Special category status

Indian Economy glossary

Also called: SCS · Topic: Fiscal Federalism: Finance Commission, Devolution and Centre-State Finances · NCERT: Beyond NCERT

Meaning

Special category status (SCS) is a label created by the National Development Council in 1969, not by the Constitution. It gave hill, border and backward states more favourable central assistance. The criteria were:

  • hilly or difficult terrain
  • low population density or a large tribal share
  • a strategic location on international borders
  • economic and infrastructure backwardness
  • non-viable state finances

The benefits included 90:10 Centre-state funding of centrally sponsored schemes and tax concessions.

Example

Eleven states held it: the 8 north-eastern states (including Sikkim), Himachal Pradesh, Uttarakhand and the erstwhile state of J&K. The 14th Finance Commission (2015-20) dropped the special/general category distinction in devolution. It covered these states' needs through the higher 42% share and revenue deficit grants. Andhra Pradesh, Bihar and Odisha still demand the status.

Don't confuse with

  • Composite development index: the Raghuram Rajan Committee (2013) proposed ranking states by how underdeveloped they are, as an alternative to the SCS label.

Related concepts

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