What Actually Is ‘Special Category Status’ & Why Is It Mandatory For Andhra Pradesh?

A lot of confusion is taking hurdles on social media framing their demands as a special status, coming to the facts, the only state in India which has special status is ‘Jammu & Kashmir’ because of its horrific and restless position.

Now, what actually Andhra Pradesh is aiming for is, ‘Special Category Status (SGS)’, as per current reports there were around 11 states in India that hold ‘SGS’. Most of them are North East states which include:

Assam, Jammu and Kashmir, Nagaland, Arunachal Pradesh, Manipur, Sikkim, Himachal Pradesh, Meghalaya, Tripura, Uttarakhand and Mizoram.

Following are the parameters, a state must possess to have an SGS

  1. Low resource base, hilly & difficult terrain
  2. Low population density or sizeable share of tribal population
  3. Backwardness, border states/ sharing the international border
  4. Economic & infrastructural backwardness
  5. Non-viable nature of state finances

And these factors are usually based on the recommendations of the National Development Council (NDC).

Why AP Deserves SCS?

  1. The split was a raw deal for AP, as it has no capital, no infrastructure and no institutions in Seemandhra.
  2. The special status has become an emotive issue as the truncated AP started its post-bifurcation journey with a Rs 16,000 crore deficit budget and is finding it difficult to mobilise resources to build the new capital city.
  3. Hyderabad was not just the capital but also a rising IT hub with about 80-90 percent of jobs. Though AP got to share Hyderabad as the capital of Telangana for 10 years, it now has the burden to build its own capital at par with Hyderabad and provide facilities that will attract investments, to keep the state going. Andhra Pradesh thus had lost the revenue from Hyderabad and has the additional burden.

Here is the Outpouring support the protest has earned so far

  1. Normal Central Assistance (NCA)
  2. Additional Central Assistance (ACA)
  3. Special Central Assistance (SCA)
  • 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.
  • For allocation among special category states, there are no explicit criteria for distribution and funds are allocated on the basis of the state’s plan size and previous plan expenditures.
  • The allocation between non-special category states is determined by the Gadgil-Mukherjee formula which gives weight to population (60%), per capita income (25%), fiscal performance (7.5%) and special problems (7.5%).
  • 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.