Special Category Status not feasible


News in Focus

  • The Central government filed a counter affidavit in the Supreme Court expressing its inability to give Special Category Status (SCS) to Andhra Pradesh and said all commitments under the A.P. Reorganisation Act (APRA), 2014 had been addressed.

What is Special Category Status?

  • The Constitution does not include any provision for categorisation of any State in India as a Special Category Status (SCS) State.
  • But, recognising that some regions in the country were historically disadvantaged in contrast to others, the SCS was introduced by Fifth Finance Commission in 1969. It provides for additional Central assistance and tax concessions.
  • The NDC granted this status based on a number of features including hilly and difficult terrain, presence of sizeable tribal population, strategic location along international borders, economic and infrastructural backwardness etc.,

What kind of assistance do SCS States receive?

  • Following the constitution of the NITI Aayog and the recommendations of the 14th Finance Commission (FFC), Central plan assistance to SCS States has been subsumed in an increased devolution of the divisible pool to all States (from 32% in the 13th FC recommendations to 42%).
  • They enjoy concessions in excise and customs duties and income tax rates.
  • Besides, assistance to Centrally Sponsored Schemes for SCS States was given with 90% Central share and 10% State share.

Special Category status and Andhra Pradesh:

  • Centre has agreed to give “special assistance” to AP for five years, which would make up for the additional central share the state might have received during these years — 2015-16 to 2019-20.
  • This will be in the form of Union funding for externally aided projects that have been signed and disbursed during these years.
  • AP is demanding that special assistance funding should be in the 90:10 ratio (Centre: state) for both EAPs and centrally-sponsored schemes — which adds up to about Rs 20,010 crore of central assistance.
  • Because the state government may not be able to spend this amount on EAPs in the stipulated five years, AP is demanding that the Centre allow it to use the money to clear outstanding loans. It is seeking permission to borrow from internal lenders like NABARD, HUDCO and other commercial banks, and to use the gap to pay interest commitments to the Government of India, NABARD and EAPs.
  • The Centre is also willing to accept the state government’s suggestion of raising funds through NABARD.

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