Some important information about Special Category Status :-
Why in news?
- A demand for Special Category Status for Andhra Pradesh has led to State-wide protests in AP, and heated debates in Parliament.
- The concept of a special category state was first introduced in 1969 by the 5th Finance Commission.
- Some of the features required for special status were:
- Hilly and difficult terrain;
- Low population density or sizeable share of tribal population;
- Strategic location along borders with neighbouring countries;
- Economic and infrastructural backwardness;
- Non-viable nature of state finances.
- The decision to grant special category status was earlier with National Development Council.
Changes were observed from 2015-16 budget. While states began to receive a higher share of 42 percent of central taxes, the Centre diluted the benefits that accompanied the SCS status and even slashed the outlay for Centrally Sponsored Schemes.
Benefits to Special Category States (SCS)
The nature of benefits to Special Category states create further demand by many states to crave for this status. The major benefits of SCS are :-
- A major portion of the Normal Central Assistance (56.25%) is distributed to 11 Special Category States and the remaining (43.75%) among 18 General Category States.
- Only Special Category States receive Special Plan Assistance and Special Central Assistance grants.
- The assistance for Externally Aided Projects (EAPs) flows to Special category States as 90 per cent grant whereas for General Category States, it flows as loans.
- The state share in Centrally Sponsored Schemes is usually lower for Special Category States as compared to General Category States.
- Special-category states get a significant excise duty concession & other such tax breaks that attract industries to relocate/locate manufacturing units within their territory.
- There is no preferential treatment to SCS when it comes to sharing of the central tax revenue.
For more information :- Current Affairs.