SPECIAL CATEGORY STATE: ONCE A RESEARCH IDEA OF A COUNTRY TODAY NEED OF THE HOUR

ABSTRACT

In the developing landscape of federalism and regional autonomy, the idea of a particular category of state has emerged as a significant focal point in discussing surrounding administrative efficiency and equitable development, proposed initially as a research idea to address unique regional challenges of rugged terrain, the concept of particular category state has developed into a crucial consideration for contemporary governance structure. The article examines the historical context and how, theoretically, a research idea became necessary for the country's hour.

A nation with various types of geographical topology and diverse regional traditions demands greater autonomy; the paper discusses how a particular category state concept is essential in addressing modern challenges.

KEYWORDS

Gadgill Formula, Niti Aayog, Special Category State, Bihar, Andhra Pradesh

METHODOLOGY

The study deploys a combined approach of qualitative and quantitative methods to study the relevance and implication of the particular category state concept in contemporary governance. The methodology is framed to provide a comprehensive analysis of the Special Category State's historical, theoretical, and practical aspects and their applicability in current socio-political times.

INTRODUCTION

Back in the day when India was a young nation, its growth trajectory and plans and means for achieving the developmental goals were established by the Planning Commission of India which is now NITI AAYOG. For the effective implementation and development of the country, it was essential that states with special needs shall be given preferential treatment so in the year 1969 “THE GADGIL FORMULA” named after the deputy chairman of the Planning Commission DR. GADGIL MUKHARJEE was recommended by the third five-year plan the formula for now the special category state status bestows a state with having a majority allocation of funds from the center on allocation of funds.

The special category state is a financial scheme for states that allows a state which was either of small territorial jurisdiction because of which they could not themselves take up various sorts of development tasks or the revenue and grant collectively for the state were not reprehensibly acceptable for the perennial development work, or rather be clubbed to another state and to replenish the state the Gadgil formula was approved by the state in 1969 which lays down the allocation of funds from central government to state for state plans for development.

The Gadgil-Mukherjee formula:

The Gadgil formula is a method that lays down the fundamentals for a central assistance plan (CAP). The formula principle factors are such as population, per capita, income, and state performance in revenue mobilization. Initially, the population was given the highest weightage, recognizing the need for a state with a large population.

States with lower per capita income received generation were also awarded to encourage better fiscal management at the state level.

As time went by, the formula by Gadgil evolved, incorporating additional criteria like literacy rate, infrastructure development, and social sector performance. Despite modifications, the core principle remains on balancing regional development and reducing economic disparity among all-state.

While the Gadgil Formula played a crucial role in central-state financial relations/ it was subject to great criticism, with states arguing that the formula was not adequately addressing the unique challenges of each state.

HISTORICAL CONTEXT OF CENTRAL ASSISTANCE IN INDIA

PRE- INDEPENDENCE PERIOD

Before 1947. When the country was not independent, the country was under the British Crown, and the role of British administration in helping provinces was very substantial. The pivotal motive of the British administration was to look into the revenue generation for the Crown from the provinces now (state) under their control, even investments which were made only which were of significant importance to the British officials up-liftmen of the society was a hollow vision under their rule. The only investment that they made was in Railways, Ports, and Dockyards. For their own vested interest.

The concept of planned economic development was largely absent, the rulers of the Provinces were given limited autonomy for development. The GOVERNMENT OF INDIA ACT-1935 did limited autonomy for development; however, the act did bring a little autonomy to the province but yet it remained primarily focused in filling up the crown's treasury. The central assistance existed in the same manner as that of the color of truth. There was no structured mechanism for a central assistance plan in play.

Post –Independence Era

Post-Independence India looked upon for a mechanized approach to development that was very evident. Under the then Prime Minister PT. JAWAHARLAL NEHRU the new cabinet was looking for a socially scientific planned economy model. The planning commission of India now referred as the NITI AAYOG was set up in the year 1950 aimed for formulating the five year plan to guide economic development of the country

In the federal structure of our country the Union Government recognized that states particularly those with lower level of developments. They were financially unable on their individual level to take up big infrastructure projects and would generally look up to the center for funds which ultimately led to the introduction of the central assistance plan (CAP), which were allocated to states based on various criteria such as population, economic status, and specific needs. CAP plays a significant key role in funding state level projects sponsored by the central government.

