Special Category Status and States

Special Category Status and States

Three capitals for Andhra Pradesh — its logic and the questions it raises

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Various committees mentioned in the newscard

Mains level : Three capitals concept

 

The Andhra Pradesh Assembly passed The Andhra Pradesh Decentralisation and Equal Development of All Regions Bill, 2020, paving the way for three capitals for the state.

Three capitals concept in Andhra Pradesh

  • Three cities serve as capitals of the country– Pretoria (executive), Cape Town (legislative), and Bloemfontein (judicial).
  • This arrangement was a result of the Second Boer War (1899-1902) in which Britain annexed the two Afrikaner speaking states -– the Orange Free State and the South African Republic (also called Transvaal Republic).
  • Cape of Good Hope then remained in the British Empire, becoming self-governing in 1872, and uniting with three other colonies to form the Union of South Africa in 1910.

What are the other examples of multiple capital cities?

  • Several countries in the world have implemented the concept.
  • In Sri Lanka, Sri Jayawardenepura Kotte is the official capital and seat of national legislature, while Colombo is the de facto seat of national executive and judicial bodies.
  • Malaysia has its official and royal capital and seat of national legislature at Kuala Lumpur, and Putrajaya is the administrative centre and seat of national judiciary.
  • Among Indian states, Maharashtra has two capitals– Mumbai and Nagpur (which holds the winter session of the state assembly).
  • Himachal Pradesh has capitals at Shimla and Dharamshala (winter).
  • The former state of Jammu & Kashmir had Srinagar and Jammu (winter) as capitals.

Reasons behind such considerations

  • According to the government, decentralisation was the central theme in recommendations of all major committees that were set up to suggest a suitable location for the capital of Andhra Pradesh.
  • It had been agreed in the November 16, 1937 Sri Bagh Pact (between leaders of coastal Andhra and Rayalaseema) that two university centres should be established in Waltair (Visakhapatnam) and Anantapur in Rayalaseema, and that the High Court and Metropolis should be in the coastal districts and Rayalaseema respectively.
  • In December 2010, the Justice B N Srikrishna Committee, set up to look into the demand for a Telangana state, said Rayalaseema and North Coastal Andhra were economically the most backward, and the “concentration of development efforts in Hyderabad is the key reason for demand of separate states”.
  • In August 2014, the K Sivaramakrishnan Committee appointed to identify locations for the new capital of AP said the state should see decentralised development, and that one mega capital city was not desirable.

Major practical problems

  • The government argues that the Assembly meets only after gaps of several months, and government Ministers, officers, and staff can simply go to Amaravati when required.
  • However, coordinating between seats of legislature and executive in separate cities will be easier said than done, and with the government offering no specifics of a plan, officers and common people alike fear a logistics nightmare.
  • The distances in Andhra Pradesh are not inconsiderable. Executive capital Visakhapatnam is 700 km from judicial capital Kurnool, and 400 km from legislative capital Amaravati.
  • The Amaravati-Kurnool distance is 370 km. The time and costs of travel will be significant.
  • The AP Police are headquartered in Mangalagiri, 14 km from Vijayawada, and senior IPS officers who may be required to visit the Secretariat will have to travel 400 km to Visakhapatnam.
  • Likewise, government officers who may have to appear in the High Court will have to travel 700 km to Kurnool, which does not have an airport.
  • All officers and Ministerial staff who may have to be at hand to brief Ministers when the Assembly is in session, will probably have to stay put in Amaravati, leaving behind their other responsibilities in Visakhapatnam.

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

Explained: Special Provisions for Other States

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Special provisions in the constitution

Mains level : Nothing much

News
 The union government has revoked the ‘special status’ granted to Jammu and Kashmir by the Constitution.
 However, a range of “special provisions” for as many as 11 other states continue to be part of the Constitution.

Part XXI of the Constitution
 The part ‘Temporary, Transitional and Special Provisions’, includes, apart from Article 370 (Temporary Provisions with respect to the State of Jammu and Kashmir) Articles 371, 371A, 371B, 371C, 371D, 371E, 371F, 371G, 371H, and 371J.
 These define special provisions with regard to other states of the Indian Union.

