Answer:

Introduction:

Special Category Status was initially introduced in 1969 to provide specific states with additional financial support, recognizing their unique challenges, including geographical, socio-economic, and strategic factors​​. The criteria for SCS include a resource shortage, low income per capita, non-viable state finances, economic and structural underdevelopment, a significant tribal population, challenging terrain, and strategic border locations​​.

Body:

Arguments For Revising the SCS Criteria:

• Evolving Economic and Developmental Needs: The criteria for SCS must be periodically reviewed and revised to align with the evolving economic and developmental challenges of states. This ensures that the allocation of resources is equitable and meets the current needs of states​​.
• Promoting Competitive Federalism: Revising the criteria could support the principles of competitive federalism, ensuring a fair and balanced approach to resource allocation, thereby fostering a healthy competition among states for development and growth​​.
• Addressing Dilution of Benefits: With the increasing number of states receiving SCS, there is a concern about the dilution of benefits. Re-examining the criteria could ensure that the original purpose of SCS – supporting states with specific disadvantages – is effectively served​​.
• Responding to States’ Demands: States like Odisha and Bihar have been vocal about their need for SCS, citing unique challenges like poverty and underdevelopment. Revising the criteria could address such demands more equitably​​.

Arguments Against Revising the SCS Criteria:

• Additional Economic Burden on the Central Government: Increasing the number of states with SCS can lead to an increased devolution of funds from the central government, creating additional economic burdens​​.
• Impact on Existing SCS States: The 14th Finance Commission recommended abolishing SCS for all states except the Northeastern region and three hill states, raising concerns among states that would lose their SCS status​​​​.
• Meagre Benefits Under Current System: Some critics argue that the benefits provided under the current SCS system are insufficient to address the economic challenges faced by states, suggesting that merely changing the criteria might not be an effective solution​​​​.

Conclusion:

The debate on revising the criteria for Special Category Status in India presents a complex scenario. On one hand, there is a need to adapt to the evolving economic and developmental challenges of various states, promoting competitive federalism and ensuring equitable resource allocation. On the other hand, there are concerns regarding the additional financial burden on the central government, the impact on existing SCS states, and the effectiveness of the current benefits system. A balanced approach, involving transparency in fund allocation and utilization, ongoing dialogue between the central government and states, and constitutional clarity on SCS provisions, appears to be a pragmatic way forward​​. This approach would ensure that the needs of all states are addressed fairly while maintaining the integrity of India’s federal structure.

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