Concept of Special Category States in India

There are twenty-eight states and seven union territories in India. Some of the states are given some benefits by the central government as they fall under the special category states. In 1969 while devising formula for sharing central assistance among states, the Fifth Finance Commission acting in line to the Gadgil formula, had accorded special status to three states on the basis of harsh terrain, backwardness and social problems prevailing in these states. As per Gadgil formula a special category state gets preferential treatment in federal assistance and tax breaks. The special-category states get significant excise duty concessions, and thus help these states attract large number of industrial units to establish manufacturing facilities within their territory. Now many other states have also been categorized under this term like:- Arunachal Pradesh, Assam, Himachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland etc.

Thus the main reason behind this categorization is the development of that particular state where there are many problems due to hilly terrains, international borders etc as there cannot be good industrial development and the finances of the state are also less, thus the centre government comes into picture. 90% of the central assistance is treated as grant and remaining 10% is considered as loan unlike other states which get 30% grant and 70% loan.

The special category states have some distinct characteristics. They have international boundaries, hilly terrains and have distinctly different socio-economic developmental parameters. These states have also geographical disadvantages in their effort for infrastructural development. Public expenditure plays a significant role in the Gross State Domestic Product of the states. The states in the North-East are also late starters in development. In view of the above problems, central government sanctions 90 percent in the form of grants in plan assistance to the states in special category. The most important prescription for special category states is interest free loan with rationalization of public expenditure based on growth enhancing sectoral allocation of resources.

For special category states unlike other states there is no hard budget constraint as the central transfer is high. Through the enactment of FRBM these states are also availing themselves of the benefit of debt swapping and debt relief schemes which facilitate reduction of the average annual rate of interest. There is a necessity of developing all these states at par with other states.

This can only be possible if all these states are guided by the norms of inter-state equity based on fiscal efficiency. There are 12 states which fall under this category till now.

The latest dispute regarding this is the issue that whether Bihar should also be given the status of special category state. The chief minister of Bihar Mr. Nitish Kumar has time and again made this demand because Bihar is economically backward and also falls on Indo- Nepal border. People in Bihar are adamant to get this status, but so far nothing has been done. Orissa, Chhattisgarh also have been demanding this status due to extreme poverty and also presence of Naxalites due to which no proper development can take place. The center has not at all responded to these demands and neither has the NDC (National Development Council)

Thus I would like to conclude by saying that the formation and division of states on the basis of these parameters is very good as it helps those states which have low financial capacity to overcome their social, economic and other problems in such a good manner and this ultimately benefits the people of that region.

 

By Shivani Rana on September 7, 2012 · Posted in Simplified concepts

13 Comments | Post Comment

Amit says:

Very Well Written unbiased article.

Posted on November 5th, 2012

rajat says:

There are 11 states under the special category not 12.

Posted on January 8th, 2013

rajat says:

For normal states the central plan assistance is 70% grant and 30% loan.

Posted on January 8th, 2013

Prathamesh Parashar says:

In view of its importance the text of the article 370 (Without amendments) is reproduced below:

Article 370 of the Constitution of India

1. Notwithstanding anything in this Constitution:

a. the provisions of article 238 shall not apply in relation to the State of Jammu and Kashmir,

b. the power of Parliament to make laws for the said State shall be limited to;

i. those matters in the Union List and the Concurrent List which, in consultation with the Government of the State, are declared by the President to correspond to matters specified in the Instrument of Accession governing the accession of the State to the Dominion of India as the matters with respect to which the Dominion Legislature may make laws for that State; and

ii. such other matters in the said Lists, as, with the concurrence of the Government of the State, the President may by order specify.

Explanation—For the purpose of this article, the Government of the State means the person for the time being recognized by the President as the Maharajah of Jammu and Kashmir acting on the advice of the Council of Ministers for the time being in office under the Maharaja’s Proclamation dated the fifth day of March, 1948;

c.the provisions of article 1 and of this article shall apply in relation to this State;

d.such of the other provisions of this Constitution shall apply in relation to that State subject to such exceptions and modifications as the President may by order specify

i. Provided that no such order which relates to the matters specified in the Instrument of Accession of the State referred to in paragraph

(i) of sub-clause (b) shall be issued except in consultation with the Government of the State:

ii. Provided further that no such order which relates to matters other than those referred to in the last preceding proviso shall be issued except with the concurrence of the Government.

2. If the concurrence of the Government of the State referred to in paragraph

(ii) of sub-clause (b) of clause

(1) or in second proviso to sub-clause

(d) of that clause be given before the Constituent Assembly for the purpose of framing the Constitution of the State is convened, it shall be placed before such Assembly for such decision as it may take thereon.

3. Notwithstanding anything in the foregoing provisions of the article, the President may, by public notification, declare that this article shall cease to be operative or shall be operative only with such exceptions and modifications and from such date as he may notify: Provided that the recommendation of the Constituent Assembly of the State referred to in clause (2) shall be necessary before the President issues such a notification.

