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Bifurcation of Andhra Pradesh and the Reorganisation Act 2014 · Chapter 4

Division of Institutions, Assets, Liabilities and Employees

What to remember

  • Immovable assets follow location; movable assets and money follow population ratio. The Andhra Pradesh Reorganisation Act, 2014 used the 2011 Census population shares (about 58% for Andhra Pradesh and about 42% for Telangana) wherever a property had no clear location.
  • Schedule IX and Schedule X list the state-level institutions to be divided. Schedule IX covers companies and corporations (public sector undertakings); Schedule X covers training academies, State institutes and similar bodies.
  • Employees are allotted by local cadre and by option. The Centre set up advisory bodies and expert committees (such as the Sheela Bhide Committee) to guide the work, and many questions went to courts and to the Union Government.

Why division was needed

The Act came into force on the appointed day, 2 June 2014. On that day one State became two: Andhra Pradesh (the residuary State) and Telangana. Every office, company, building, bank balance, loan and employee of the old State had to be shared. Most of these were in Hyderabad, which now lay inside Telangana. This made the work hard and politically sensitive.

The Act did not divide everything in one stroke. It gave basic principles, then left details to the two Governments, to the Union Government and to expert committees.

Principles for assets

Property of the old State was divided on simple rules.

  • Immovable property (land, buildings) went to the State in which it is located.
  • Movable property (vehicles, furniture, stocks) generally went by the location of the office or by the population ratio.
  • Cash and bank balances were shared in the population ratio, after adjusting for the headquarters location.
  • Property of institutions that served both regions was handled by agreement; if no agreement was reached, the Union Government decided.
  • Property outside the old State was also shared, usually in the population ratio.

Because Hyderabad had most of the headquarters buildings, Telangana received many assets by location. The residuary State therefore asked for a fair adjustment, and this became a long discussion between the two Governments.

Principles for liabilities

  • Public debt of the old State was apportioned between the two States, mainly in the population ratio, with adjustments for loans linked to specific projects.
  • Loans taken for a project moved with the project, so the State that kept the project took the loan.
  • Guarantees and pension liabilities were shared by rules laid down in the Act, usually following where the employee or the institution went.
  • The Comptroller and Auditor General (CAG) was given a role in certifying accounts and the balance sheet of the division. This is a standard feature of reorganisation Acts.

Schedules IX and X

FeatureSchedule IXSchedule X
What it listsCompanies and corporations owned by the StateInstitutions such as academies, training bodies, State-level institutes and councils
Examples of typePower companies, development corporations, finance corporationsAcademies of administration, higher education bodies, State institutes of rural or technical training
Main issueDivision of shares, assets and liabilitiesDivision by location and by use
Who decidedTwo States by agreement; Union Government as the final guideSame

Both schedules are lists attached to the Act. The Act itself did not complete the division. It only said how the division should take place.

Some institutions were located in Hyderabad but served the whole of Telangana and Andhra Pradesh together. Their division became a major difficulty. Some were treated as common institutions for a period.

Committees and the role of the Union Government

  • A committee of experts, headed by Sheela Bhide, was formed on 30 May 2014 to recommend how the Schedule IX undertakings (companies and corporations) should be divided under Section 53. It suggested principles and made recommendations on many institutions.
  • The two States did not agree on every point. Some recommendations were accepted by one State and objected to by the other.
  • Disputes went to the Union Home Ministry, to negotiation between the two Chief Ministers or Governments, and in some cases to courts.
  • The Union Home Ministry acts as the main coordinating body for reorganisation matters.
  • Many Schedule IX and X matters were reported as pending even years later. The details of what is pending change over time, so check the latest official position.

At concept level, remember: the committee gave recommendations, not binding orders. The final decision lay with the Governments and the Centre.

Employees: allotment and nativity

The Act made the Union Government responsible for allotting employees of the old State between the two successor States.

  • Local cadre rule: employees in district, zonal or multi-zonal posts stayed with the State where their local cadre fell. This follows the Presidential Order of 1975 that created zones in the old State.
  • State-level cadres were divided on the basis of a fixed process: options, seniority and vacancy.
  • Option: employees were asked to state a preference. Final allotment considered the preference but also needed to balance numbers.
  • Nativity: the home State of an employee was decided using guidelines such as place of birth, place of study and residence. Nativity helped decide which State an employee was "from" and thus which State they would be allotted to.
  • Guidelines issued by the Centre, with expert advice, helped carry this out.

The allotment of employees was not smooth. Some employees went to courts and administrative tribunals. The Andhra Pradesh and Telangana governments disagreed about the number of employees each should receive, about the "native" test, and about seniority after reallotment.

