Part XXI of the Constitution deals with the special provisions for certain states. There are a few states that have been designated as special categories. The concept of Special Category Status emerged in 1969 when the Gadgil formula was approved. Some states require specific treatment due to their non-uniformity, unequal development, tribal areas, backwardness, and people’s aspirations in order to achieve uniform growth, equality, and promote inclusive development. All of these exceptional arrangements, on the other hand, have been developed as a result of progressive constitutional revisions.

Historical Background

• In 1969, the 5th Finance Commission introduced the concept of Special Category Status, recognizing that some sections of the country had historically been disadvantaged in comparison to others.
• Aim: To grant preferential treatment to disadvantaged states in the form of central support and tax cuts. The National Development Council has previously provided assistance to various states under the Central Plan.
• Initially only three states were given special status: Assam, Nagaland, and Jammu and Kashmir.
• The states of Assam, Nagaland, and Jammu & Kashmir were awarded special status during the 4th 5-Year Plan (1969-1974).
• Note: On 5th August 2019, the President of India promulgated the Constitution (Application to Jammu and Kashmir) Order, 2019. It revokes the special status given to Jammu & Kashmir under Article 370.
• From 1974 through 1979, five more states were added to the special category. Himachal Pradesh, Manipur, Meghalaya, Sikkim, and Tripura are among them.
• The number of states with Special Category status expanded to ten in 1990, with the accession of Arunachal Pradesh and Mizoram. In 2001, the state of Uttarakhand was granted Special Category Status.

Special Category Status

Background

• In 2016, a special package was given to Andhra Pradesh in lieu of the special status, but industrial incentives being given to a few other States under package-2 were not being given to Andhra Pradesh.
• The special assistance was given to Andhra Pradesh to make up for the additional Central share the State might have received during 2015-16 to 2019-20, if the funding of Centrally Sponsored Schemes (CSS) would have been shared at the ratio of 90:10 between the Centre and the State.
• The special assistance is to be provided by way of repayment of loan and interest for the Externally Aided Projects (EAPs) signed and disbursed during 2015-2016 to 2019-20 by the State.

About Special Category Status (SCS)

• Meaning:
  • Special Category Status (SCS) is a classification given by the Centre to assist in the development of those states that face geographical and socio-economic disadvantages.
  • This classification was done on the recommendations of the Fifth Finance Commission in 1969.
  • Parameters: It was based on the Gadgil formula. The parameters were:
    • Hilly Terrain;
    • Low Population Density And/Or Sizeable Share of Tribal Population;
    • Strategic Location along Borders With Neighbouring Countries;
    • Economic and Infrastructure Backwardness; and
    • Non-viable Nature of State finances.
• Constitutional Provisions:
  • While the Constitution does not have any provision for categorisation of any state as a Special Category Status (SCS) State, but considering the fact that some areas in India are historically disadvantaged as compared to others, the Centre has assisted states with funds in the past allocated by the former Planning Commission body called the National Development Council (NDC).
• Assistance states get with Special Category Status:
  • The Centre pays 90 percent of the funds required in a centrally-sponsored scheme to special category status category states as against 60 per cent in case of normal category states, while the remaining funds are provided by the state governments.
• When was the first Special Category status bestowed?
  • The NDC first accorded SCS in 1969 to Jammu and Kashmir, Assam and Nagaland.
  • Over the years, eight more states were added to the list — Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura and, finally, in 2010, Uttarakhand.
  • Until 2014-15, SCS meant these 11 states received a variety of benefits and sops.
• Information from NITI AAyog:
  • As per the information provided by the NITI Aayog, 11 states namely,
    • Arunachal Pradesh,
    • Assam,
    • Himachal Pradesh,
    • Jammu & Kashmir,
    • Manipur,
    • Meghalaya,
    • Mizoram,
    • Nagaland,
    • Sikkim,
    • Tripura and
    • Uttarakhand
    was granted special category status.

Benefits of SCS

• 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, while the remaining funds are provided by the state governments.
• Unspent money does not lapse and is carried forward.
• Significant concessions are provided to these states in excise and customs duties, income tax and corporate tax.
• Preferential treatment in getting central funds.
• Concession on excise duty to attract industries to the state.
• 30 percent of the Centre’s gross budget also goes to special category states.
• These states can avail the benefit of debt-swapping and debt relief schemes.

Challenges with SCS

• Multiple Demands: Aside from Andhra Pradesh, Odisha and Bihar had demanded SCS status.
• Economic Burden: The SCS puts additional economic burden when the increased devolution is already flowing to the State as recommended by the FFC.
• Affecting Federalism: It affects the centre state financial relations and hinders competitive federalism among the states.

Difference between Special Category Status and Special Status

• The constitution provides special status through an Act that has to be passed by 2/3rds majority in both the houses of Parliament whereas the special category status is granted by the National Development Council, which is an administrative body of the government.
• For example, Jammu and Kashmir enjoyed a special status as per Article 370 and also special category status. But now that Article 35A has been scrapped and it has become a union territory with legislature, special category status doesn’t apply to J&K anymore.
• Special status empowers legislative and political rights while special category status deals only with economic, administrative and financial aspects.

