Special Category State

Special Category State

Bihar government has again asked the Central Govt. to consider its demand for special category status, given that Bihar is economically lagging.

Special Category Status:

  • It is given by the central govt. to those states that are socio-economically backward and face developmental disadvantages due to hilly or difficult terrain.
  • In the past, status was given to J&K, Assam, and Nagaland.
  • Originally, the Constitution did not have any such provisions concerning special category status. It was in later periods that this classification was added.
  • At present only 11 states out of 28 states have special category status, which includes Assam, Nagaland, Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand, Telangana have been accorded special category status.

What are the parameters for granting special category status?

The basic formula for granting such a status is based on the recommendation of the Gadgil report. There are a few parameters that should be considered before conferring such a status:

  • Hilly terrain
  • Non-viable nature of state finance.
  • Economic and infrastructure backwardness.
  • Low population density.
  • Sizeable Share of tribal population.

Benefits of Special Category Status

  • 30% of the central government budget is given to these special category states.
  • Unspent money in a financial year does not lapse and is carried forward.
  • Concessions are provided to these states in excise and customs duties, income tax, and corporate tax.
  • Centre Govt. pays 90% of funds in centrally sponsored schemes to special category states as against 60 to 75% in the case of other states, while the remaining funds are provided by the state government.

Recent Status

The Central Government has clarified in the past that it will not consider any new demand for “special category status”. The Central government took this stand based on the 14th Finance Commission report. It stated that no such status should be given to any state as it increases the burden on central finances and also creates such demand from other states.