water Disputes Act of 1956 was enacted to resolve water disputes
that arise over the use, control, and distribution of an interstate river.
4. Even after a decade since the bifurcation of Andhra Pradesh in 2014, the state has not been able to establish a
permanent capital. Critically analyse the reasons behind this delay and its implications.
Syllabus Paper II: Section II: Chapter 5
Keyword Critically Analyse: Focus is on criticizing the statement and breaking it into fundamental parts and
then writing its impact on various aspects.
Demand and  Demand is to write about the critical analysis of delay in Capital construction in Andhra
Deviation Pradesh, by including the reason for delay and its impacts.
 Deviation is writing more about the provisions related with Andhra Pradesh Reorganization
Act, 2014 on capital formation and political reasons for the delay.
Dimensions /  Introduction:
Sub-headings  Briefly mention the Andhra Pradesh Reorganization Act, 2014, which led to the
bifurcation of Andhra Pradesh and the loss of Hyderabad as its capital.
 Introduce the issue of capital uncertainty, mentioning the initial plan of Amaravati and
subsequent developments.
 Reasons for the Delay in Capital Formation
 Political Instability and Policy Reversals
 Legal and Administrative Hurdles
 Financial Constraints
 Centre-State Relations and Lack of Special Status
 Impact of Natural Disasters and COVID-19
 Implications of the Delay

Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 8

 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
 Governance and Administrative Challenges
 Investor and Business Uncertainty
 Impact on Infrastructure Development
 Public Dissatisfaction and Social Unrest
 Way Forward
 Consensus-Based Approach
 Strategic and Phased Development
 Strengthening Federal Support
 Ensuring Legal and Administrative Stability
 Conclusion:
 A stable and well-planned capital is crucial for Andhra Pradesh’s economic growth and
administrative efficiency.
The Andhra Pradesh Reorganisation Act, 2014, bifurcated unified Andhra Pradesh into two States.
As a result, Hyderabad, which had historically served as the capital of Andhra Pradesh became the
Introduction
permanent capital of Telangana. The loss of the capital city, delay in the construction of the
Polavaram project, and non-implementation of various assurances are still a prevalent issue.
Reasons for the Delay in Capital Formation:
 Political Instability and Policy Reversals:
 After the 2019 elections, the newly elected YSR Congress Party (YSRCP) government halted
the Amaravati project initiated by the previous Telugu Desam Party (TDP) government.
 The policy change of the YSRCP Government regarding three-capital plan - Visakhapatnam,
Amaravati, and Kurnool, delayed the project.
 Legal and Administrative Hurdles:
 The farmers of Amaravati, who had given land for the capital under the land pooling
scheme protested against the shift in capital plans. This resulted in judicial delays.
 Financial Constraints:
 The delay in taking up works for the Amaravati capital city has resulted in 45% rise in
construction costs, said Municipal Administration and Urban Development (MAUD)
Body & Minister.
Infographic  Multilateral agencies like World Bank and Asian Infrastructure Investment Bank committed
Representation to invest in capital project. However, both pulled out of the project after the new
government came to power in the state following the 2019 assembly polls.
 Centre-State Relations and Lack of Special Status:
 Delay in release of grants by the Union Government as per the provisions of AP
Reorganization Act.
 The Centre has rejected the Andhra Pradesh (AP) government's demand for Special
Category Status for the state. The lack of such status prevented higher central grants, tax
incentives, and financial support for infrastructure projects.
 Impact of Natural Disasters and COVID-19:
 The COVID-19 pandemic (2020-2021) slow down the construction activities due to labour
shortages, supply chain disruptions, and diversion of state funds for healthcare and
pandemic relief efforts.
Implications of the Delay:

Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 9

 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
 Governance and Administrative Challenges: The absence of a fully developed capital has led
to governance inefficiencies, with temporary arrangements in other places like Vijayawada.
The scatteredness of Government offices cause inconvenience to the public and the officials.
 Investor and Business Uncertainty: Uncertainty over the capital city discouraged private and
foreign investments, affecting the state’s economic growth.
 Impact on Infrastructure Development: Key infrastructure projects, like roads, government
buildings, and public facilities, have stalled. The delay has widened the development gap
between different regions of Andhra Pradesh.
 Public Dissatisfaction and Social Unrest: The stalled construction projects affect thousands of
workers, contractors, and small businesses dependent on capital development lost their jobs
and income.
Way Forward:
 Consensus-Based Approach: The state government should take a firm and transparent
decision by consensus among political parties on the capital issue to end uncertainty.
 Dedicated budget: The state should allocate a dedicated budget for Amaravati’s development,
ensuring that funds are not diverted to other projects
 Strengthening Federal Support: Strong support from the centre is essential for funding, policy
stability, and infrastructure development in Amaravati.
 Ensuring Administrative Stability: The capital issue should not be treated as a political rivalry
but as a state development priority.
A stable and well-planned capital is crucial for Andhra Pradesh’s economic growth and
administrative efficiency. A well-developed capital will not only serve as the administrative hub but
Conclusion
also drive industrial growth, infrastructure expansion, and socio-economic progress for the entire
state.
 Amaravati to be 'single capital' of Andhra Pradesh; State Government filed affidavit in the
Supreme Court recently.
Relevance of
 Union Government’s Special financial support package of ₹15,000 crore for the development
the Theme
of Andhra Pradesh’s new capital city during the financial year 2024-25.
 Amaravati seen as driving force of State’s economic growth
 The World Bank along with the Asian Development Bank in principle has committed to fund
USD 1600 million (Rs 13,600 crore) for Amaravati capital city phase-I development.
 Of the total cost of Rs 15,000 crore for the phase-I development, the Central government will
be funding the remaining Rs 1,400 crore
Add-on Info
 The International Bank for Reconstruction and Development (IBRD), part of the World Bank,
which provides loans and guarantees, among others and ADB will be funding USD 800 million
(Rs 6,800 crore) each for the project.
 The repayment of the WB and ADB loans will be taken care of by the Centre.
5. Examine the challenges faced in the bifurcation of assets and liabilities of institutions listed under Schedule IX
and Schedule X of the Andhra Pradesh Reorganisation Act, 2014.
Syllabus Paper II: Section II: Chapter 5
Keyword Examine: Here you can write why and how of the question by quoting examples. As it is examining
one can also criticise the policy or scheme
Demand and  Demand is to write about the challenges in bifurcation of assets and liabilities and its
Deviation implications.
 Deviation is writing more about the schedule 9 and 10 of the act and its challenges without
giving a solution/step.
Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 10
 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
Dimensions /  Introduction:
Sub-headings  Briefly explain the Andhra Pradesh Reorganization Act, 2014 and its significance in the
bifurcation of the state.
 Mention Schedule IX and Schedule X, highlighting their importance in dividing
institutions and assets between Andhra Pradesh and Telangana.
 Overview of Schedule IX and Schedule X:
 Key Problems in Bifurcation of Assets and Liabilities:
 Disputes Over Asset and Fund Distribution
 Legal and Administrative Complexities
 Controversies in Educational and Research Institutions
 Power and Energy Sector Issues
 Delay in Implementation and Political Differences
 Steps Taken to Resolve the Issues:
 Conclusion:
 Suggest speedy resolution mechanisms through inter-state coordination, central
government intervention, and judicial rulings.
The Andhra Pradesh Reorganisation Act, 2014, which led to the bifurcation of united Andhra
Pradesh, is a significant chapter in India's ongoing process of state reorganisation. The Schedule IX
Introduction and Schedule X of the Act laid out how assets and liabilities must be shared between the two states.
Such division of various institutions and corporations between the two states, has not been
completed as there was no consensus over several issues.
Overview of Schedule IX and Schedule X:
 Schedule IX of the act lists public corporations, and companies that were originally set up for
the undivided Andhra Pradesh. These entities were reorganized and divided between Andhra
Pradesh and Telangana based on their jurisdiction, assets, and liabilities.
 The Ninth schedule lists 89 corporations, and companies. These includes Andhra Pradesh
State Seeds Development Corporation, Andhra Pradesh State Agro Industrial Development
Corporation and Andhra Pradesh State Warehousing Corporation etc.
 Schedule X of the act lists 107 training institutions/centres like AP State Co-operative Union,
Environment Protection Training and Research Institute, AP Forest Academy, Centre for Good
Governance and Andhra Pradesh Police Academy etc., that need to be shared between the two
states.
Body &
Key Problems in Bifurcation of Assets and Liabilities:
Infographic
 Disputes Over Asset and Fund Distribution:
Representation
 Telangana, with Hyderabad as its capital, gained control over many revenue-generating
institutions.
 The division of several institutions like the RTC headquarters and the Deccan Infrastructure
and Landholdings Limited (DIL) have become the key bone of contention between the two
States.
 Disagreement between the two states over assets of the state-run Road Transport
Corporation.
 AP sought a share in assets of the Road Transport corporation located in
Hyderabad and that the TSRTC has denied and disagreed on it.
 Legal and Administrative Complexities:
 Transfer of employees is one of the issues which is waiting for final resolution.

Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 11

 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
 Many employees wanted to stay in Hyderabad, while Andhra Pradesh needed
experienced officials to manage administration.
 Many of the pensionable employees who have retired post bifurcation have not received
their financial benefits.
 Controversies in Educational and Research Institutions:
 Post bifurcation, Hyderabad house the top universities and research institutions, including
Osmania University, NALSAR, IIT Hyderabad, IIIT Hyderabad, and NIFT Hyderabad.
 Then, Central Government set up several Central institutions, including IIT and IIM.
 IIT at Tirupati, IIM at Visakhapatnam, NIT at Tadepalligudem in West Godavari
district and Indian Institute of Science Education and Research (IISER).
 Power and Energy Sector Issues:
 According to the act, Telangana was entitled to 53.89% and Andhra Pradesh to 46.11% of
the power generated in the erstwhile united Andhra Pradesh, based on power
consumption statistics.
 The two states have been caught in a row over payment of dues for supply of power post
bifurcation.
 Telangana refused to clear pending power dues to Andhra Pradesh, leading to
conflicts between DISCOMs (Distribution Companies) of both states.
Steps Taken to Resolve the Issues:
 Formation of Committees: Sheela Bhide Committee, was set up to oversee the division of
assets and liabilities between Andhra Pradesh and Telangana.
 Legal Intervention: The Supreme Court and other judicial bodies have been involved in
resolving disputes over corporations, power dues, and financial allocations.
 Central Support: The World Bank along with the Asian Development Bank in principle has
committed to fund USD 1600 million (Rs 13,600 crore) for Amaravati capital city phase-I
development, after Central Government’s commitment of repayment.
 Union Budget 2024-25, proposed financial support for the Capital Project and Polavaram
project
 New central institutions: IIT at Tirupati, IIM at Visakhapatnam, NIT at Tadepalligudem in West
Godavari district and Indian Institute of Science Education and Research (IISER).
 Political Negotiations and Central Mediation: The central government has attempted to
mediate between Andhra Pradesh and Telangana, but political differences continue to impact
resolutions.
The asset and fund distribution disputes between Andhra Pradesh and Telangana have created
long-standing financial and administrative challenges. A structured legal approach, political
Conclusion
consensus, and central government intervention are crucial for achieving a fair settlement and
ensuring smooth governance in both states.
Relevance of  Andhra, Telangana chief secretaries recently met to discuss inter-state disputes.
the Theme  Bifurcation issues between Telangana and Andhra Pradesh remain unresolved.
Issues with respect to Andhra Pradesh Reorganisation Act 2014: -
 The state received only 46% of the estimated revenues of the combined State while accounting
for the 58% of its population.
Add-on Info  Assets were allocated on location basis whereas debt liabilities were distributed on population
basis.
 In power sector, power consumption has been adopted as the basis of distribution which is
detrimental to AP state.
Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 12
 APPSC | Group-I | Mains 2025 | Naipunyata | Test Code: AG1DMT-2205
 Refund of taxes is to be shared between Andhra Pradesh and Telangana on population basis
(58.32: 41.68) whereas deferred tax collections have been allocated on location basis. This has
caused a loss of about Rs.3,800 Crores.
 No capital city for the residuary State of Andhra Pradesh
 Undivided loan liability of more than Rs.33,478Cr. has been put in the books of accounts of
Andhra Pradesh, burdening the State with discharge of liability along with interest, pending
division.
 Despite Singareni Collieries being a Schedule IX Company, Telangana State has been allocated
51% equity of the company on location basis.

Every Question is framed based on the Reverse Engineering Technique | www.civiccentre.in 13