Panel rejects Bihar's demand for special category status

Bihar’s long-pending demand for grant of a special category status has received a big jolt, with an inter-ministerial group rejecting the state’s request, finding it not feasible.

The panel, under the supervision of the Planning Commission, also turned down the demand for area-based fiscal concessions for Bihar on the grounds that it was not consistent with the proposed reform measures under the Direct Taxes Code and Goods and Services Tax.

The high-powered group was constituted at the intervention of Prime Minister Manmohan Singh. It was headed by the member-secretary of the Planning Commission and had the secretary in the department of expenditure as a member.

The group was constituted in September last year, following a persistent demand from Bihar chief minister Nitish Kumar for granting special category status to the state.

The group, however, recognised the need for some special resource from the central government to assist the state’s development plan.

It suggested extra financial support through the ongoing flagship programmes like the Mahatma Gandhi National Rural Employment Guarantee Scheme and also a special plan under the Backward Region Grant Fund for addressing issues related to financial support to Bihar.

The panel also endorsed the view that a special unit be set up in the Commission to exclusively deal with matters relating to the development of Bihar.

Nitish Kumar had launched a massive campaign in support of special category status and collected 12.5 million signatures.

The main demand of Bihar was to alter the current formula of central assistance of 70 per cent loan and 30 per cent grant to 90 per cent grant and 10 per cent loan like other special category status and a fiscal package comprising tax holidays to attract private investment.

At present, 11 states, namely Arunachal Pradesh, Assam, Himachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand are granted the special category status.