In the initial years, the mechanism of CAP was a successful scheme as its primary focus remained and grants and loan to state, but after a particular time the formula which was initially a hit faced severe challenges and there was a demand for a more effective and more efficient formula to be brought in place rather than the one prevailing. The Gadgil Formula introduced in 1969, later the Gadgil-Mukherjee Formula, took over and increased the utility and effective distribution of funds, and now there was judicial use of resources and a step in bringing all states on the same pedestal eliminating inequality among states.

After independence CAP was a prominent tool in achieving balanced regional development across all states. The federal government used CAP to address interstate disparity, support social welfare programs, and fund infrastructure projects. This assistance played a very crucial role in shaping India’s development graph, ensuring that all states had the resources needed to participate in the national development agenda.

CAP was adversely affected after 1991 economic policy, the planning commission role hurled itself and in 2015, it was replaced by NITI AAYOG still the CAP remains a vital part of India’s Federal Financial System, supporting the state in their development efforts which adopted a more cooperative federalism approach. Even after these changes, central assistance remains an important part of India’s Federal financial system, supporting states in their developmental efforts.

STRUCTURE AND COMPONENTS OF THE CENTRAL ASSISTANCE PLAN

In India’s federal structure CAP plays a very crucial role, it aids the central government to support the state government in implementing government projects, reducing regional disparity and promoting overall growth of the nation. The CAP mechanism has been put in place to ensure the state receives adequate financial resources based on their specific needs and priorities. Over a period of time CAP has helped significantly to address the changing economic infrastructure of the company

A) INSTITUTIONAL FRAMEWORK

The institutional framework of the central assistance plan involves several key players

1. NITI AAYOG:

NITI Aayog's previous planning commission played a vital role in formulation and coordination between central and state governments among various policies. Niti Aayog does not directly allocate funds. However, it plays a very crucial role in determining national priorities and directing the central government allocating process in consultation with the Finance Ministry and other ministries.

2. MINISTRY OF FINANCE:

The Ministry of Finance is the body primarily responsible for the actual distribution of central assistance. It works in sync with NITI AAYOG, so that funds are processed effectively and in the process of national / state priorities

3. FINANCE COMMISION OF INDIA :

The Finance Commission is established every five years and it plays a very crucial role in determining the distribution of central tax revenue between the union government and state government. The recommendation of the Finance Commission influence the overall budget and resource available at the government’s disposal.

B) CATEGORIZATION OF CENTRAL ASSISTANCE

Central assistance plan can be broadly categorized into three types

Normal Central Assistance (NCA):

The utmost basic and traditional form of capital assistance is termed as Normal Central Assistance. It is a distribution based upon the formula which the paper discusses very briefly attributes like population, per capita and revenue efforts NCA is primarily used for state development projects.

Additional Central Assistance (ACA):

Additional Central Assistance provides for specific projects and centrally sponsored schemes that are of significant importance to nation growth but require state wide implementation. Funds released under this area are generally conditional, ensuring that they are used for intended purposes.

Special Central Assistance (SCA):

The Special Central Assistance program is staged to define unique challenges such as those in the north eastern region or territories with a high proportion of backward caste people. This assistance aims to eliminate regional disparity and promote inclusive development.

COMPONENTS OF THE CENTRAL ASSISTANCE PLAN

A) Formula based assistance:

One of the core ingredients of the central assistance plan is formula – based assistance. This is to ensure that funds are allocated to states on parameters like transparent and objective criteria, with the aim of promoting balanced development across the country.

i. Gadgil Formula:

Introduced in 1969, the Gadgil formula was one of the first attempts to create a scientific approach to fund distribution. The formula considered factors such as population (60 % weight), per capita income (25% weight), and performance and special problems (15% weight). The goal was to ensure that states with lower per capita income received more assistance to address their developmental needs.

ii.Gadgil-Mukherjee Formula:

In 1990, the Gadgil formula was modified into the Gadgil- Mukherjee Formula, which introduced additional criteria like fiscal discipline and tax effort.

