Context:

• Recently, the Bihar Chief Minister said that he would launch a movement across the State if the Union government did not grant Bihar special category status.

What is the Special Category Status?

• Special Category Status was introduced in 1969 on the recommendations of the Fifth Finance Commission.
• SCS is a classification given by the Centre to assist development of states that face geographical and socio-economic disadvantages. (Constitution does not make a provision for SCS).
• Indicator for Special Category Status
  • International border proximity, 
  • Hilly terrain, 
  • Economic disparities.
  • Sizable tribal population and 
  • Infrastructural backwardness.
• State with Special Category Status
  • Eleven States: Assam, Nagaland, Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand and Telangana.
  • Telangana, the newest State of India, was accorded the status as it was carved out of another State — Andhra Pradesh.
• Benefits of Special Category Status
  • Higher Central Funding: States with special status receive an increased share of Central funding. The government pays 90 percent of the funds in schemes that the Centre sponsors.
  • Financial Support for Development: Designated to provide financial support specifically for development purposes.
• The 14th Finance Commission has done away with the ‘special category status’ for states, except for the Northeastern and three hill states.
  • It suggested filling the resource gap of such states through tax devolution by increasing it to 42% from 32%.
• Concern With SCS:
  • It will further strained fiscal resources of center.
  • Similar demand from other states, For instance, demands from Andhra Pradesh, Odisha, etc.
  • Politicization of the issue by regional parties for electoral gains.

News Source: The Hindu