Why in the News?

Bihar Chief Minister Nitish Kumar has renewed the State’s persistent call for special category status from the Centre, which would boost the State’s share of tax revenues from the Central government.

How does the ‘Special Category’ Status benefit the states like Bihar?

• Increased Central Funds: States with special category status receive a higher share of central funds for government schemes, typically 90% from the Centre, compared to 60%-80% for other states.
• Tax-Related Concessions: These states enjoy various tax concessions that can attract investments and boost economic development.
• Financial Aid for Development: The additional funds can be used to address developmental gaps, improve infrastructure, and support welfare programs.

Criteria for Special Category status:

• Geographic Disadvantages: States with challenging terrains such as hilly or difficult terrain.
• Low Population Density or High Tribal Population: States with a considerable proportion of tribal population or low population density.
• Economic and Social Backwardness: States that are economically and socially disadvantaged.
• Strategic Location: States that share international borders or have strategic significance.

Why has Bihar’s demand been a long-standing issue?

• Economic Backwardness: Bihar has one of the lowest per capita incomes in India and lags behind in several human development indicators.
• Fiscal Challenges: The bifurcation of the state leading to the formation of Jharkhand, frequent natural disasters, and insufficient water resources for irrigation have adversely affected Bihar’s fiscal situation.
• Political Reiteration: Successive Bihar governments have continuously demanded special status to help the state’s development.

What are the political implications of granting ‘Special Status’ to Bihar?

• Increased Bargaining Power: Granting special status could enhance Bihar’s political leverage with the central government, especially in coalition politics.
• Precedent for Other States: Granting special status to Bihar could lead to similar demands from other states, potentially creating financial burdens for the Centre.
• Electoral Promises and Alliances: Political parties may use the promise of special status as an electoral tool to gain or maintain power, as seen with the Congress party’s manifesto promise in 2024.
• Centre-State Relations: The decision could impact the dynamics of center-state financial relations and influence the federal structure of revenue distribution in India.

Conclusion: The Central government should establish a transparent and well-defined framework for granting special category status, taking into account various economic, geographic, and social parameters. This framework should be periodically reviewed to ensure it remains relevant and fair to all states.

Mains PYQ: 

Q To what extent is Article 370 of the Indian Constitution, bearing marginal note “Temporary provision with respect to the State of Jammu and Kashmir”, temporary? Discuss the future prospects of this provision in the context of Indian polity. (UPSC IAS/2016)

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