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What is Special Category Status?

What is Special Category Status?
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What is Special Category Status. For all the efforts made by its Chief Minister N Chandrababu Naidu, Andhra Pradesh will not get the eagerly sought...

For all the efforts made by its Chief Minister N Chandrababu Naidu, Andhra Pradesh will not get the eagerly sought Special Category Status.The 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 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, which is granted by the National Development Council (NDC), 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.

The 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.

Special 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.

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