Special Provisions but not special treatment
 All these provisions take into account the special circumstances of individual states, and lay down a wide range of specific safeguards that are deemed important for these states.
 In these range of Articles from 371 to 371J, Article 371I, which deals with Goa, stands out in the sense that it does not include any provision that can be deemed “special”.
 Article 371E, which deals with Andhra Pradesh and Telangana, too, is not that “special”.
 The special provisions laid down in Article 370 before it was modified were obviously much more farreaching than the special provisions for other states, described in Articles 371, 371A-H, and 371J.
The following special provisions are guaranteed by the Constitution to states
other than Jammu and Kashmir:
Maharashtra and Gujarat (Article 371)
The Governor has a “special responsibility”-
 To establish “separate development boards” for “Vidarbha, Marathwada, and the rest of Maharashtra”, and Saurashtra and Kutch in Gujarat;
 To ensure “equitable allocation of funds for developmental expenditure over the said areas”, and “equitable arrangement providing adequate facilities for technical education and vocational training, and adequate opportunities for employment” under the state government.

Nagaland (Article 371A, 13th Amendment Act, 1962)
 Parliament cannot legislate in matters of Naga religion or social practices, the Naga customary law and procedure, administration of civil and criminal justice involving decisions according to Naga customary law.
 Parliament also cannot intervene in ownership and transfer of land and its resources, without the concurrence of the Legislative Assembly of the state.

 This provision was inserted in the Constitution after a 16-point agreement between the Centre and the Naga People’s Convention in 1960, which led to the creation of Nagaland in 1963.
 Also, there is a provision for a 35-member Regional Council for Tuensang district, which elects the Tuensang members in the Assembly.
 A member from the Tuensang district is Minister for Tuensang Affairs. The Governor has the final say on all Tuensang-related matters.
Assam (Article 371B, 22nd Amendment Act, 1969)
 The President of India may provide for the constitution and functions of a committee of the state Assembly consisting of members elected from the tribal areas of the state.
Manipur (Article 371C, 27th Amendment Act, 1971)
 The President of India may provide for the constitution and functions of a committee of elected members from the Hill areas of the state in the Assembly, and entrust “special responsibility” to the Governor to ensure its proper functioning.
 The Governor has to file a report every year on this subject to the President.
Andhra Pradesh and Telangana (Article 371D, 32nd Amendment Act, 1973; substituted by the Andhra Pradesh Reorganization Act, 2014)
 The President must ensure “equitable opportunities and facilities” in “public employment and education to people from different parts of the state”.
 He may require the state government to organise “any class or classes of posts in a civil service of, or any class or classes of civil posts under, the State into different local cadres for different parts of the State”, and allot them.
 The President has similar powers vis-à-vis admissions in any university or state government-run educational institution.
 Also, he may provide for setting up of an administrative tribunal outside the jurisdiction of the High Court to deal with issues of appointment, allotment or promotion in state civil services.
 Article 371E allows for the establishment of a university in Andhra Pradesh by a law of Parliament. But this is not really a ‘special provision’ in the sense of the other provisions in this part of the Constitution.
Sikkim (Article 371F, 36th Amendment Act, 1975)
 The members of the Legislative Assembly of Sikkim shall elect the representative of Sikkim in the House of the People.
 To protect the rights and interests of various sections of the population of Sikkim, Parliament may provide for the number of seats in the Assembly, which may be filled only by candidates from those sections.
 The Governor shall have “special responsibility for peace and for an equitable arrangement for ensuring the social and economic advancement of different sections of the population”.
 All earlier laws in territories that formed Sikkim shall continue, and any adaptation or modification shall not be questioned in any court.
Mizoram (Article 371G, 53rd Amendment Act, 1986)
 This provision lays down that Parliament cannot make laws on “religious or social practices of the Mizos, Mizo customary law and procedure, administration of civil and criminal justice involving decisions according to Mizo customary law, ownership and transfer of land… unless the Legislative
Assembly… by a resolution so decides”.
Arunachal Pradesh (Article 371H, 55th Amendment Act, 1986)
 The Governor has a special responsibility with regard to law and order, and he shall, after consulting the Council of Ministers, exercise his individual judgment as to the action to be taken.
 Should a question arise over whether a particular matter is one in which the Governor is “required to act in the exercise of his individual judgment, the decision of the Governor in his discretion shall be final”, and “shall not be called in question”
Karnataka (Article 371J, 98th Amendment Act, 2012)
 There is a provision for the establishment of a separate development board for the Hyderabad-Karnataka region, the working of which will be reported annually to the Assembly.
 There shall be “equitable allocation of funds for developmental expenditure over the said region”, and “equitable opportunities and facilities” for people of this region in government jobs and education.
 An order can be made to provide for reservation “of a proportion” of seats and jobs in educational and vocational training institutions and state government organisations respectively in the Hyderabad-
Karnataka region for individuals who belong to that region by birth or domicile.

