It was only last month that Nitish Kumar’s demand was rejected by the central government. For the last several years, there was a demand for giving special state status to Bihar. From RJD to JDU and LJP, everyone raised their voice on this issue. In political circles, there was a heated discussion about the possible demand for a special status state from Telugu Desam Party, another constituent of NDA. In such a situation, what is SCS? How is this status given to a state? Let us know what benefits does this give to that state and its people.
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What is Special Category Status (SCS)?
This is a classification done by the central government to provide assistance to states facing geographical and socio-economic disadvantages. The Indian Constitution does not provide for this. This classification was done in 1969 on the recommendations of the 5th Finance Commission. Jammu and Kashmir, Assam and Nagaland were given this status for the first time in 1969. 11 states including Assam, Nagaland, Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand and Telangana have been given the status of special category states.
Recommendations of the 14th Finance Commission
The 14th Finance Commission has abolished the special category status for states except the northeastern and 3 hill states
It suggested bridging the resource gap of such states through tax transfers, from 32% to 42%. ‘SCS’ is different from Special Status. Special status provides more legislative and political powers, while SCS deals only with economic and financial aspects.
For example, before the abrogation of Article 370, Jammu and Kashmir had special status.
Parameters for SCS (Based on Gadgil Formula):
* Hilly terrain;
* Low population density or large proportion of tribal population;
* Strategic location on borders with neighbouring countries;
* Economic and infrastructural backwardness; and
* Unviable nature of state finances
What are the benefits of this status
The Centre pays 90% of the funds required to the special category states as compared to 60% or 75% in the case of other states in a centrally-sponsored scheme. While the remaining amount is provided by the state governments. The money left over in a financial year does not lapse and is carried forward. These states are provided concessions in excise and customs duties, income tax and corporate tax. 30% of the Centre’s gross budget goes to the special category states.
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These states got special status in 1969
Before this provision, Jammu and Kashmir got special status in this category. However, after the repeal of Article 370, it is now a union territory. After this, Assam and Nagaland of the Northeast were the first states to be given special status in 1969. Later, eleven states including Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand and Telangana were given the status of special category states.
