Special Category Status - Qualifiers & Benefits

Special status is guaranteed by the Constitution of India through an Act passed by the two-third majority in both houses of the Parliament, as in the case of Jammu and Kashmir. Special Status empowers legislative and political rights

Whereas Special Category Status is granted by the National Development Council, an administrative body of the government. Special Category Status deals only with economic, administrative and financial aspects. The decision to grant special category status to States lie with the National Development Council composed of the Prime Minister, Union Ministers, Chief Ministers and members of the Planning Commission, who guide and review the working of the Planning Commission. Initially, three states namely Assam, Nagaland and Jammu & Kashmir were accorded special category status and later on eight other states were also given special category status namely: Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Uttarakhand, Tripura, Himachal Pradesh, and Sikkim and thus the list is now increased to eleven.

At present there are 11 States that enjoy Special Status and Special Category Status: Arunachal Pradesh, Assam, Himachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand.

The bases on the basis of which NDC decides whether a State should be accorded special status or not includes: (1) hilly and difficult terrain; (2) low population density and or sizeable share of tribal population; (3) strategic location along borders with neighboring countries; (4) economic and infrastructure backwardness and (5) non-viable nature of state finances.

Special category states enjoy concessions in excise and customs duties, income tax rates and corporate tax rates as determined by the government. The Planning Commission also allocates funds for the purpose of assistance for externally aided projects and other specific project. 

For general category states, external aid is passed on in the exact mixture of loan and grants in which it is received at the Centre. And for them, in the case of centrally-sponsored schemes, only 70% of the central funding is given as grant. 30% to be borne by the state. In the case of special-category states, 90% of Plan assistance was given as grants, and only 10% as state's share. This 10% will also be as central loan in case of centrally-sponsored schemes and external aid. 

Five states, Bihar, Chhattisgarh, Jharkhand, Orissa and Rajasthan-have been making this demand for the last 10 years. Bihar’s repeated plea for Special Category Status was rejected on the ground of backwardness.

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