Way Ahead

• Following the recommendations of 14th Finance Commission, the Special Category States cease to exist and thus, no special category status has been granted to any State.
• It is time to revisit the criteria and include other states into this exclusive category by excluding those who do not need such assistance any longer.

Who Grants The Special Category Status To The States?

The National Development Council grants the special category status on the basis of some criteria which are as follows:

• Hilly and difficult terrain.
• Low population density.
• Presence of a sizable tribal population.
• Strategic location along international borders.
• Economic and infrastructural backwardness
• Non-viable nature of state finances.
• The Prime Minister, union ministers, chief ministers, and members of the planning commission make up the National Development Council, which directs and reviews the commission’s activities.

Constitutional Provisions

Special Provisions For Some States – Constitutional Provisions

• Article 371 to 371-J in part XXI of the Constitution deal with the special provisions for certain states viz., Maharashtra, Gujarat, Nagaland, Manipur, Mizoram, Assam, Andhra Pradesh, Sikkim, Arunachal Pradesh, Goa and Karnataka.
• These special provisions were not originally provided in the Constitution. But were incorporated by the various amendments made in the context of the reorganization of the States or Union Territories.

Idea Behind Special Provision To Some State

• To meet the aspirations of the people of backward regions of the States.
• To deal with the disturbed law and order condition in some parts of the states.
• To protect the cultural, social, economic and political interest of the tribal people of the States.
• To protect the interest of the local people of the states.

Special Provision For Maharashtra And Gujarat

• Under Article 371, the President of India is authorized to provide that the Governor of Maharashtra and of Gujarat would have special responsibility for:
• The establishment of separate development boards for Vidarbha, Marathwada and the rest of Maharashtra, Saurashtra, Kutch and the rest of Gujarat with the provision that a report on the working of these boards will be placed every year before the State Legislative Assembly;
• The equitable allocation of funds for developmental expenditure over the said areas, subject to the requirements of the State as a whole; and
• An equitable arrangement providing adequate facilities for technical education and vocational training, and adequate employment opportunities in the state services in respect of all the said areas.

Special Provision For Nagaland

• 13th Amendment Act, 1962 added Article 371-A which makes the following special provisions for Nagaland:
• The Acts of Parliament relating to the following matters would not apply to Nagaland unless it is decided by the State Legislative Assembly. The matters include: Administration of civil and criminal justice involving decisions according to Naga customary law; Religious or social practices of the Nagas; Naga customary law and procedure; and Ownership and transfer of land and its resources.
• The Governor of Nagaland shall have special responsibility for law and order in the state so long as internal disturbances caused by the hostile Nagas continue. In the discharge of this responsibility, the Governor after consulting the Council of Ministers exercises his individual judgment and his decision is final. This special responsibility of the Governor shall cease when the President directs.
• The Governor has to ensure that the money provided by the Government of India out of the consolidated fund of India for any specific purpose is included in the demand for a grant relating to that purpose and not in any other demand.
• A regional council for the Tuensang district consisting of 35 members should be established. The Governor should make rules for the composition of the council, manner of choosing its members, their qualifications, term, salaries and allowances; the procedure and conduct of business of the council; the appointment of officers and staff of the council and their service conditions; and any other matter relating to the constitution and proper functioning of the council.
• For a period of ten years from the formation of state of Nagaland or for such further period as the Governor may specify on the recommendation of the regional council, the following provisions would be operative for the Tuensang district:
• The administration of the Tuensang District shall be carried on by the Governor.
• The Governor shall in his discretion arrange for equitable distribution of money provided by the Centre between Tuensang District and the rest of Nagaland.
• The Governor can make Regulations for the peace, progress and good government of the Tuensang district.
• There shall be a Minister for Tuensang Affairs in the State Council of Ministers who is appointed from amongst the members representing Tuensang district in the Nagaland Legislative Assembly.
• The final decision on all matters relating to Tuensang district shall be made by the Governor at his discretion.
• Members in the Nagaland Legislative Assembly from the Tuensang district are not elected directly by the people but by the regional council.

Special Provision For Assam

• 22nd Amendment Act, 1969 added Article 371-B, the President may provide for the Constitution and function of a committee of the Legislative Assembly of the state consisting of members of that assembly elected from the Tribal Areas as he may specify.

Special Provision For Manipur

• 27th Amendment Act, 1971 added Article 371-C, make the following special provisions for Manipur:
• The President may provide for the Constitution and function of a committee of the Legislative Assembly of the state consisting of the members of that assembly elected from the Hill Areas of the state. The President can also direct that the Governor shall have special responsibility to secure the proper functioning of that committee.
• The Governor should submit an annual report to the President regarding the administration of the Hill Areas and the executive power of the Union can give directions to the State Government as to the administration of the Hill Areas.