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

[op-ed snap] India should begin discussing the delimitation question

Note4students

Mains Paper 2: Polity | Functions & responsibilities of the Union & the States, issues & challenges pertaining to the federal structure

From UPSC perspective, the following things are important:

Prelims level: 15th Finance commission, Delimitation commission

Mains level: Debate related to 15th Finance commission’s methodology & North-South divide


Context

Strident tones against 15th Finance commission

  1. There is fear that the 15th Finance Commission might use the 2011 Census to determine the share of each state in the nation’s resources
  2. In doing so, the richer and less populous states in South India may end up contributing more than they receive

Why is redistribution necessary?

  1. Richer regions contribute to the well-being of poorer regions, and redistribution happens in all modern democracies
  2. All states are part of a national project of balanced economic development

Why is there an opposition to redistribution?

  1. Indian states exhibit a continuing divergence in economic development
  2. There is a trend contrary to the global trend among rich and poor countries
  3. The divisible resources are going increasingly to the poorer states
  4. These also happen to have much higher fertility rates, hence their population share is rising

Fears related to 15th FC redistribution

  1. Finance commissions are a constitutional mechanism to ensure some degree of logic and transparency in the allocation rule
  2. Over the years, their main criteria have been population and backwardness
  3. Fifteenth finance commission will be considering 2011 census instead of 1971 census used by previous finance commissions and this might lead to more finances being allocated to populous north Indian states

The question of delimitation

  1. India’s Constitution puts an upper limit of 550 elected members in the lower house of Parliament
  2. Until the early 1970s, it was the general practice to redraw constituencies based on the most recent population available, but the total number of members was constant
  3. The idea of redrawing was to have each member of Parliament (MP) represent roughly an equal number of voters, hence the redrawing of constituencies
  4. Parliament passed an amendment during the Emergency years in 1976, freezing all delimitation as per the 1971 census, up to the census of 2001
  5. In 2000, another amendment postponed the day of reckoning to 2026
  6. Thus, only after 2026 will we consider changing the number of seats in Parliament

Population Surge & its effect on Parliament seats

  1. In 1971, India’s population was 548 million, and by 2031, the first census after 2026, it may well be close to 1.4 billion
  2. Redrawing boundaries and distributing the existing 550 MPs might mean that the south will lose a lot of seats to the north
  3. Even if more members are added to the Lok Sabha, that incremental gain will mostly go to the northern states

Resolving 15th FC’s dilemma

  1. The weightage given to population can be reduced to 10% or even 5%
  2. The focus could be on other parameters like per capita income and intrastate inequality
  3. Newer aspects like direct devolution to the lowest tiers of government, or giving credit for an increase in forest cover and improvement in health indicators can be adopted

Way forward

  1. We may desire “equality” of constituencies, but economic development and demographic patterns do not develop uniformly across the country
  2. Just as the nation took more than 12 years to come to a consensus on “one nation one tax” (i.e. the roll-out of the goods and services tax), a national consensus exercise should be started to sort out issues much before 2026

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

[op-ed snap] Re-imagining federalism to fulfil India’s potential

Note4students

Mains Paper 2: Polity | Functions & responsibilities of the Union & the States, issues & challenges pertaining to the federal structure

From UPSC perspective, the following things are important:

Prelims level: Seventh Schedule, Finance Commission, Election Commission, Supreme Court, Article 356, Planning Commission, S.R. Bommai case, Article 311, Part IX of the Constitution

Mains level: Issues related to federal structure


Context

Union-state relationship in recent years

  1. The Union-state relationship has become one of the core issues ahead of the next general election
  2. This climate gives us an opportunity to examine our federalism beyond partisan politics.
  3. We are approaching the third phase of federalism since the founding of our republic

First phase of federalism

  1. The traumatic events surrounding the partition of India and fears of balkanization made our founding fathers opt for a highly centralized Union
  2. States were given a well-defined legislative and executive jurisdiction in the Seventh Schedule of the Constitution
  3. Institutions like the Finance Commission, Election Commission, and Supreme Court were created to ensure some degree of fairness in dealing with the states
  4. But, Article 356, the all-India services, Planning Commission, the introduction of licence-permit-quota-raj—all these eroded the states’ powers significantly

Second phase of federalism

  1. The S.R. Bommai case verdict (1994) made abuse of Article 356 largely a thing of the past
  2. Successive Finance Commission reports on resource transfer, end of license raj, the decline of discretionary public sector investments, the rise of regional parties and abolition of Planning Commission—helped create a more balanced federal India
  3. Indian federalism has matured quite a bit, and the states have far greater control of their economic and political management than in the earlier phase

Structural problems persist

  1. A rigid, uniform political model imposed on all states and local governments disregarding local needs
  2. A dysfunctional bureaucracy protected by Article 311
  3. The generalist, all-purpose all-India services that do not bring specialized skills required to manage various services
  4. Poorly drafted Part IX of the Constitution that created over-structured, under-powered local governments
  5. Needless rigidity in Union legislation on subjects like education with resultant failure to improve outcomes despite vast expenditure

What has this led India to?

  1. Out of the 49 relatively large nations with gross domestic product (GDP) exceeding $200 billion, India ranks at near bottom on most indicators of basic amenities, infrastructure, education

Global structure of federalism

  1. In no other democracy does the federal constitution impose a uniform structure, electoral system, and bureaucratic apparatus on states and local governments
  2. Even in small unitary Britain, Scotland, Wales, Northern Ireland and London city have their own electoral systems different from the Westminster model
  3. In the US, each of the 50 states have their own constitutions and structure of government
  4. In Australia too, each of the six states and two self-governing territories have their own constitutions
  5. In Germany, every Land (State) has its own constitution with the power and flexibility to design its own governance structure
  6. In Canada, the 10 provinces have the right to decide on the electoral system, form of government and local governance structure

Need for third phase of federalism

  1. The time has come for India to move to the third phase of federalism
  2. Many of our states are larger than 90% of nations on earth
  3. We need to allow each state to have its own model of governance, bureaucracy and local governments
  4. This has to be done with firm safeguards to preserve national unity, separation of powers, fundamental rights and democratic accountability

Way forward

  1. We need more flexible federalism, strengthening India’s unity and integrity, and allowing us to fulfill our potential

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

Special status category no longer exists, says Arun Jaitley

Note4students

Mains Paper 2: Polity | Functions & responsibilities of the Union & the States, issues & challenges pertaining to the federal structure

From UPSC perspective, the following things are important:

Prelims level: 14th Finance Commission, Special category status, Centrally sponsored scheme

Mains level: Debate over special category status to certain states


No special category status to Andhra Pradesh

  1. Citing the 14th Finance Commission, the Finance Minister said the category of “special status” no longer exists
  2. Therefore, Andhra Pradesh can no longer be put in that category

Special category status

  1. The special status used to be originally granted to States in the northeast because their own revenue was inadequate
  2. In the case of any Centrally sponsored programme or scheme, the Centre pays 60% of the amount and the State pays 40%
  3. The States enjoying ‘special status’ only have to pay 10% of this contribution

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

Centre considers IAP-like initiative in backward districts

Note4students

Mains Paper 2: Governance | Government policies & interventions for development in various sectors & issues arising out of their design & implementation

From UPSC perspective, the following things are important:

Prelims level: Integrated Action Plan (IAP)

Mains level: Backward area development


Transforming backward districts

  1. The Centre is mulling an initiative similar to the Integrated Action Plan (IAP) for the transformation of 115 districts from “backward” to “aspirational”
  2. IAP is being used in Left Wing Extremist (LWE) districts

Why this program?

  1. The Union government has embarked on a policy initiative for rapid transformation of 115 districts lagging in development parameters like nutrition, education, basic infrastructure, agriculture, water resources, financial inclusion and skill development
  2. Thirty-five worst-affected LWE districts are among these districts
  3. For each of these 115 districts, a senior-level official of the rank of additional secretary or joint secretary has been nominated Prabhari Officer

About IAP

  1. IAP was launched in 2010 for LWE districts
  2. Under this, additional central assistance with the focus on the creation of public infrastructure and services is granted to districts

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

Karnataka panel proposes 3-colour official state flag

Image source

Note4students

Mains Paper 1: Social issues | Regionalism

From UPSC perspective, the following things are important:

