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 isno 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 14thFinance 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.
