“The Union government needs to examine the long-standing demand of Andhra Pradesh and Bihar for special category status carefully and not in a hurry, as it could set a precedent and may put extreme pressure on the Centre’s fiscal resources,” former Niti Aayog vice-chairman Rajiv Kumar said on June 23.
Andhra Pradesh has been demanding special category status after its bifurcation in 2014 on the grounds of revenue loss as Hyderabad became the capital of Telangana.
Why is Bihar demanding the Special Category Status? | Explained
Bihar has also been demanding the special status since 2005 when Nitish Kumar was sworn in as its Chief Minister. The State also suffered revenue loss after the mineral-rich Jharkhand was carved out of it in 2000.
"This (SCS) is their (Bihar and Andhra Pradesh) long-standing demand...this is a demand which needs to be considered very carefully because you have to carefully examine in detail the economic parameters on the basis of which this demand is being made," he told PTI in a video interview.
For special category status States, the Centre meets 90% of the funds required in a Centrally sponsored scheme against 60% in the case of normal category States. The remaining funds are provided by the State government.
"Because...if you do it in a hurry, then this might set a precedent, which is not going to be fiscally possible because more and more States will be making the same demand if we do this here, and that would mean extreme pressure on the government's fiscal resources," the economist added.
The 14th Finance Commission raised the share of States in taxes collected by the Centre to 42% from 32% but abolished special category States.
"So, I think this issue has to be reviewed and carefully studied. Maybe the Finance Commission should do this task," he opined. Under relentless Opposition attack over its failure to secure special category State status for Andhra Pradesh, in 2018, the State's ruling party Telugu Desam Party (TDP) pulled out of the Modi government.
Recently, Congress Party general secretary Jairam Ramesh asked the Prime Minister whether he would fulfil his 2014 election promise and the ten-year-old demand of his ally and JD(U) chief Nitish Kumar by giving special category status to Bihar. "There has been a demand for this, but the PM did not break his silence on the issue," he added.
With support from N. Chandrababu Naidu's Telugu Desam Party (TDP) and Nitish Kumar's JD(U), which won 16 and 12 seats in Andhra Pradesh and Bihar, respectively, and other alliance partners, the NDA has crossed the halfway mark.
Mr. Ramesh also said, "On April 30, 2014, in the holy city of Tirupati, you promised to give special category status to Andhra Pradesh so that massive investment comes in. It's been 10 years, but it has not happened. Will that promise be fulfilled now? Will the PM give special category status to Andhra Pradesh".
The special status category was introduced in 1969 on the recommendation of the Fifth Finance Commission to benefit certain backward States with hilly terrains, strategic international borders, and economic and infrastructural backwardness.
