What a special category state means

In 1969, when the Gadgil formula for sharing Plan assistance among states was devised, three states were labelled special-category, to bring those on a par with the development levels of other states. Gradually, this number grew to 11 - the seven Northeastern states, Sikkim, Uttarakhand, J&K and Himachal Pradesh

• These states are given a higher share in the Union government's resource allocation, due to harsh terrain, backwardness and other social problems. All these happen to be border states. Now, Bihar also wants get this status
   
• Special-category states get significant excise duty concessions that attracts industries to relocate/locate manufacturing units within their territory. This has been a sore point with neighbouring general-category states. Also, 30 per cent of the Centre's gross budgetary support for Plan expenditure goes to special- category states
  

 

For special-category states, 90% of Plan assistance is given as grants, and 10% as loans. The 12th Finance Commission recommended the Centre give only grants, and leave it to the states to raise loans. Since then, this formula is restricted to Centrally-sponsored schemes and external aid
 

Chhattisgarh, Jharkhand, Odisha and Rajasthan have also been demanding special category status for a decade
 

Bihar is a beneficiary of the Backward Regions Grants Fund. In his Budget speech 2013-14, P Chidambaram announced a huge outlay for the BRGF and that the concept of special-category states would be revisited