Bihar Cabinet demands special status for State

Bihar Cabinet demands special status for State



The Bihar Cabinet passed a resolution on Wednesday urging that the Centre immediately award the state special category status, days after Chief Minister Nitish Kumar threatened to organize an agitation if the demand was not met.

What is special category status?

  • Special Category Status (SCS) is a classification that the National Development Council (NDC) grants to states to help them develop. The NDC is an administrative body of the government. 
  • The SCS is granted to states that face geographical and socio-economic disadvantages.

What is the historical context of the Special Status Category?

  • Origins: The notion of SCS was first established in 1969 as part of the Fifth Finance Commission’s recommendations. SCS is not officially mentioned in the Constitution.
  • Initial Recipients: In 1969, Jammu and Kashmir, Assam, and Nagaland were the first states to be granted SCS.SCS for plan support was awarded by the National Development Council of the former Planning Commission.
  • Current Status: Except for the Northeast and three hill states, the 14th Finance Commission discontinued SCS for states. These states’ resource deficit is now being addressed through enhanced tax devolution (from 32% to 42%).

What are the parameters to be met to be eligible for Special category status?

  • Hilly Terrain
  • Low Population Density and/or Sizeable Share of Tribal Population
  • Strategic Location along Borders with Neighbouring Countries
  • Economic and Infrastructure Backwardness
  • The nonviable Nature of State finances

What was the resolution passed in the Bihar Cabinet?

  • The Bihar Cabinet passed a resolution seeking that the Central Government award the state special category status.
  • Nitish Kumar supported his demand by claiming that Bihar has approximately 94 lakh poor families.
  • He predicted that providing special status will generate approximately 2.50 lakh crore for the state over the next five years to fund different social measures.

What are the previous welfare measures passed by the Bihar cabinet?

  • According to the poll, the state government has earlier boosted the caste-based quota in jobs and education to 65% from 50%.
  • Various welfare initiatives have been introduced, including financial help for land purchase and housing for landless families.

What are the benefits of the special category status?

  • Financial Assistance: The Centre provides 90% of cash for centrally sponsored schemes to SCS states, whereas other states receive 60% or 75%.
  • Fiscal Concession: Fiscal concessions include exemptions from excise and customs tariffs, income taxes, and corporate taxes.
  • Budget Allocation: Special Category states receive 30% of the Centre’s Gross Budget.
  • Unspent funds: Unspent funds in a fiscal year are carried forward rather than lapse.

What are the concerns faced by the Special Category status?

  • Financial Burden: Special concessions and financial aid to states with SCS might place pressure on the central government’s resources. The additional expenditures required to address these states’ particular needs may have an impact on the country’s overall fiscal health.
  • Demand from Other States: Granting SCS to specific states frequently results in comparable demands from other states, which may argue that they, too, have similar obstacles or disadvantages. As a result, many states may want preferential treatment, potentially overloading the central government’s capacity to accommodate these demands.
  • Concerns about equity and fairness: Critics contend that the criteria used to evaluate SCS are not always transparent or objective. This could create issues about the justice and equity of special status allocation, leading to resentment among nations that do not qualify for such benefits.
  • Incentivizing underdevelopment: Some critics argue that providing special concessions and benefits through SCS may create a disincentive for governments to develop and improve their economic and social conditions on their own. States may grow reliant on central support instead of focusing on self-sufficiency.