Special Category Status (SCS): A Detailed Insight

What is Special Category Status (SCS)?

Special Category Status is a classification given by the Government of India to certain states that are recognized as needing special assistance and support for their development due to unique challenges they face.

Why was SCS Introduced?

After the reorganization of states and addressing regional disparities, some states were identified as backward or economically weaker due to factors like difficult terrain, poor infrastructure, low industrialization, and socio-economic challenges.

The SCS was introduced to provide these states with special financial assistance and concessions to accelerate their development and bring them on par with other states.

Criteria for Granting Special Category Status

According to the Planning Commission’s 2008 guidelines (which originally recommended SCS), a state could be considered for SCS if it satisfied most of the following criteria:

Hilly and difficult terrain

Low population density or sizeable share of tribal population

Strategic location along borders

Economic and infrastructural backwardness

Non-viable agriculture and dependence on subsistence farming

Pervasive poverty

Lack of connectivity and communication infrastructure

Benefits of Special Category Status

States with SCS enjoy several financial and administrative advantages, such as:

Higher Central Assistance:
The central government provides 90% grants and only 10% loan for development schemes (as opposed to the usual 30% grant and 70% loan for general category states).

Concessions in Excise and Customs:
Duty concessions for industries and raw materials to promote industrial growth.

Preference in Funding:
Priority in central government’s developmental programs and schemes.

Tax and Duty Exemptions:
Certain exemptions to promote investment.

Special Provisions for Infrastructure:
Extra funds for road construction, power, health, and education.

States Currently Having Special Category Status

Initially, states like Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Jammu & Kashmir were given this status. However, over time, some changes have occurred:

Jammu & Kashmir used to have SCS but lost it after the abrogation of Article 370 in 2019.

The classification and the number of states recognized as special category has been a subject of political debate and periodic revision.

Controversies and Recent Developments

In 2015, the 14th Finance Commission recommended doing away with the Special Category Status system and proposed a more uniform grants allocation based on backwardness and other criteria.

Many states, especially Telangana, Uttarakhand, and Himachal Pradesh, have been demanding SCS due to their developmental challenges.

The Government of India has resisted expanding the list, arguing for a rationalized, needs-based funding system instead of the special category.

The demand for SCS is often linked with regional political aspirations and economic development promises.

Central assistance is now often given under different heads without necessarily using the “special category” label, but many states seek formal recognition for symbolic and practical reasons.

Summary

AspectDetails
PurposeHelp backward states with development aid
CriteriaDifficult terrain, tribal population, poverty
BenefitsHigher central grants, duty concessions
States granted SCSNortheast states, formerly Jammu & Kashmir
ControversiesDebate over discontinuation, demands by states
Current scenarioNo new states officially given SCS; funding reforms underway

 

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