Why the division was hard

  • Location bias: most head offices were in Hyderabad. A rule that follows location gave Telangana most buildings and land. Andhra Pradesh argued that these assets were built with money from all regions.
  • Shared services: many bodies served people of the whole old State, such as universities, councils and training centres. It was not easy to split a body that has one campus and one budget.
  • Companies with mixed assets: a power company or a corporation may own plants in one State and offices in another. Its assets and debts had to be separated carefully.
  • Pension and service matters: retired staff were also counted. Pension cost was shared by agreed rules, so the final bill for each State depended on the number of staff allotted.
  • Time: the Act set a transition period in which some bodies were allowed to work for both States. Over time, each State created its own offices.

Common institutions during the transition

For a limited period, some bodies continued to serve both States. Hyderabad was the common capital for not more than ten years, so many offices stayed there. The Governor had special responsibility for the safety and security of all residents of Hyderabad. This arrangement allowed both States to function while new buildings and offices were set up. It also explains why many questions about institutions and assets of Hyderabad remained open for a long time.

How to answer questions on this topic

  • If a question asks "who decides", the answer is usually the Union Government, working with the two State Governments.
  • If it asks "on what basis", the answer is location for immovable property and population ratio for movable property, cash and debt.
  • If it asks about "Schedule", match the type of body: companies go with IX and institutions go with X.
  • If it asks about employees, think of local cadre, option and nativity.

Timeline and key terms

TermMeaning
Appointed day2 June 2014, the day the Act took effect
Residuary StateAndhra Pradesh after the division
Successor StateA State that takes over rights and duties; here both States
Local cadreA set of posts linked to a district or a zone
NativityThe place that is treated as the home State of an employee
CAGConstitutional audit authority that checks accounts of the division

Exam traps

  • Schedule IX is about companies and corporations; Schedule X is about institutions. Do not reverse them.
  • Immovable property goes by location; movable property and cash go by population ratio. Do not say "all property goes by population".
  • The Sheela Bhide Committee gave recommendations. It did not pass binding orders.
  • Nativity is not the same as option. Nativity is a test of origin; option is the employee's preference.
  • The Union Government allotted employees; the two State Governments did not.
  • The Act came into force on the appointed day, 2 June 2014, not on the day Parliament passed it.
  • The Presidential Order of 1975 is about local cadres and zones, not about the Act of 2014.
  • The population ratio used in the Act came from the 2011 Census, not from a later count.

One-liners

  • The Act is the Andhra Pradesh Reorganisation Act, 2014.
  • The appointed day was 2 June 2014.
  • Telangana became the 29th State of India.
  • Schedule IX lists companies and corporations of the old State.
  • Schedule X lists institutions such as academies and State institutes.
  • Immovable property goes to the State where it is located.
  • Movable property and cash are shared mainly by population ratio.
  • The ratio came from the 2011 Census.
  • A committee under Sheela Bhide made recommendations on Schedule IX undertakings.
  • Employees were allotted by the Union Government.
  • Local cadre posts remain with the State of that cadre.
  • The CAG has a role in certifying the accounts of division.

Practice questions

  1. What was the appointed day under the Andhra Pradesh Reorganisation Act, 2014?

    1. 1 March 2014
    2. 18 February 2014
    3. 2 June 2014
    4. 1 June 2014
    Answer

    C. 2 June 2014

    The Act took effect on the appointed day, 2 June 2014.

  2. Which schedule of the Act lists companies and corporations of the old State?

    1. Schedule IX
    2. Schedule XIII
    3. Schedule VIII
    4. Schedule X
    Answer

    A. Schedule IX

    Schedule IX covers State companies and corporations.

  3. Which schedule of the Act lists State-level institutions such as academies and training bodies?

    1. Schedule IX
    2. Schedule XII
    3. Schedule XI
    4. Schedule X
    Answer

    D. Schedule X

    Schedule X lists institutions; Schedule IX lists companies and corporations.

  4. Immovable property of the old State was allotted mainly on the basis of

    1. revenue earned
    2. its location
    3. the wish of the Governor
    4. population ratio
    Answer

    B. its location

    Land and buildings go to the State in which they are situated.

  5. Movable property and cash balances were shared mainly in the ratio of

    1. area of the State
    2. number of employees
    3. population
    4. number of districts
    Answer

    C. population

    The population ratio from the 2011 Census was used for movable assets and cash.

  6. The population ratio used for division was taken from which Census?

    1. 2001 Census
    2. 2011 Census
    3. 1991 Census
    4. 1981 Census
    Answer

    B. 2011 Census

    The Act relied on 2011 Census population shares.

  7. Who allotted employees of the old State between the two successor States?

    1. The Governor of Telangana
    2. The High Court
    3. The Finance Commission
    4. The Union Government
    Answer

    D. The Union Government

    The Act gave the Union Government the power to allot employees.

