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What is 'Special Category Status' and how does a state get it? Know benefits

NDA is going to form next government under the leadership of PM Modi, however, this time its going to be a coalition government as BJP has fallen short of absolute majority on its own. In such a scenario, its allies JDU, TDP may demand Special Category Status. Let's take a look at what is SCS.

Edited By: Shashwat Bhandari @ShashBhandari New Delhi Updated on: June 06, 2024 15:07 IST
Representational image
Image Source : FILE PHOTO Representational image

Lok Sabha Elections 2024: As BJP rush back-to-back meetings in Delhi, its ruled-states and with alliance partners as it mulls National Democratic Alliance (NDA) government formation under the leadership of Prime Minister Narendra Modi, various speculations are doing the rounds in political circles about possible demands being made by its allies. One such demand which may be put forward by NDA partners especially Janata Dal United - JD(U) and Telugu Desam Party (TDP) before the BJP leadership could be the 'Special Category Status' (SCS). So what is SCS, how a state is awarded this status and what are its benefits? Let's take a look.

What is Special Category Status (SCS)?

  • Special Category Status (SCS) is allotted to state to amplify its growth if they are backward.
  • The status is awarded to their growth rate if they face geographical and socio-economic disadvantages.
  • Although there is no provision in the Constitution to allot a special status to a state for its overall development, however, a provision was made later for awarding Special Category Status on the recommendations of the Fifth Finance Commission in 1969.

Which states received Special Status for the first time?  

  • Jammu and Kashmir (now a Union Territory after revocation of Article 370), Assam and Nagaland were the first ones who were awarded special status in 1969.
  • Later, eleven states including Assam, Nagaland, Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand and Telangana have been accorded the special category state status.
  • Telangana had received special status tag after it was carved out of Andhra Pradesh after the Parliament passed the bill on February 18, 2014 under the then Congress-led UPA government.
  • The 14th Finance Commission has done away with the 'special category status' for states, except for the Northeastern and three hill states and suggested to accomodate the resource gap in such states through tax devolution by increasing it to 42% from 32%.
  • Special Category State is different from Special status which imparts enhanced legislative and political rights. SCS deals with economic and financial aspects only.

What are the conditions before a state to get Special Category State? 

  • If a state has hilly terrain 
  • Low population density or sizeable share of tribal population
  • Strategic location along borders with neighbouring countries
  • State is backward in economic and infrastructure 
  • Nonviable nature of state finances.

Benefits of Special Category Status?

  • If a state gets the 'Special Category Status', the Central government has to give 90 per cent share of funds to implement centrally-sponsored scheme compared to 60 per cent or 75 per cent in other states. The remaining funds are backed by the state.
  • Allotted money if not spent does not lapse and is carry forward.
  • A state also gets significant concessions in taxes and duties including customs, income tax and corporate tax.
  • A 30 per cent part of Centre’s Gross Budget goes to Special Category states.

ALSO READ | Review Agniveer scheme, caste-based census call of hour: JDU ahead of NDA govt formation

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