B) Scheme – specific Assistance

It is yet another important component of the CAP. These funds are issued to specific projects or as known as Centrally Sponsored Schemes (CSS), these projects are aligned with national priority but provide states with space to implement them according to local conditions of the particular state as the case may be.

C) Centrally sponsored schemes(CSS):

CSS are schemes that are funded by both the central and state government, with the central government usually bearing a large share of the cost. These schemes cover a wide range of sectors, including health, education, housing and rural development Eg: PM AVAS YOJNA (PMAY), NATIONAL RURAL HEALTH MISSION (NRHM).

D) Flagship scheme

The central government from time to time launches flagship schemes that focus on specific priorities of the country, such as poverty alleviation, infrastructure development and social welfare. These schemes receive significant funding under the Central Assistance Plan and are closely monitored by various state and union departments to ensure effective implementation.

E) Sectorial Assistance:

In addition to that of flagship schemes, the central government also provides sectorial assistance in various and specific fields aiming to develop the particular sector and up-liftmen of its people for specific areas such as agriculture, infrastructure and social service. This assistance is often regarded as achieving specific milestones or performance indicators, ensuring that states which are vulnerable in certain sectors must cope up and regional disparity among states may be dissolved.

F) Special Category states Assistance

Special Category States a club of states that receives a privileged treatment in terms of central assistance due to their distinct and difficult socio-economic and geographical challenges, these states typically include states like Jammu- Kashmir, Himachal Pradesh, and Uttarakhand. Bihar and Andhra Pradesh are also showing exceptional good will to be added in Bihar and Andhra Pradesh.

SCS is granted based on factors such as hilly terrain, low population density, strategic location, economic backwardness, and a high population of tribal populations. These states face significant challenges in terms of infrastructure development and other geographical challenges making central assistance crucial for development.

States with Special Category Status state receive a significant portion of the state central assistance in form of grants as compared to other states they have a privileged access to these funds under the centrally sponsored schemes. These schemes are for addressing unique challenges faced by states within economic and geographic disadvantage to ensure they participate fully in the national development process.

G) Performance based Assistance

Over the years, there has been an emerging emphasis on performance based assistance, where states shall be awarded for specific reward for achieving their said developmental targets and establishing good governance. This mechanism is aimed at promoting accountability of the executing government and ensuring that central assistance can also be used as a result oriented scheme and not just a financial loop of money scheme.

The central government has introduced various schemes for monetary incentive to undertake reform in areas such as fiscal discipline, ease of doing business, and social sector performance. For e.g.; states to implement agriculture reform, improve health of the general population, or promote education may receive additional central assistance.

WHY DO STATES LIKE BIHAR AND ANDHRA PRADESH REQUIRE SPECIAL STATUS FOR STATE?

ECONOMIC DISADVANTAGE

When we look at Andhra Pradesh post the bifurcation of the state in 2014, Andhra Pradesh faced significant economic challenges. The capital city, Hyderabad, which contributed substantially to the state economy, remained with Telangana. This left Andhra Pradesh with a revenue deficit and fewer economic assets. Special status is sought to attract central funding and industrial investment to bridge this gap

Whereas in the case of Bihar it has historically been one of the economically backward states in India. Low per capita income, high poverty rates, and inadequate infrastructure are a persistent issue. Special status is seen as a way of garnering more central funds to improve these conditions.

GEOGRAPHICAL CHALLENGES

The state is prone to natural disaster; particularly floods due to its location near major rivers like Ganges, these geographical challenges make it difficult to sustain consistent economic development, necessitating additional central support. Whereas in case Andhra Pradesh, the state has a long coastline but lacks significant port infrastructure compared to other coastal states. Special status would help both states develop ports and related infrastructure to multiply the state's capacity in boosting trade and economic activities.

