Special Category Status

Context:  Recently , the Union Finance Minister announced that the Centre will not consider the demands for “special category status “ for any states

About Special Category Status :

• It is a classification given by the Centre to assist development of states that face geographical and socio-economic disadvantages.
• Under this, the Central government extends financial assistance to states that are at a comparative disadvantage against others.
• There is no provision of SCS in the Constitution of India.
• The concept emerged in 1969 with the approval of the Gadgil formula in the Fifth Finance Commission in 1969. 

The parameters required for Special Category Status:

• Must be economically backward with poor infrastructure.
• The states must be located in hilly and challenging terrain.
• They should have low population density and significant tribal population.
• Should be strategically situated along the borders of neighboring countries.
• First SCS was accorded in 1969 to Jammu and Kashmir, Assam and Nagaland.
• The 14^th Finance Commission has done away with the ‘special category status’ for states, except for the North-eastern and three hill states.
• Presently, eleven states have the Special Category Status in the country including Assam, Nagaland, Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand, and Telangana.

Benefits to States with SCS:

• The Centre pays 90% of the funds required in a centrally-sponsored scheme to special category status states as against 60% or 75% in case of other states, while the remaining funds are provided by the state governments.
• Preferential treatment in getting central funds.
• 30 percent of the Centre’s gross budget also goes to special category states.
• Unspent money does not lapse and is carried forward.
• Significant concessions are provided to these states in excise and customs duties, income tax and corporate tax.
• These states can avail the benefit of debt-swapping and debt relief schemes.

SOURCE: THE TIMES OF INDIA

Previous Year Questions

Q.1)  With reference to India’s Five-Year Plans, which of the following statements is/are correct? (2019)

1. From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital good industries.
2. The Fourth Five-Year Plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power.
3. In the Fifth Five-Year Plan, for the first time, the financial sector was included as an integral part of the Plan.

Select the correct answer using the code given below.

1. 1 and 2 only
2. 2 only
3. 3 only
4. 1, 2 and 3

Q.2) The main objective of the 12th Five-Year Plan is (2014)

1. inclusive growth and poverty reductions
2. inclusive and sustainable growth
3. sustainable and inclusive growth to reduce unemployment
4. faster, sustainable and more inclusive growth.