"When you are inspired by some great purpose, some extraordinary project, all your thoughts break their bounds. Your mind transcends limitations, your consciousness expands in every direction, and you find yourself in a new, great and wonderful world. Dormant forces, faculties and talents come alive, and you discover yourself to be a greater person by far than you ever dreamt yourself to be."
Maharishi Patanjali Yoga Sutra before 2200 years.
one can ignore Odisha’s demand. It deserves special category
status. It is a genuine right,” said Odisha Chief Minister, Naveen
Patnaik, earlier this month.
The Odisha State assembly has passed a resolution requesting
special category status and their demands follow Bihar’s recent
special category status.
concept of a special category state was first introduced in 1969 when
the 5th Finance Commission sought to provide certain
disadvantaged states with preferential treatment in the form of
central assistance and tax breaks. Initially three states Assam,
Nagaland and Jammu & Kashmir were granted special status but
since then eight more have been included (Arunachal Pradesh,
Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura
and Uttarakhand). The rationale for special status is that certain
states, because of inherent features, have a low resource base and
cannot mobilize resources for development. Some of the features
required for special status are: (i) hilly and difficult terrain;
(ii) low population density or sizeable share of tribal population;
(iii) strategic location along borders with neighbouring countries;
(iv) economic and infrastructural backwardness; and (v) non-viable
nature of state finances. 1 The
decision to grant special category status lies with the National
Development Council, composed of the Prime Minster, Union Ministers,
Chief Ministers and members of the Planning Commission, who guide and
review the work of the Planning Commission.
India, resources can be transferred from the centre to states in many
ways (see figure 1). The Finance Commission and the Planning
Commission are the two institutions responsible for centre-state
Planning Commission allocates funds to states 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. NCA, the
main assistance for state plans, is split to favour special category
states: the 11 states get 30% of the total assistance while the other
states share the remaining 70%. The nature of the assistance
also varies for special category states; NCA is split into 90% grants
and 10% loans for special category states, while the ratio between
grants and loans is 30:70 for other states.
allocation among special category states, there are no explicit
criteria for distribution and funds are allocated on the basis of the
state’s plan size and previous plan expenditures. Allocation
between non special category states is determined by the Gadgil
Mukherjee formula which gives weight to population (60%), per capita
income (25%), fiscal performance (7.5%) and special problems (7.5%).
However, as a proportion of total centre-state transfers NCA
typically accounts for a relatively small portion (around 5% of total
transfers in 2011-12).
category states also receive specific assistance addressing features
like hill areas, tribal sub-plans and border areas. Beyond additional
plan resources, special category states can enjoy concessions in
excise and customs duties, income tax rates and corporate tax rates
as determined by the government. The Planning Commission also
allocates funds for ACA (assistance for externally aided projects and
other specific project) and funds for Centrally Sponsored Schemes
(CSS). State-wise allocation of both ACA and CSS funds are prescribed
by the centre.
Commission allocations can be important for states, especially for
the functioning of certain schemes, but the most significant
centre-state transfer is the distribution of central tax revenues
among states. The Finance Commission decides the actual distribution
and the current Finance Commission have set aside 32.5% of central
tax revenue for states. In 2011-12, this amounted to Rs 2.5 lakh
crore (57% of total transfers), making it the largest transfer from
the centre to states. In addition, the Finance Commission recommends
the principles governing non-plan grants and loans to states.
Examples of grants would include funds for disaster relief,
maintenance of roads and other state-specific requests. Among
states, the distribution of tax revenue and grants is determined
through a formula accounting for population (25%), area (10%), fiscal
capacity (47.5%) and fiscal discipline (17.5%). Unlike the
Planning Commission, the Finance Commission does not distinguish
between special and non special category states in its allocation.
Sabha unstarred question no. 667, 27 Feb, 2013, Ministry of