Special Category Status of Indian States – Recent Developments

This is a topic on and off the Indian political radar, now particularly as the General Elections are scheduled in the summer of 2014.

Currently, India has 11 ‘special category’ status states. They are Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim, Tripura, Jammu and Kashmir, Himachal Pradesh and Uttarakhand. It is usually given to states which have distinct features like international boundaries, hilly terrains, special environmental issues, different socio-economic patterns and where infrastructural investments or public services are very difficult to be implemented. And most of these states bear a large tribal or economically backward population.

The country’s apex decision making body National Development Council headed by the Prime Minister and all the Chief Ministers and Union Cabinet Ministers on board, is the competent authority to grant ‘special category’ status to a state based on a set of criteria as per the Gadgil formula. This formula was evolved in 1969 by Dr. D. R. Gadgil, the social scientist and first critic of the Indian Planning Commission. Since then, the formula has been applied, modified and re-applied because of various reasons (statistical or changing social indicators, political, financial, etc.) and in various ways.

The states which enjoy the ‘special category’ status are given 90 per cent grant as assistance for externally aided projects. For the general category states, there is usually no grant and resources flow to states as back-to-back loans.

In March-2013, Bihar’s Chief Minister Nitish Kumar had remarked “Whoever empathises with and helps backward states will come to power in Delhi“. In May-2013, the Finance Minister P. Chidambaram said that a high-level sub-committee would be constituted under the then Chief Economic Advisor to Government of India, Raghuram Rajan (now the Governor of Reserve Bank of India) in order to determine the criteria of backwardness of a state. Further, Mr. Chidambaram added “… going by whatever information that I have, Bihar will certainly qualify under the new criteria”. Assuming that the Minister rightfully pre-possessed some good data about Centre’s likely financial assistance, tax-waivers and performance-linked-incentives, I believe it were apt if the statement was made by him with certainty but only after the criteria of backwardness was re-defined. Otherwise, the statement still leaves behind a gap that may rather mean that the criteria be re-set so as to accommodate Bihar in the ‘special category’ status !

Anyhow, this gesture by the Congress-led UPA Government was interpreted as a sign of wooing Mr. Nitish Kumar away from his alliance with the Opposition party, BJP and gaining his party, the JD(U)’s support. From the aamjunta, there was hardly any amount of noticeable discussion on this deal just focussing on Bihar’s genuine needs.

In August-2013, the expert committee under Mr. Raghuram Rajan identified 10 parameters for a new Composite Development Index for the allocation of Central funds to backward states. The new index considers the rating of states on the basis of their distance from the national average on parameters including poverty rate, consumption, education, health, female literacy, urbanization, household amenities, connectivity, financial inclusion and share of SCs/STs (Scheduled Castes /Scheduled Tribes) in total population. Some states like Bihar have also insisted on the inclusion of per capita energy consumption as a measure of development. Overall, if this new index rates Bihar as a backward state, then it will definitely do the same for Odisha and few other states as well.

It has been reported that ‘while Bihar was given Rs 12,500 crore as part of a special development plan, Odisha’s eight Kalahandi-Bolangir-Koraput (KBK) districts, more backward than many of Bihar’s districts, should have received an allocation in the same proportion’. As the discussions and rallies were being held by various groups seeking the ‘special category’ status for Odisha, the Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia cited the state’s stable finances and “sound indicators of fiscal deficit, outstanding liabilities and interest payments” as reasons for non-consideration !!

Being born and brought up in Odisha, I can vouch that while the state is rich in many natural resources and abounds in several industrial potentialities, it is economically backward due to meagre or non-sustained patronage from New Delhi. Odisha dramatically boosts the national treasury through trade in various minerals and industries namely coal, iron-ore, bauxite, manganese, power, steel, railways, shipping, commercial ports, fishery, agriculture, art, craft and tourism. One of the most significant DRDOs of the country – testing of missiles, is based in this state only.

There are at least 32 primitive tribal groups (the state has 22.8% tribal population, higher than the 8.6% national average) and according to the Planning Commission, about 155 lakh people in the state are suffering from acute poverty. The literacy rate is low and infant mortality rate high. Health and sanitation issues have just started getting mobilized towards a better future. Only then, would come the next arduous task of strengthening the education sector.

