Special Category Status not feasible, Centre tells SC

The Central government filed a counter affidavit in the Supreme Court on Wednesday expressing its inability to give Special Category Status (SCS) to Andhra Pradesh and said all commitments under the A.P. Reorganization Act (APRA), 2014 had been addressed.

It furnished details in the form of an annexure, listing out the financial and other forms of assistance given to the State since bifurcation. The affidavit was in response to a writ petition filed in the apex court by Telangana Congress leader Ponguleti Sudhakar Reddy, who pleaded for clarity on issues concerning his State and Andhra Pradesh post-bifurcation, setting up of a steel plant at Bayyaram and the extent of submergence likely to be caused by the Polavaram project.

When the state was divided, Andhra not only lost a capital but also an important industrial hub, which was in and around Hyderabad. The contribution of agriculture to state GDP is higher for Andhra than its neighboring states.

In fact, today it is arguably the highest in South. This is also a reflection of a lower level of industrialization and along with it a lower per capita income and again, the lowest in South.

Much of this is because of Hyderabad, which political analysts argue has gone on to make Telangana, a city-centric state, with the city still an important growth engine and revenue source for Telangana. Today, the per capita income for Telangana is at par with states like Maharashtra and Tamil Nadu, and many see this as largely on account of Hyderabad.

There is no provision of SCS in the Constitution; the Central government extends financial assistance to states that are at a comparative disadvantage against others. The concept of SCS emerged in 1969 when the Gadgil formula (that determined Central assistance to states) was approved.

Some prominent guidelines for getting SCS status:

  • Must be economically backward with poor infrastructure.
  • The states must be located in a hilly and challenging terrain.
  • They should have a low population density and significant tribal population.
  • Should be strategically situated along the borders of neighboring countries.

The SCS States used to receive block grants based on the Gadgil-Mukherjee formula, which effectively allowed for nearly 30 percent of the Total Central Assistance to be transferred to the SCS States as late as 2009-10.

Following the constitution of the NITI Aayog (after the dissolution of the Planning Commission) and the recommendations of the Fourteenth Finance Commission (FFC), Central plan assistance to the SCS States has been subsumed in an increased devolution of the divisible pool to all States (from 32% in the 13th FC recommendations to 42%) and do not any longer appear in plan expenditure.

The FFC also recommended variables such as “forest cover” to be included in devolution, with a weight of 7.5 in the criteria and which could benefit north-eastern States that were previously given SCS assistance. Besides, assistance to Centrally Sponsored Schemes for the SCS States was given with 90% Central share and 10% State share.

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.

Considering special status to any new State will result in demands from other States and dilute the benefits further. It is also not economically beneficial for States to seek special status as the benefits under the current dispensation are minimal. States facing special problems will be better off seeking a special package.

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