REVENUE DEFICIT

Both states face significant revenue deficits due to lower tax collection in state and high expenditure on social welfare programs, special status would provide more grants and less reliance on loans, easing the financial burden on these states and helping overcome their challenges and contributing to the nation’s growth prominently.

Bihar faces severe economic and development challenges, largely stemming from its geographical vulnerabilities. Frequent and devastating floods, particularly in northern Bihar, not only disrupt lives, agriculture, and infrastructure every year. The state low lying area and poor drainage systems exacerbate waterlogging, leading to agriculture losses and public health issues. Additionally, Bihar’s location in a seismically active zone increases its vulnerability to earthquakes. These geographical disadvantages, combined with low industrialization and high poverty levels, make a compelling case for Bihar to receive Special Status. This position would enable the state to access additional central assistance to bolster disaster management, improve infrastructure, and promote economic growth.

After the bifurcation of Andhra Pradesh in 2014, the state is facing significant economic challenges. The shift of Hyderabad to Telangana deprived Andhra Pradesh of a major revenue generating city, leaving it with a revenue deficit and overall less industrial assets at its disposal. Moreover, Andhra Pradesh is a long coastal state. This limits the state ability to fully benefit financially on its maritime potential. The state faces periodic droughts in its Rayalaseema region, further stressing its agriculture sector. Special status would help Andhra Pradesh attract union funds and investment to build infrastructure and address regional imbalances.

Both states Bihar and Andhra Pradesh Require Special Status to overcome their unique geographical and economic challenges. For Bihar, Special Status will provide the necessary resources to tackle its food related issues and help uplift its backward regions. For Andhra Pradesh, it would help to bridge the gap created by the bifurcation and promote industrial growth. Special status is essential for both to achieve balance development and ensure that their populations have access to better infrastructure, education, healthcare, and economic

opportunity. Central assistance under this designation would play a very significant role in addressing their development needs fostering inclusive growth.

Special status should be seen as a means for states like Andhra Pradesh and Bihar to overcome their unique challenges of geography and economics and achieve balanced development. Central assistances under this plan would help address economic disparities, infrastructure deficits, and social welfare needs, leading to overall growth and development

CONCLUSION

For Bihar, Special Status is not about economic aid but is a necessity to tackle the recurrent floods that destroy the state every year. Factors like lowland elevation, poor drainage and inclination to earthquakes further increases its vulnerability. These are the kind of challenges which are beyond the state's capacity to manage alone which necessitates this presence of sustainable central support. Special status to Bihar would let Bihar access more central funds, implement long term floods control measures and enhance disaster management mechanisms ultimately leading to stabilized economic growth and improved living conditions for the people of Bihar.

For Bihar, Special Status is not a matter of economic aid but a necessity to combat the recurrent floods that devastate the state annually. The state's low land elevation, poor drainage, and susceptibility to earthquakes further compound its vulnerabilities. These are the kind of challenges which are beyond the state's capacity to manage alone, necessitating sustainable central support. Special status would allow Bihar to access more central funds, implement long term flood control measures, and enhance disaster management capabilities, ultimately leading to more stable economic growth and improved living conditions for its people.

Similarly, Andhra Pradesh’s need for Special Status is even more important since it is bifurcated. This bifurcation has led to revenue deficit and fewer industrial assets. While Telangana retained everything as the capital city of Hyderabad. The coastal states potential is underutilized due to inadequate infrastructure and frequent drought in the Rayalaseema region Special Status would help Andhra Pradesh cope up and provide with resources to develop its industrial base, to overcome the economic setbacks of bifurcation and achieve long term growth.

Providing special status to these states portray wider concern about regional inequality in India as the policy framework for SCS has traditionally been limited to some areas, the evolving needs of the states of states like Bihar and Andhra Pradesh call for a more flexible inclusive approach. Providing Special Status to these states is like a step forward in building a more resilient and equitable nation where in the process of development of state is left behind

AUTHOR: RATNA GOPAL SINGH

DR. RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY