Special Category Status is a classification that provides states with significant funding for development from the central government. States with Special Category Status typically receive 90% of development funds as grants and 10% as loans, while other states usually receive 30% as loans and 70% as grants. Currently 11 states have been given Special Category Status based on criteria like geographical isolation, poor infrastructure, low resource base, and strategic border locations. Bihar is demanding Special Category Status to help address its poverty, lack of infrastructure and industrial backwardness through increased central funding and tax incentives to boost private investment.
2. Special Category Status is a classification that allows states to get significant
level of resources necessary for development.
This includes a change in the way funds are allocated to the states for planned
development.
Under Special Category Status, a state will typically receive 90% of funds as grants
and 10% as loans in the Centrally Sponsored Schemes (CSS). In contrast, other
states typically receive 30% funds as loans and 70% as grants. There could be
variations based on the scheme.
3. Of the 28 states in India, 11 states have been accorded Special Category Status
Arunachal Pradesh Assam Manipur Meghalaya
Mizoram Nagaland Sikkim Tripura
Jammu & Kashmir Himachal Pradesh Uttarakhand
BIHAR IS DEMANDING SPECIAL CATEGORY STATUS NECESSARY
TO EMERGE OUT OF POVERTY AND INFRASTRUCTURAL BACKWARDNESS
4. Ministry of Commerce & Industry Planning Commission
1. Geographical isolation
2. Inaccessible terrain
3. Poor resource base
4. Remoteness to larger market
5. Poor infrastructure
1. Hilly & difficult terrain
2. Low population density
3. Strategic location along the borders with
neighboring countries
4. Economic and infrastructural
backwardness
5. Non-viable nature of state finance
Criteria for Special Category Status
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.
5. Demand of Special Category Status for Bihar has two components
1. 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.
2. 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