Prelims level: Provisions related to state flag

Mains level: Regionalism being promoted in various forms across India


State flag for Karnataka

  1. A committee constituted last June by the Karnataka government to examine the feasibility of having a separate flag for the state has submitted its report
  2. It has recommended an official three-coloured flag to replace an unofficial two-coloured one currently used to signify local pride
  3. The committee has recommended a flag with the yellow and red of the unofficial flag to be separated by white in the middle with the state symbol on it

Clearance of MHA required

  1. The proposal needs to be forwarded to the Union Ministry of Home Affairs (MHA) for clearance
  2. If adopted with clearance from the MHA, Karnataka will be the second state after Jammu and Kashmir to have an official state flag
  3. Karnataka has had an unofficial state flag since the mid-1960s, used to signify local pride

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

NITI Aayog ruled out special status to Andhra Pradesh: Venkaiah

  1. Union Information and Broadcasting Minister: The Centre was almost prepared to grant the Special Category Status (SCS) to Andhra Pradesh
  2. However, two factors dissuaded it from going ahead:
  • Clamour from nine more States for the same tag had AP been given the status
  • NITI Aayog ruling out the possibility citing the 14th Finance Commission report that had made it clear that it would not make any distinction between special and general category States

Discuss: Given that economic benefits under the Special Category status are minimal and have been diluted over the years, States would be better off seeking a special package. Analyse

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

[Discuss] Hollow promise of ‘special status’

  1. Demand for Special Category Status is being used to pursue political goals instead of furthering the development goals. Discuss.
  2. The discussion will be summarised and updated the next day.

Demand for Special Category Status is being used to pursue political goals instead of furthering the development goals. Discuss. 

Hindu Op-ed


More Open Questions – 

  1. Whether the 10 states like JK, HP, UK and Seven Sister states special or special category?
  2. Whether it is decided by Gadgil formula or Gadgil-Mukherjee formula?
  3. What exactly are the advantages of special status?
  4. Nitish Kumar is vying for special category status, right? 5. What will be the perks now as the central allocation reduces amount for special (or Special category) states?

 

The discussion will be summarised and updated the next day.

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

Nothing special about Special Category States any longer


 

Bihar Chief Minister Nitish Kumar has been demanding Special Category Status (SCS) for his state for at least three years now.

But with the recommendations of the Fourteenth Finance Commission having been accepted, the SCS has been reduced, at best, to a political rallying point — not just for Bihar, but also for Odisha and Jharkhand.

 

Why? The NITI Aayog, which has replaced the Planning Commission, has no power to allocate funds.

In Budget 2015-16, states received a significantly higher share of central taxes — 42 per cent, or 10 percentage points more than before.

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

Special Status vs. Special Category Status – What’s the difference?

  1. Special Status is guaranteed by the Constitution of India through an Act passed by the two-third majority in both houses of the Parliament (example – J&K).
  2. Special Category Status is granted by the National Development Council, an administrative body of the government.
  3. While Special Status empowers legislative and political rights, Special Category Status deals only with economic, administrative and financial aspects.
  1. Special Status is guaranteed by the Constitution of India through an Act passed by the two-third majority in both houses of the Parliament (example – J&K)
  2. Special Category Status is granted by the National Development Council, an administrative body of the government.

 

While Special Status empowers legislative and political rights, Special Category Status deals only with economic, administrative and financial aspects.

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

Centre ruled out Special Category Status (SCS) for Bihar

  1. Reason given is that the 14th Fin Commission had not made any difference between general states and SCS for the horizontal distribution among them.
  2. However, special assistance on lines of what was provided to Andhra Pradesh post bifurcation has already been allotted to Bihar and West Bengal in this year’s budget.

Why?

  1. Reason given is that the 14th Fin Commission had not made any difference between general states and SCS for the horizontal distribution among them.
  2. However, special assistance on lines of what was provided to Andhra Pradesh post bifurcation has already been allotted to Bihar and West Bengal in this year’s budget.

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

Ordinance route not possible for granting special category to AP

  1. Special category status is usually based on the recommendations of the National Development Council (NDC).
  2. What are the parameters?
  3. Low resource base, hilly & difficult terrain
  4. Low population density or sizeable share of tribal population
  5. Backwardness, border states/ sharing the international border
  6. Economic & infrastructural backwardness
  7. Non-viable nature of state finances

Special category status is usually based on the recommendations of the National Development Council (NDC).

What are the parameters?