  8. The Sheela Bhide Committee was formed to recommend division of

    1. river waters
    2. Finance Commission grants
    3. institutions listed in Schedules IX and X
    4. Lok Sabha seats
    Answer

    C. institutions listed in Schedules IX and X

    The committee made recommendations on Schedule IX and X institutions.

  9. Telangana became which State of India?

    1. 29th
    2. 25th
    3. 28th
    4. 30th
    Answer

    A. 29th

    Telangana was formed as the 29th State.

  10. The State that remained after Telangana was carved out is called the

    1. reserve State
    2. interim State
    3. residuary State
    4. parent State
    Answer

    C. residuary State

    Andhra Pradesh is called the residuary State in the Act.

  11. Local cadre posts of employees are linked to

    1. the capital city only
    2. a district or a zone
    3. the Raj Bhavan
    4. the Finance Department
    Answer

    B. a district or a zone

    Local cadres are district, zonal or multi-zonal sets of posts.

  12. Which Presidential Order of the old State created zones for local cadres?

    1. The Presidential Order of 1975
    2. The Presidential Order of 2014
    3. The Presidential Order of 1950
    4. The Presidential Order of 1996
    Answer

    A. The Presidential Order of 1975

    The 1975 Order set up the zonal system for employment.

  13. In the context of employees, 'nativity' decides

    1. the pay scale of the employee
    2. the rank in the cadre
    3. the retirement age
    4. which State is treated as the employee's home State
    Answer

    D. which State is treated as the employee's home State

    Nativity is a test of origin, such as birth, study and residence.

  14. 'Option' in employee allotment means

    1. the preference stated by the employee
    2. the Governor's order
    3. the court's direction
    4. the rank in the exam
    Answer

    A. the preference stated by the employee

    Employees were asked to give their preference, which was considered with other factors.

  15. Which constitutional authority has a role in certifying accounts in the division of assets and liabilities?

    1. Union Public Service Commission
    2. Attorney General
    3. Comptroller and Auditor General
    4. Election Commission
    Answer

    C. Comptroller and Auditor General

    The CAG audits and certifies accounts in reorganisation matters.

  16. A loan linked to a specific project in the old State normally went with

    1. Andhra Pradesh always
    2. Telangana always
    3. the Union Government
    4. the State that kept the project
    Answer

    D. the State that kept the project

    Project-linked loans move with the project.

  17. Public debt of the old State was apportioned mainly on the basis of

    1. number of employees
    2. population ratio
    3. distance from Hyderabad
    4. share of area
    Answer

    B. population ratio

    Debt was shared in the population ratio with adjustments for project loans.

  18. Why were many assets located in Telangana after division?

    1. The Governor chose them
    2. Telangana paid for them
    3. Most head offices and buildings were in Hyderabad
    4. Andhra Pradesh refused them
    Answer

    C. Most head offices and buildings were in Hyderabad

    Immovable property goes by location and Hyderabad held most head offices.

  19. The recommendations of the Sheela Bhide Committee were

    1. binding on both States
    2. not binding orders; final decisions lay with the Governments and the Centre
    3. binding on Andhra Pradesh only
    4. passed by Parliament as law
    Answer

    B. not binding orders; final decisions lay with the Governments and the Centre

    The committee gave recommendations, not orders.

  20. A power company with plants in one State and its office in another is an example of

    1. an institution of Schedule X
    2. a Central Government body
    3. a local cadre
    4. a mixed-asset company that needed careful division
    Answer

    D. a mixed-asset company that needed careful division

    Such companies had assets and debts across both States, making division hard.

  21. Which body acts as the main coordinating body of the Centre for reorganisation matters?

    1. Ministry of Home Affairs
    2. Ministry of Law
    3. Ministry of Finance
    4. NITI Aayog
    Answer

    A. Ministry of Home Affairs

    The Union Home Ministry coordinates reorganisation work.

  22. Which committee dealt with the division of Schedule IX and X institutions?

    1. The Srikrishna Committee
    2. The Sheela Bhide Committee
    3. The Bachawat Tribunal
    4. The Sivaramakrishnan Committee
    Answer

    B. The Sheela Bhide Committee

    Srikrishna studied the Telangana demand and Sivaramakrishnan studied the capital; Sheela Bhide dealt with institutions.

  23. Which authority decides the final allotment of employees between the two States?

    1. The Union Government
    2. The Speaker
    3. The Chief Election Commissioner
    4. The Chief Justice
    Answer

    A. The Union Government

    The Act empowers the Union Government to allot employees.

