States demanding special category status: What is it, and why do states demand it?

The next government of India is about to be formed by the NDA led by Prime Minister Narendra Modi. But this time the government will be different from the last election. In simple terms, it will be a coalition government this time. The BJP, which won the last election, actually failed to get an absolute majority this time. Amid all this, the JDU, TDP and more allies may demand a special category status. What exactly is this special category status? Let’s find out.

The BJP is holding several meetings in Delhi. The party is in discussions with alliance partners and state governments to form a National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi. At a time like this, there are multiple speculations that the allies might demand for ‘Special Category Status’. It is speculated that the allies, especially the Telugu Dhashtami Party (TDS) and the Janata Dal (JD(U)) might demand for ‘Special Category Status’.

Understanding Special Category Status

If a state is backward, then it is actually allotted a special category status to improve its growth prospects. If these areas suffer from any socio-economic or geographical disadvantages, then this status is given to improve the growth rate of these areas.

Does the Indian Constitution have such a provision?

No, there is no provision in the Constitution of India to grant special category status to a state. However, later on, on the basis of the recommendations of the Fifth Finance Commission in 1969, provisions for special category status were made.

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Which states in India have received special category status for the first time?

Many states were granted special category status in 1969. Jammu and Kashmir, Nagaland and Assam were the first states in the history of India to be granted special category status.

Later, 11 other states were also included in the special category, including Himachal Pradesh, Meghalaya, Manipur, Tripura, Sikkim, Uttarakhand, Mizoram, Telangana and Arunachal Pradesh.

Telangana also got the special category status tag after being separated from Andhra Pradesh.

It is noteworthy that the 14th Finance Commission has scrapped the special category status of states, except for the three hill states and the northeastern states. This was done to fill the resource gap in these states through tax devolution. This ratio has been increased from 32% to 42%.

What is the difference between special category countries and special status?

Of course, the label of special status confers more political and legislative rights. On the other hand, special category status only applies to financial and economic aspects.

Why do states ask for special category status? What are the benefits of doing so?

States have sought special category status because of the many benefits that the label can bring.

Firstly, if a state is granted ‘special category status’, it will get a total of 90% of funds from the central government to implement centrally sponsored schemes, while other states will get only 60-70%.

If allocated funds are not spent, the money does not expire. Instead, it is carried forward.

Besides, 30% of the total budget of the Central Government is also allocated to the States with special category status.

Not only that, a country can also get huge benefits in terms of tariffs and taxes. These benefits include income tax, customs duties, corporate taxes, etc.

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