Daily News Analysis » Bihar’s Demand for Special Category Status (SCS)

Bihar’s Demand for Special Category Status (SCS)

Special Category Status (SCS):

  • Definition: SCS is a classification for Indian states facing unique challenges like tough terrain or socio-economic issues.
  • Origin: Introduced in 1969, following the fifth Finance Commission’s recommendations.
  • Criteria for SCS: Includes hilly terrain, low population density/tribal population, strategic location, economic/infrastructural backwardness, and non-viable state finances.

Benefits of SCS:

  • Financial Aid: Enhanced central assistance; previously 30% based on the Gadgil-Mukherjee formula, now a shared pool of funds.
  • Funding Ratios: More favorable Centre-State funding ratios (90:10) for SCS states.
  • Tax Incentives: Concessions in customs, excise, income, and corporate taxes to boost investments.

Bihar’s Rationale for Seeking SCS:

  • Economic Hardship: High poverty levels and low per-capita GDP.
  • Industrial Decline: Post-bifurcation, industries moved to Jharkhand, reducing employment opportunities.
  • Environmental Challenges: Regular floods and droughts affecting agriculture and livelihoods.
  • Welfare Funding Needs: Seeking substantial funds for welfare measures.
  • Resource Scarcity: Limited natural resources and irrigation issues.

Other States’ Interests:

  • Andhra Pradesh and Odisha: Also seeking SCS, citing reasons like revenue loss post-bifurcation and challenges due to natural disasters and tribal populations.
  • Central Government’s Stance: Rejections based on the 14th Finance Commission report, emphasizing equal status for all states.

Way Forward:

  • Revisiting SCS Criteria: Considering Bihar’s specific challenges, except for hilly terrain and geographical difficulties.
  • New Funding Approaches: Exploring models based on a multi-dimensional index, as suggested by the Raghuram Rajan Committee.
  • Targeted Support for Bihar: Focused aid for poverty reduction, disaster management, agriculture, and policies to attract industries and jobs.


Why in News:

  • Bihar is seeking Special Category Status to address its developmental challenges.