What is special category status (SCS):
It is a classification granted by the centre to assist the development of states that face geographical or socio-economic disadvantage.
The SCS was introduced in 1969 on the recommendation of fifth Finance Commission.
Factors that determine the necessity of granting special status, such as
1) Hilly and difficult terrain.
2) Low population density or sizeable population.
3) Strategic location
4) Economic backwardness
5) Non-viable nature of state Finance.
In 1969 three states such as J&K, Assam and Nagaland were granted the special status. After that nine more states were given the special status.
What are benefits attached:
- Special status is used to receive grants based on Gadgil Mukherjee formula which earmarked nearly 30% of total central assistance for the states to special category status.
- Concession in custom and excise duties, income tax rates. Corporate tax rates to attract investment.
Why Bihar is demanding the special category status:
- Poverty and backwardness of the state
- Lack of natural resources, water for irrigation.
- Regular floods in northern region and severe drought in southern part of the state.
- The bifurcation of the state led to the shifting of the industries to Jharkhand and created drain of employment and investment opportunities.
- With per capita GDP of Rs 54000 Bihar has consistently been one of the poorest states.
- State is home to around 94 lakh poor families.
Is Bihar’s demand justified?
Although Bihar meets most of the criteria for grant of special category status, it does not fulfil the requirement of hilly terrain and geographically difficult area which is considered to be primary reason for difficulty in infrastructural development.