It is a fact that Odisha does not have an international border but some analysts are of the opinion that the 480 km coastal line can be treated as a substitute. This gets pronounced considering massive environmental factors like the Paradip cyclone, 1999 and the recent Phailin cyclone, 2013 hitting the state from across the vast Bay of Bengal, the waters of which are known to whirl some of the most dreadful tropical storms and cyclones ! This coastal line, if not guarded properly, is also vulnerable to illegal trades and anti-social activities, including infiltration.

Though the present BJD government led by Chief Minister Mr. Naveen Pattnaik has taken good measures towards developing some areas of the state, much of the state funds are spent either in administration or repayment of huge Central loans; therefore, it is not adequate in helping all the economically affected people and developing remote areas. Inadequate solutions and non-uniform development of a region, both are largely detrimental to the inclusive concept of growth. A sustained development model, as also envisaged by world-bodies, can gradually come into the picture only at a later stage.

The demand for ‘special category’ status for Odisha was first raised in 1979, but successive governments at the Centre have not paid heed. On one occasion, Mr. Naveen Patnaik has led a 30-member delegation comprising Odisha ministers, BJD MPs and MLAs to President Mr. Pranab Mukherjee. They have submitted a memorandum and one crore signatures collected from the state voicing their concerns and demands. But any noticeable step is yet to be taken by the Central government.

Last week, the state of Seemandhra (earlier part of high-ranked Andhra Pradesh) has been granted ‘special category’ status by the Centre, as quickly as it was curved out. Whereas states like Odisha and Bihar, whose demands have been far more justifiable and long-standing, still continue to be ignored. These type of callous decisions quite seem to be linked to political bias, appeasement tactics and ploys for vote-banks. Ultimately, the citizens suffer ! One better ranked region steadily rises up the development ladder; whereas other regions, in actual needs, may still continue to falter, under-perform and remain almost stagnant for years. This undoubtedly leads to  undesirable issues of inter-state migration or over-populated urban areas where people from low-ranked states flock in search of employment and social upliftment !! Thus, it is negatively cumulative in effect.

So, when is any Central government going to think cogently and channelize the available resources in a proper direction for the long-neglected states ? In fact, not only should it provide the necessary financial grants to economically backward states but also assist them with proper and timely guidance through various advisory bodies or committees working successfully in various parts of the country. This shall expedite development in these low-ranked states and be one of the ways to compensate faster for all the years of neglected work. No Central Government should ever make the blunder of political discrimination (for vote-banks, rivalry, etc.) among states because that will create a huge social mess in the long run !

Aamjunta – What do you say ?

Similar article by aamjunta – Odisha Assam mein hai na!

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9 Responses

  1. These days the special status is politicized. Give me special status, I will vote you. It is just blackmailing. No one looks for India as a whole, they are dividing and politicizing only. KBK should get special status, but will they? Doubt.

  2. Dr Raghuram Rajan committe report was politicized. The biggest politivian is Jayram Ramesh. He does not want any deserving state to get the specual status.

  3. ++ agree with the author that the special status are politicized. Many states in India should not get and many other should get the special status. If Bihar deserves then Chatisgarh as well as Jharkhand also deserve. Odisha certainly deserve. But there should be a fair and unbiased attempt from the Government; which is not seen these days.

  4. True… to my knowledge the states of Bihar, Odisha, Chattisgarh and Jharkhand must get the ‘special category’ status. But unfortunately the political games continue to be played!

    Only today there is news that the TRS Chief has indicated to the Congress that he can give up majority of the LS seats from Telangana for the latter, in exchange of Centre’s support to his becoming the CM of the new state. This followed with various demands including granting ‘special category’ status to Telangana!!

  5. Good to see people are aware of the things and alternative and informative writings are available. Good job aam junta.

    More than requirement and deservingness, political equations decide the special category.

  6. Thanks to the author for a detailed writeup. But what bothers me is the attitude of the political parties including the major congress and bjp. Regional parties try but never gets any success if they do not have bargaining power at the center. Long way to go for WE Indians.

  7. The days of Swabhimaan are gone. Days of Grace/Alms are on.
    Swabhimaan: hesitates and does not agree to accept any help so easily…whereas,
    Grace/Alms: cries out for help and in the process a time comes when one forgets his own abilities and depends only on external factors.

  8. long time, no article; any travel story coming? aamjunta must have observed a lot in the recent past!

  9. Thanks Sridhar. Sure, will share many more in the coming days 🙂

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