Special Category Status

Special Category Status

News: Recently, the Bihar Cabinet has passed a resolution seeking the grant of Special Category Status (SCS) to Bihar.

What is a Special category status?
• A special category status in India means that a state is given certain benefits and privileges by the central government to help it overcome its geographical and socio-economic disadvantages.
• The special category status is not a constitutional provision, but a decision taken by the National Development Council, which is
a body of the central and state governments.
• Currently, 11 states in India have the special category status. They are: Arunachal Pradesh, Assam, Himachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand

What are the benefits?
• A higher share of central assistance and tax breaks to attract investment and promote development.
• A preferential treatment in getting central funds and schemes.
• A lower interest rate on loans and more grants than loans from the central government.
• A reservation in local government jobs and educational institutions for the residents of the state.

What are the criteria for granting Special Category Status?
• The state must be economically backward with poor infrastructure and low per capita income.
• The state must be located in hilly and challenging terrain with strategic border locations.
• The state must have a low population density and a significant tribal population.
• The state must face economic and infrastructural backwardness and non-viable state finances.

Why is Bihar demanding a Special category status?
• Bihar is demanding for special category status because it wants to get more financial and developmental assistance from the central government to overcome its socio-economic challenges.
• Bihar is one of the most backward and poor states in India, with a low per capita income, high poverty rate, and limited natural resources.
• Bihar faces frequent natural disasters such as floods and droughts, which affect its agriculture and infrastructure.
• Bihar lost a significant part of its industrial base and revenue after the bifurcation of Jharkhand in 2000.
• Bihar has a large population and a high dependency ratio, which puts pressure on its public services and social welfare schemes

What are the concerns related to Special category status?
• Granting SCS entails providing additional financial assistance to the state, which can strain the central government's resources.
• SCS states often rely heavily on central government for assistance discouraging efforts to meet their own needs through their independent strategies.
• Lack of utilization of funds due to administration inefficiencies.

Way Forward
• There is a need to revisit and refine the criteria for granting SCS to ensure fairness and transparency.
• States must create comprehensive development plans that focus on sustainable growth, job creation, infrastructure development, and human capital enhancement.