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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.
