India is a “union of states.” India now consists of 28 states and six union territories. All of these states and union territories receive a portion of the central government’s taxes every five years, based on the recommendations of the President of India’s Finance Commission.
In addition to the Finance Commission’s recommendations, Article 275 of the Indian constitution allows the federal government to provide further financial support to any state.
This page explains the requirements for granting Special Category State designation to specific states, as well as the benefits obtained by these states.
It’s worth noting that 11 of India’s 29 states have already been designated as Special Category States, with five more requesting the designation.
The ‘Special Category States’ are a set of eleven economically poor hill states in India that share international borders.
The transfer of central resources to states through the Planning and Finance Commissions, as well as the constitutional difficulties involved, types of plan support, and the evolution of the Gadgil formula.
On the basis of the Gadgil Formula, the fifth Finance Commission (Chairman Mahavir Tyagi) granted Special Category State status to three states (Jammu & Kashmir, Assam, and Nagaland) in 1969.
The social, economic, and geographical backwardness of these three states was the rationale for their special status.
The central government covers 90% of state spending on all centrally sponsored initiatives and foreign aid, while the remaining 10% is granted to the state as a zero-interest loan.
Preferential treatment when it comes to receiving cash from the government.
Excise duty reductions to entice businesses to the state.
Special category states receive 30% of the federal government’s total budget.
Debt-swapping and debt-relief programmes are mainly available to these states.
To encourage investment, states with the special category status are excluded from customs duty, corporate tax, income tax, and other taxes.
If a special category state has money left over at the end of a fiscal year, it does not expire and can be carried over to the next fiscal year.
India is referred to as a “federation of states.” There are presently 29 states and seven union territories in India. Based on the President of India’s Finance Commission’s recommendations, all of these states and union territories receive a percentage of the federal government’s revenues every five years. The ‘Special Category States’ in India are a group of eleven economically impoverished hill states that share international boundaries.
Profile
Settings
Refer your friends
Sign out
