What is
The special category classification was introduced on the recommendations of the fifth finance commission in 1969.The SCS aims to support the development of states facing geographical and socio-economic challenges by providing them with additional financial assistance and other benefits.
The concept was the brainchild of social scientist Dhananjay Ramchandra Gadgil, the deputy chairman of Planning Commission (now Niti Ayog) who formulated the third five-year plan of the Planning Commission.
According to the Gadgil Formula, special category status is bestowed if a state has the following characteristics:
- Hilly and difficult terrain
- Low population density or significant tribal population
- Strategic location across borders
- Economic and infrastructural backwardness
- Non-viable nature of state finances
Which states have special category status
In the past, the National Development Council of the erstwhile Planning Commission granted SCS for plan assistance.
Eleven states, namely, Assam, Nagaland, Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand and Telangana” have been accorded the special category state status. Telangana, India’s newest state, was granted this status after being carved out of Andhra Pradesh.
However, the 14th Finance Commission has abolished the ‘special category status’ for states, except the Northeastern and three hill states. The commission proposed bridging the resource gap of these states by increasing tax devolution from 32% to 42%.
The BJP’s alliance partners, the Telugu Desam Party (TDP) and the Janata Dal (United) (JD(U)), have been vocal in their demands for special category status for their respective states. This has been a long-standing issue for both parties, who have consistently pushed for this recognition from the central government.
The TDP, which is based in Andhra Pradesh, has argued that the state deserves special category status due to the economic and developmental challenges it faces following its bifurcation in 2014. The party has claimed that the special status would help attract investments, create jobs, and boost overall growth in the state.