Special Provision For Andhra Pradesh

• 32nd Amendment Act, 1973 added Article 371-D, make the following special provisions for Andhra Pradesh:
• The President is empowered to provide for equitable opportunities and facilities for the people belonging to different parts of the State in the matter of public employment and education and different provisions can be made for various parts of the state.
• For the above purpose, the President may require the State Government to organize civil posts in local cadres for different parts of the state and provide for direct recruitment to posts in any local cadre. He may specify parts of the state which shall be regarded as the local area for admission to any educational institution.
• The President may provide for the establishment of an Administrative Tribunal in the state to deal with certain disputes and grievances relating to appointment, allotment or promotion to civil posts in the state.
• The Tribunal is to function outside the purview of the State High Court. No court other than the Supreme Court is to exercise any jurisdiction in respect of any matter subject to the jurisdiction of the tribunal. The President may abolish the tribunal when he is satisfied that its continued existence is not necessary.
• With the formation of a separate Telangana state, the Article 371-D will need to be amended. Article 371-E empowers the Parliament to provide for the establishment of a Central University in the state.

Special Provision For Sikkim

• 35th Amendment Act, 1974 conferred on Sikkim the status of an associate state of Indian Union. It was provided a status of full-fledged state by 36th Amendment Act, 1975. Article 372-F provides special provision for Sikkim, which are as follows:
• The Legislative Assembly of Sikkim should consist of not less than 30 members.
• One seat is allotted to Sikkim in the Lok Sabha and Sikkim forms one Parliamentary constituency.
• For the purpose of protecting the rights and interests of the different sections of the Sikkim population, the Parliament is empowered to provide for the:
• Number of Seats in the Sikkim Legislative Assembly which may be filled by candidates belonging to such sections; and
• Delimitation of the Assembly constituencies from which candidates belonging to such sections alone may stand for elections to the assembly.
• The Governor shall have special responsibility for peace and for an equitable arrangement for ensuring the social and economic advancement of the different sections of the Sikkim population. In the discharge of this responsibility, the Governor shall act in his discretion, subject to the directions issued by the President.
• The President can extend to Sikkim any law which is in force in a state of the Indian Union.

Special Provision For Mizoram

• 53rd Amendment Act, 1986 added Article 371-G, make the following special provisions for Mizoram:
• The Acts of Parliament relating to the following matters would not apply to Mizoram unless the State Legislative Assembly so decides. The matters include: Religious or social practices of the Mizos; Mizo customary law and procedure; Administration of civil and criminal justice involving decisions according to Mizo customary law; and Ownership and Transfer of land.
• The Legislative Assembly of Mizoram should consist of not less than 40 members.

Special Provision For Arunachal Pradesh

• 55th Amendment Act, 1986 added Article 371-H, make the following special provisions for Arunachal Pradesh:
• The Governor of Arunachal Pradesh shall have special responsibility for law and order in the state. In the discharge of this responsibility, the Governor, after consulting the Council of Ministers, exercises his individual judgement and his decision is final. This special responsibility of the Governor shall cease when the President directs.
• The Legislative Assembly of Arunachal Pradesh should consist of not less than 30 members.

Special Provision For Goa

• 56th Amendment Act, 1987 added Article 371-I provides that the Legislative Assembly of Goa is to consist of not less than 30 members.

Special Provision For Hyderabad-Karnataka Region

• Article 371-J was inserted by the 118th Amendment Act, 2012 the act seek to empower the Governor of Karnataka to take steps to develop the Hyderabad-Karnataka Region i.e., the district of Gulbarga, Bidar, Raichur, Koppal, Yadgir and Bellary. The President may allow the Governor to take the following steps of the development of the region:
• Setting up a development board for the region.
• Ensure a fair distribution of funding for development expenditures across the region.
• Seats at educational and vocational training institutes in the region are reserved for students from the region.
• To provide for reservation in State Government positions in the region for persons from the region.

Benefits Under The Special Category Status

• The central government covers 90 percent of state spending on all centrally sponsored schemes and external aid, while the remaining 10 percent is granted to the state as a zero-interest loan. The typical loan-to-grant ratio for general category states is 70 percent loan and 30 percent grant.
• Preferential treatment when it comes to receiving cash from the government.
• Excise duty reductions to entice businesses to the state.
• Special category states receive 30 percent of the federal government’s gross budget.
• Debt-swapping and debt-relief programmes are available to these states.

Concern Related To Special Category Status

• Any new state granted special status will elicit demands from other states, diluting the benefits even further.
• States do not benefit economically from seeking special status because the rewards under the current regime are modest.

Recent Developments

• Special Category Status has been demanded by Andhra Pradesh, Bihar, Odisha, Rajasthan, and Goa.

Conclusion

• All of these provisions take into account the unique conditions of various states and establish a variety of specific safeguards deemed necessary for these countries.
• Article 371-I, which deals with Goa, stands out among the Articles from 371 to 371-J because it lacks any “special” provisions. Article 371-E, which also applies to Andhra Pradesh and Telangana, is not “exceptional.”