What is the meaning of a special status to an Indian state? What are the criteria to get it, and how does it help a state to grow well?

The special status is granted to the states on different parameters.
1. Hilly and difficult terrain
2. Low population density
3. Strategic location along the borders of the country
4. Economic and infra structure backwardness
5. Non-viable nature for state finances.

Because the special category status will get benefits like
1. 90% grants and 10% loans while for normal states these are 70 and 30 respectively
2. Concession of excise duty (attract the industrial investments)
3. Preference in central financial assistance i.e, funding
By granting special category status, the residual part will get benefits and will be able to attract more investments which help it to revive its economy.

There is a huge difference between the terms ‘Special Status’ and ‘Special Category Status’

» Special status is guaranteed by the Constitution of India through an Act passed by the two-third majority in both houses of the Parliament, as in the case of Jammu and Kashmir, whereas Special Category Status is granted by the National Development Council (NDC), an administrative body of the government.

» Special Status empowers legislative and political rights while Special Category Status deals only with economic, administrative and financial aspects.

» The concept of a special category state was first introduced in 1969 when the 5th Finance Commission sought to provide certain disadvantaged states with preferential treatment in the form of central assistance and tax breaks

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» Initially three states Assam, Nagaland and Jammu & Kashmir were granted special status but since then eight more have been included (Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura and Uttarakhand).

» So, currently total 11 states enjoy the Special category status.

1. Arunachal Pradesh

2. Assam

3. Himachal Pradesh

4. Jammu and Kashmir

5. Manipur

6. Meghalaya

7. Mizoram

8. Nagaland

9. Sikkim

10.Tripura

11. Uttarakhand

The special status is given to states based on certain parameters. Which are

· Low resource base

· Hilly and difficult terrain

· Low population density

· Sizable share of tribal population

· Hostile location

» The benefits that a state gets under the provision of being a 'special state' are -

· Preferential treatment in getting Central funds assistance

· Concession on excise duty, this attracts industries to the state

· Significant 30% of the Centre’s gross budget goes to the Special category states

These states avail themselves of the benefit of debt swapping and debt relief schemes

· In centrally sponsored schemes and external aid special category states get it in the ratio of 90% grants and 10% loans, while other states get 30% of their funds as grants.

Special Category states like Assam, Jammu and Kashmir and Nagaland were given preference. Their needs should first be met out of the total pool of Central assistance.

» The remaining balance of the Central assistance should be distributed among the remaining states on the basis of the following criteria:

1. 60 per cent on the basis of population;

2. 7.5 per cent on the basis of tax effort, determined on the basis of individual State's per capita tax receipts as percentage of the State's per capita income;

3. 25 per cent on the basis of per capita state income, assistance going only to States whose per capita incomes are below the national average;

4. 7.5 per cent for special problems of individual states.