  24. The Governor's special responsibility in Hyderabad during the transition relates to

    1. collection of taxes
    2. allocation of river water
    3. safety and security of all residents
    4. division of employees
    Answer

    C. safety and security of all residents

    The Governor has special responsibility for the life, liberty and property of all residents of the common capital.

  25. A body used by both States for a limited time after the appointed day is best described as

    1. a cadre zone
    2. a Schedule XIII body
    3. a residuary State
    4. a common institution during transition
    Answer

    D. a common institution during transition

    Some bodies served both States for a transition period.

  26. The Presidential Order of 1975 is most closely related to

    1. the formation of Schedule IX
    2. local cadres and zones in employment
    3. Finance Commission grants
    4. division of rivers
    Answer

    B. local cadres and zones in employment

    It set up the zonal system used to decide local cadres.

  27. Which pair is correctly matched?

    1. Schedule IX - companies and corporations
    2. Schedule IX - training academies
    3. Schedule X - companies and corporations
    4. Schedule X - river boards
    Answer

    A. Schedule IX - companies and corporations

    Schedule IX lists companies; Schedule X lists institutions.

  28. An employee is allotted to a State mainly by considering

    1. party membership
    2. height and age
    3. local cadre, option and nativity
    4. caste and religion
    Answer

    C. local cadre, option and nativity

    These three factors drove the allotment process.

  29. A major reason for disputes over Schedule X institutions was that

    1. they were all closed down
    2. they were abolished by the Act
    3. they were Central bodies
    4. they served the whole old State from one campus and budget
    Answer

    D. they served the whole old State from one campus and budget

    Bodies with one campus and budget serving both regions are hard to split.

  30. Why did Andhra Pradesh seek adjustments when assets were divided by location?

    1. The Act banned adjustments
    2. It did not want any assets
    3. Hyderabad's assets were built with funds from all regions
    4. The Governor demanded it
    Answer

    C. Hyderabad's assets were built with funds from all regions

    The residuary State argued that assets in Hyderabad belonged to the whole old State.

  31. Pension liabilities of retired staff were shared

    1. by the Governor's discretion
    2. fully by Andhra Pradesh
    3. fully by Telangana
    4. by rules laid down in the Act, following the staff allotted
    Answer

    D. by rules laid down in the Act, following the staff allotted

    The final burden depended on staff allotment and the rules of the Act.

  32. Which of the following was NOT a basis in the Act for dividing property?

    1. Population ratio
    2. Caste of the officer who held it
    3. Project linkage
    4. Location of the property
    Answer

    B. Caste of the officer who held it

    Location, population ratio and project linkage are used; caste is not.

  33. Property outside the old State was usually shared

    1. in the population ratio
    2. by lottery
    3. equally 50:50 always
    4. only by Telangana
    Answer

    A. in the population ratio

    Property outside the State is normally shared in the population ratio.

  34. Statements: 1. Immovable property was allotted by location. 2. Movable property and cash were allotted by location only, ignoring population.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    Movable property and cash were largely shared in the population ratio, so statement 2 is wrong.

  35. Statements: 1. Schedule IX covers companies and corporations. 2. Schedule X covers institutions.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both statements are correct as per the Act.

  36. Statements: 1. The Union Government allotted employees. 2. The Sheela Bhide Committee issued binding orders.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    The committee made recommendations, not binding orders.

  37. Statements: 1. The appointed day was 2 June 2014. 2. The ratio used was from the 2001 Census.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    The ratio came from the 2011 Census.

  38. Statements: 1. Local cadre employees remained with the State where their cadre fell. 2. The Presidential Order of 1975 is linked to local cadres.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are correct.

  39. Statements: 1. Nativity means the pay scale of an employee. 2. The CAG has a role in certifying division accounts.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    B. 2 only

    Nativity is the home-State test, not pay scale.

  40. Statements: 1. Project-linked loans move with the project. 2. All debt was taken by Telangana.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    Debt was shared mainly by population ratio with project adjustments.

  41. Statements: 1. Employees' preferences were asked for. 2. Option and nativity are the same thing.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    Option is the employee's preference; nativity is a test of origin.

  42. Statements: 1. All Schedule IX and X matters were settled on the appointed day. 2. Some matters were still reported pending later.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    B. 2 only

    The Act gave principles; many details remained to be settled by the Governments and the Centre.

  43. Statements: 1. The Governor has special responsibility for security in the common capital. 2. The common capital arrangement was for not more than ten years.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are provisions of the Act.

  44. Statements: 1. All disputes were settled by the Finance Commission. 2. Disputes over division were sent to the Union Home Ministry or courts.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    B. 2 only

    The Finance Commission does not settle institutional disputes.

  45. Statements: 1. Telangana is the 29th State. 2. Andhra Pradesh is the residuary State.

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are correct.

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