What is Special Category Status

Special Category Status is a classification that allows states to get significant level of resources necessary for development.

This includes a change in the way funds are allocated to the states for planned development.

Under Special Category Status, a state will typically receive 90% of funds as grants and 10% as loans in the Centrally Sponsored Schemes (CSS). In contrast, other states typically receive 30% funds as loans and 70% as grants. There could be variations based on the scheme.

Of the 28 states in India, 11 states have been accorded Special Category Status

Arunachal Pradesh Assam Manipur Meghalaya

Mizoram Nagaland Sikkim Tripura

Jammu & Kashmir Himachal Pradesh Uttarakhand

BIHAR IS DEMANDING SPECIAL CATEGORY STATUS NECESSARY

TO EMERGE OUT OF POVERTY AND INFRASTRUCTURAL BACKWARDNESS

Ministry of Commerce & Industry Planning Commission

1.  Geographical isolation2.  Inaccessible terrain3.  Poor resource base4.  Remoteness to larger market5.  Poor infrastructure

1. Hilly & difficult terrain2. Low population density3. Strategic location along the borders with

neighboring countries4. Economic and infrastructural

backwardness5. Non-viable nature of state finance

Criteria for Special Category Status

Conceptually, a state under special category has a low resource base that makes

indigenous development improbable. Also, such a state is strategically located

mandating a sustained level of development. Special Category Status is accorded by

National Development Council.

Demand of Special Category Status for Bihar has two components

1. Changing the formula of cost sharing in Centrally Sponsored Schemes (CSS) such that share of the state is limited to 10% instead of 70% (as in most schemes).

This will enable higher resource availability and greater borrowing power.

2. Fiscal policy for equalizing differences in manufacturing and industrial sector and incentivizing private investment in the state.

• Direct Tax Code for waiver of Income and Corporate taxes• In proposed GST, a provision for refund of Excise collected to new units set up in Bihar or the

benefit of accelerated depreciation.

This will help in rapidly industrializing the state.

Bihar not only matches the criteria for Special Category Status but alsodemands a REVIEW of the criteria to incorporate the condition of economic

and infrastructural backwardness