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March 09, 2018
2 years

Why in news?

The Centre has rejected the Andhra Pradesh (AP) government's demand for Special Category Status for the state.

What is the special category status?

  • Rationale - The Constitution does not have any provision for categorisation of any state as a Special Category Status (SCS) State.
  • But the Centre has assisted some states with funds in the past, since 1969.
  • This was as allocated by the former Planning Commission body called the National Development Council (NDC).
  • The assistance was in consideration of the historical disadvantages of certain states when compared to others.
  • Criteria - The NDC granted this status based on some features such as:
  1. hilly and difficult terrain
  2. low population density and/or the presence of sizeable tribal population
  3. strategic location along international borders
  4. economic and infrastructural backwardness
  5. non-viable nature of State finances
  • Advantages - The SCS states would receive funding for Centrally Sponsored Schemesin the 90-10 ratio i.e 90% of the funds would come from the Centre as against 60% for normal category states.
  • The remaining would be funded by the state governments.
  • States - The NDC first accorded SCS in 1969 to Jammu and Kashmir, Assam and Nagaland.
  • Over the years, 8 more states were added to the list.
  • They are Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura and, in 2010, Uttarakhand.
  • These 11 states got the benefits of SCS until 2014-15 when the 14th Finance Commission proposed major changes.

What are the 14th Finance Commission's recommendations?

  • 14th Finance Commission headed by YV Reddy submitted its report in 2014.
  • It redefined the financial relationship between the Centre and the states for the five-year period ending 2019-20.
  • The Commission notably did away with the ‘special category’ status for states, except for the Northeastern States and 3 hill states (J&K, Himachal Pradesh and Uttarakhand).
  • Instead, it suggested that the resource gap of each state be filled through ‘tax devolution’.
  • It thus urged the Centre to increase its share of tax revenues to the states from 32% to 42%.
  • If devolution alone could not cover the revenue gap for certain states, the Centre could provide a revenue deficit grant.
  • The Commission stated that Andhra Pradesh would end up as a revenue deficit state.
  • It thus recommended that the Centre provide a revenue deficit grant for the period of the 14th Finance Commission.

What does the AP Reorganisation Act provide for?

  • The state of Andhra Pradesh was bifurcated in 2014 under the Andhra Pradesh Reorganisation Act, 2014.
  • The Act does not mention ‘special category’.
  • But it does mention that the Centre would help Andhra Pradesh bridge any resource gap.
  • Under the ‘Revenue Distribution’ section, the Central Government may make appropriate grants.
  • It may ensure that benefits and incentives in the form of special development package are given to the backward areas of that State.
  • But notably, apart from the legislation, the former PM had in the Rajya Sabha assured that AP would be granted special category status.
  • It was said that Special Category Status would be extended to the successor state of Andhra Pradesh for a period of 5 years.
  • But the successor government (NDA) has been emphasizing that the 14th Finance Commission did not provide for such treatment.

What is the Centre's stance for AP?

  • The Union government is of the view that SCS category did exist when the state was bifurcated in 2014.
  • But after the 14th Finance Commission’s award, such treatment was “constitutionally” restricted and so cannot be accorded.
  • The Centre however stated that it was willing to provide the “monetary equivalent” of a special category state.
  • As an additional measure, the Centre has agreed to fund all externally aided projects in Andhra Pradesh in the 90-10 ratio.

What is AP's stance?

  • AP reiterates that Telugu sentiments and emotions had been hurt and only special category status could assuage them.
  • It is also maintained that the CM had only been asking for what was provided for in the AP Reorganisation Act.


    Source: The Hindu, The Indian Express


    Quick Fact

    Special Status/Special Provisions for States

    • It is to be noted that the Special Category Status (SCS) states are different from states with Special Status/Special Provisions.
    • Special Category Status deals with economic, administrative and financial aspects.
    • On the other hand, Special Status/Special Provisions empowers legislative and political rights and is offered by constitutional provisions under Part XXI.
    • Article 370 grants Special Status to the State of Jammu and Kashmir.
    • Art 371 to 371-J contain Special Provisions for eleven states as given below.
    • Art 371 specifies the “Special responsibility” to Governor to establish “separate development boards”.
    • This is in respect of “Vidarbha, Marathwada, and the rest of Maharashtra”, and Saurashtra and Kutch in Gujarat.
    • The other special provision states are as follows:
    1. Nagaland - Art 371A by 13th Amendment Act, 1962
    2. Assam - Art 371B by 22nd Amendment Act, 1969
    3. Manipur - Art 371C by 27th Amendment Act, 1971
    4. Andhra Pradesh & Telangana - Art 371D by 32nd Amendment Act, 1973; substituted by the Andhra Pradesh Reorganisation Act, 2014
    5. Sikkim - Art 371F by 36th Amendment Act, 1975
    6. Mizoram - Art 371G by 53rd Amendment Act, 1986
    7. Arunachal Pradesh - Art 371H by 55th Amendment Act, 1986
    8. Karnataka - Art 371J by 98th Amendment Act, 2012
    • Art 371E allows for the establishment of a university in Andhra Pradesh by a law of Parliament.
    • But this is not really a ‘special provision’.
    • Art 371I deals with Goa, but does not include any provision that can be termed ‘special’.


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