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.