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Bihar’s Resolution Demanding Special Category Status

Why is it in the news?

  • The Bihar cabinet has passed a resolution requesting the Union Government to grant Special Category Status (SCS) to the state. A formal request was made in 2017 as well.


Special Category Status (SCS)

  • SCS is a classification provided by the Union government to assist states facing geographical and socio-economic disadvantages.
  • It aims to safeguard the interests of backward regions, protect tribal and cultural interests, or address law and order issues.
  • SCS was introduced in 1969, named after Dr. Gadgil Mukherjee, and initially granted to Assam, Nagaland, and Jammu & Kashmir. Later, more states were added.
  • Criteria for Special Category Status: Includes hilly and difficult terrain, low population density or a substantial tribal population, strategic border locations, economic and infrastructural backwardness, and non-viable state finances.


Benefits of Special Category Status

  • Central government bears 90% of state expenditure on centrally-sponsored schemes.
  • Preferential treatment in obtaining central funds.
  • 30% of the Centre’s gross budget allocation goes to special category states.
  • Concessions on excise duty to attract industries.
  • Debt relief and tax exemptions to promote investment.
  • Unspent money in a financial year does not lapse but carries forward.


Difference Between Special Category Status and Special Status

  • Special status is granted through a parliamentary Act, requiring a 2/3rd majority in both houses, while SCS is granted by the National Development Council, an administrative body.
  • Special status empowers legislative and political rights, whereas SCS focuses on economic, administrative, and financial aspects.


Why Gadgil Formula Was Discontinued

·       The 14th Finance Commission recommended a shift in the approach to fund devolution to states, emphasizing a more holistic, formula-based approach treating all states uniformly.

·       The new approach aimed to empower states to make decisions based on their unique needs, providing flexibility in fund utilization and focusing on improving governance and efficiency.

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