Special Category Status and States

On Special Category Status for Andhra Pradesh


From UPSC perspective, the following things are important :

Prelims level: Benchmark for the granting of SCS

Mains level: Why is the demand for special status for Andhra Pradesh back in the political limelight?

Why in the News?

With the completion of the 2024 Lok Sabha elections, the demand for Special Category Status to Andhra Pradesh is again gaining attention.

Why is the demand for special status for Andhra Pradesh back in the political limelight?

  • Unfulfilled Promise: Despite assurances by the previous Prime Minister and BJP leaders, the Special Category Status (SCS) promised to Andhra Pradesh post bifurcation remained unfulfilled.
  • Economic Struggles: Andhra Pradesh faces revenue deficits and escalating debts post-bifurcation, hampering its development projects and infrastructure initiatives.
  • Dependency on Central Aid: With the need for funding for critical projects like Amaravati’s development and ongoing revenue deficits, Andhra Pradesh seeks central assistance for its economic stability and growth.

Five factors stood as the qualifying benchmark for the granting of SCS

  • States that comprise a majority tribal population, low density of population, hilly States and close to international borders, have socio-economic and industrial backwardness and lack adequate State finances.
  • At present, the States that have the SCS include Arunachal Pradesh, Assam, Himachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand.

Why did Chandrababu Naidu, back in 2018, settle for a special package?

  • Pressure from Opposition: Facing criticism and a strong opposition campaign over the unmet promise of SCS, Naidu, then allied with the NDA, agreed to a Special Package (SP) as an alternative.
  • Naidu’s decision to accept the SP was influenced by political considerations that included maintaining stability within the NDA alliance and counter-opposition attacks.

Is the State qualified to be granted Special Status?

  • Debatable Qualification: Andhra Pradesh’s eligibility for SCS is contested, with some arguing it doesn’t meet the criteria outlined for special status, including socio-economic and geographical disadvantages.
  • Previous Annulment: The 14th Finance Commission equated SCS with general category status and annulled it for new states, citing increased tax devolution and revenue deficit grants as alternatives.

What did the 14th Finance Commission state?

  • On Alternative Grants: Instead of SCS, the commission increased tax devolution to states and introduced revenue deficit grants to address fiscal disparities, providing Andhra Pradesh with financial assistance.
  • Scope for Review: While the 14th Finance Commission did not explicitly rule out SCS, it left the decision to the Union Government, suggesting a potential review by subsequent finance commissions and policy bodies.

Way forward:

  • Comprehensive Economic Reform: Implement structural reforms to boost economic growth, reduce fiscal deficits, and attract investments, ensuring sustainable development beyond dependency on special status or central aid.
  • Targeted Development Projects: Prioritize funding for infrastructure projects based on critical needs and potential economic returns, focusing on sectors like agriculture, manufacturing, and technology to drive growth and employment.

Mains PYQ:

Q The political and administrative reorganization of states and territories has been a continuous ongoing process since the mid-nineteenth century. Discuss with examples. (UPSC IAS/2022)

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