Special Category Status is a classification that allows states to get significant levelof resources necessary for development.This includes a change in the way funds are allocated to the states for planneddevelopment.Under Special Category Status, a state will typically receive 90% of funds as grants and10% as loans in the Centrally Sponsored Schemes (CSS). In contrast, other statestypically receive 30% funds as loans and 70% as grants. There could be variationsbased on the scheme.
Of the 28 states in India, 11 states have been accorded Special Category StatusArunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim TripuraJammu & Kashmir Himachal Pradesh Uttarakhand BIHAR IS DEMANDING SPECIAL CATEGORY STATUS TO EMERGE OUT OF POVERTY AND INFRASTRUCTURAL BACKWARDNESS
Criteria for Special Category StatusMinistry of Commerce & Industry Planning Commission 1. Hilly & difficult terrain1. Geographical isolation 2. Low population density2. Inaccessible terrain 3. Strategic location along the borders with3. Poor resource base neighboring countries4. Remoteness to larger market 4. Economic and infrastructural5. Poor infrastructure backwardness 5. Non-viable nature of state finance Conceptually, a state under special category has a low resource base that makes indigenous development improbable. Also, such a state is strategically located mandating a sustained level of development. Special Category Status is accorded by National Development Council.
Demand of Special Category Status for Bihar has two components1. Changing the formula of cost sharing in Centrally Sponsored Schemes (CSS) such that share of the state is limited to 10% instead of 70% (as in most schemes).This will enable higher resource availability and greater borrowing power.1. Fiscal policy for equalizing differences in manufacturing and industrial sector and incentivizing private investment in the state. • Direct Tax Code for waiver of Income and Corporate taxes • In proposed GST, a provision for refund of Excise collected to new units set up in Bihar or the benefit of accelerated depreciation.This will help in rapidly industrializing the state. Bihar not only matches the criteria for Special Category Status but also demands a REVIEW of the criteria to incorporate the condition of economic and infrastructural backwardness