  1. Low resource base, hilly & difficult terrain
  2. Low population density or sizeable share of tribal population
  3. Backwardness, border states/ sharing the international border
  4. Economic & infrastructural backwardness
  5. Non-viable nature of state finances

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

Special Category Status and States

‘Special Category Status’ is the new catch phrase

  1. Till a few days ago, words such as ‘Samaikyandhra’ and ‘integrationist’ were the buzzwords in Andhra Pradesh politics.
  2. But, now ‘Special Category Status’ appears to be the catch phrase.

Is this the new carrot that is being dangled by the Congress for the people of both the regions? Former Rajya Sabha Member Yelamanchili Sivaji feels so.

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

  • What is ‘Special Category’ status?
    What benefits do states having ‘Special Category’ status enjoy?
  • Who accords the category status to state and how?
  • Which states held Special category status?
  • Lacunas in the working of Special Category status
  • Why the status has been removed?
  • Way ahead now

What is ‘Special Category’ status?

  • ‘Special category’ status is a classification given by Centre to assist in development of those states that face geographical & socio-economic disadvantages like hilly terrains, strategic international borders, economic & infrastructural backwardness and non-viable state finances.
  • The classification came into existence in 1969 as per the suggestion given by the Fifth Finance Commission, set up to devise a formula for sharing the funds of Central govt. among all states.

What benefits do states having ‘Special Category’ status enjoy?

  • Significant concession in excise & customs duties, income tax and corporate tax
  • 30 percent of planned expenditure (central budget) goes to ‘special category’ states
  • Special Category states are benefited because of Normal Central Assistance which was skewed in favour of these states. These states get more funds in terms of NCA and most part of these funds was in the form of grants rather than loans.
  • Special Central Assistance given to SCS is also an additional amount which can be used by the concerned state for economic development.
  • Centre bears 90% of the state expenditure (given as grant) on all centrally-sponsored schemes and external aid while rest 10% is given as loan to state. For general category, the respective grant to loan ratio is 30:70 where as external aid is passed on in the same ratio as received at the centre.
  • Unspent money does not lapse and gets carry forward.

Hence, special-category status catalyses the inflow of private investments and generates employment and additional revenue to state. Since centre bears 90% of state expenditure on all centrally-sponsored schemes, state can take more welfare-based schemes from the new savings.

Further, more grants from centre helps in building state infrastructure and social sector projects. As a result, special-category state gets to bridge its development deficit.

Who accords the category status to state and how?

Special Category’ status had been granted in the past by the Union government to States having certain characteristics based on the recommendations of the National Development Council.

These include

i) hilly terrain;

ii) low population density and/or sizeable share of tribal population;

iii) strategic location along borders with neighbouring countries;

iv) economic and infrastructure backwardness; and

v) non-viable nature of State finances.

Special Category States

source

Which states held Special category status?

11 states used to have ‘special category’ status, namely, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Jammu & Kashmir, Himachal Pradesh, and Uttarakhand.

Lacunas in the working of Special Category status

  • Firstly, the way Special Category Status were assigned to a state has been a matter of debate. Various committees used different parameters to classify a state in Special Category status.
  • Some states lobby central government to classify them in special category. This was to be corrected and the consent of majority of state must be taken before granting a special category status to any state.
  • Moreover there should have been a general consensus among states related to principle used for granting the SCS.
  • Secondly, data reveals that even after awarding Special category status not much economic progress has been noticed among states. This may mean that for economic development it’s important to follow sound economic policy. Benefit of SCS may act as a stimulus but rest depends on the individual state policy.
  • Third, the amount of proceeds that states receive has increased after 14th finance commission. So the structure does not seem to have any specific relevance in present context.

Why has the status been removed now?

The Finance Ministry’s reasoning for withdrawing the status is that the higher 42% devolution takes into account all needs of states.

Way ahead?

Following the demand for Special Status by Bihar, a committee was appointed under Dr. Raghuram Rajan in 2013. This committee suggested that States classified as ‘Special Category States’ and those seeking inclusion in that category, would find that their need for funds and special attention more than adequately met by a basic allocation to each State and the categorisation of some as ‘least developed’.

Considering special status to any new State will result in demands from other States and dilute the benefits further. It is also not economically beneficial for States to seek special status as the benefits under the current dispensation are minimal. States facing special problems will be better off seeking a special package.


References:

By Amit Bhardwaj

Engineer by training | Educationist at heart | Indulgences? Reading, Quizzing and Teaching.

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