4. In exercise of the powers conferred by this article the President, on the recommendation of the Constituent Assembly of the State of Jammu and Kashmir, declared that, as from the 17th day of November, 1952, the said art. 370 shall be operative with the modification that for the explanation in cl.(1) thereof the following Explanation is substituted namely:

Explanation—For the purpose of this Article, the Government of the State means the person for the time being recognised by the President on the recommendation of the Legislative Assembly of the State as the *Sadar-I-Riyasat of Jammu and Kashmir, acting on the advice of Council of Ministers of the State for the time being in office.
Implications

This article specifies that except for Defence, Foreign Affairs, Finance and Communications,(matters specified in the instrument of accession) the Indian Parliament needs the State Government’s concurrence for applying all other laws. Thus the state’s residents lived under a separate set of laws, including those related to citizenship, ownership of property, and fundamental rights, as compared to other Indians.

Similar protections for unique status exist in tribal areas of India including those in Himachal Pradesh, Arunachal Pradesh, Andaman & Nicobar Islands and Nagaland however it is only for the state of Jammu and Kashmir that the accession of the state to India is still a matter of dispute between India and Pakistan still on the agenda of the UN Security Council and where the Government of India vide 1974 Indira-Sheikh accord committed itself to keeping the relationship between the Union and Jammu and Kashmir State within the ambit of this article .

The 1974 Indira-Sheikh accord mentions that ” The State of Jammu and Kashmir which is a constituent unit of the Union of India, shall, in its relation with the Union, continue to be governed by Article 370 of the Constitution of India ” .

Indian citizens from other states and women from Jammu & Kashmir who marry men from other states can not purchase land or property in Jammu & Kashmir.[1]

Sheikh Mohammad Abdullah, the state’s ‘Prime Minister’ and leader of the Muslims in the Vale, found the inclusion of Article 370 in the ‘Temporary and Transitional Provisions’ of the Constitution’s Part XXI unsettling. He wanted ‘iron clad guarantees of autonomy’. Suspecting that the state’s special status might be lost, Abdullah advocated independence from India, causing New Delhi to dismiss his government in 1953, and place him under preventive detention.[2]

Some argue[citation needed] that the President may, by public notification under article 370(3), declare that Article 370 shall cease to be operative and no recommendation of the Constituent Assembly is needed as it does not exist any longer. Others say it can be amended by an amendment Act under Article 368 of the Constitution and the amendment extended under Article 370(1). Art. 147 of the Constitution of Jammu and Kashmir states no Bill or amendment seeking to make any change in the provisions of the constitution of India as applicable in relation to the State; shall be introduced or moved in either house of the Legislature. As per Art. 5 of the Constitution of Jammu and Kashmir the executive and legislative power of the State extends to all matters except those with respect to which Parliament has power to make laws for the State under the provisions of the Constitution of India as applicable in relation to this state.
Constitution of Jammu And Kashmir

Article 1 of the Constitution of Jammu and Kashmir states that the State of Jammu and Kashmir is and shall be an integral part of the Union of India. Article 5 states that the executive and legislative power of the State does not extend to matters those with respect to which Parliament has power to make laws for the State under the provisions of the Constitution of India. These provisions cannot be amended. The constitution was adopted and enacted on 17 November 1956.
Applicability of the Constitution of India to J&K

In exercise of the powers conferred by clause (1) of article 370 of the Constitution, the President, with the concurrence of the Government of the State of Jammu and Kashmir made the The Constitution (Application to Jammu and Kashmir) Order, 1954 which came into force on 14/5/1954.

Posted on February 1st, 2013

shivani says:

no rajat it’s 70% loan and 30% grant…

Posted on February 23rd, 2013

sagar says:

Well Written .. Thanx

Posted on March 17th, 2013

Amit Singh says:

very good article…must read

Posted on March 18th, 2013

rajasekaran.k says:

well written shivani,

i would like to comment on the special status given to states on the basis of less territorial availability and border terrorism,at the moment Tamilnadu too suffers by the border terrorism of srilanka and the essentials for life such as earth (land) and water for irrigation becomes so dearer in regard to disbute ever running between karnatka and tamilnadu.this is the right time for union india consider a special status to tamilnadu and thus save the people of tamilnadu

Posted on March 25th, 2013

ashish chak says:

only 10 states r under spcl category state.

Posted on March 29th, 2013

puneet bhardwaj says:

neat n clean article..please send this type of articles on my id too..thank u shivani..

Posted on April 2nd, 2013

MOUTHPIECE says:

special status given to states should exist for fixed period till they(states)match the parameters of development. The fund allocated to states under special category in the past years must be checked and verified to ensure that the funds have not been misutilized or siphoned off by political people of those states. If found discrepancy they must be sacked from status out-rightly.

Posted on April 24th, 2013

Shazia Zahid says:

No doubt,it’s really very genuin article n clear concept.Good job

Posted on July 5th, 2013

pushpanjali says:

of course it is a good article.short neat and clean and also beneficial for students but actually there are how many special states plz make it clear

Posted on October 11th, 2013