Context
Recently, Bihar Government clarified that his party had not dropped the demand of special category status to Bihar but it was up to the Centre to take a decision on it.
About Special category status
- Special Category Status (SCS) refers to a classification given by the Centre to assist in the development of those states that face geographical and socio-economic disadvantages.
- This concept was first introduced on the recommendation of the fifth Finance Commission in 1969.
- The parameter of SCS were:
- Hilly and difficult terrain
- Low population density or sizeable share of tribal population
- Strategic location along borders with neighbouring countries
- Economic and infrastructural backwardness
- Non-viable nature of state finances
- Assam, Nagaland and Jammu & Kashmir were granted special status in 1969.
- In the year 1974-1979, Himachal Pradesh, Manipur, Meghalaya, Sikkim and Tripura were added under the special category.
- The states, Arunachal Pradesh and Mizoram, were added to SCS in 1990, the states increased to 10.
- In 2001, Uttarakhand State was given special category status.
Who provides the status?
- Special category status for plan assistance has been granted in the past by the National Development Council (NDC) to some states that are characterized by a number of features necessitating special consideration.
- Now, Special Category Status (SCS) is given by the Centre Government.
Benefits to states with special category status
- Central government bears 90 percent of the state expenditure on all centrally-sponsored schemes and external aid while the rest 10 percent is given as loan to the state at zero percent rate of interest.
- States with special category status are exempted from customs duty, corporate tax, income tax and other taxes to attract investment.
- 30 percent of the Centre's gross budget also goes to SCS.
- These states can avail the benefit of debt-swapping and debt relief schemes.
