Following the 2024 General Elections, which resulted in a split mandate, the Janata Dal (United) led by Nitish Kumar and the Telugu Desam Party led by Chandrababu Naidu are set to be key players in forming the central government. This has brought renewed attention to their earlier demands for special category status for Bihar and Andhra Pradesh, respectively. Both parties are part of the Bharatiya Janata Party-led National Democratic Alliance (NDA), with the TDP securing 16 seats and the JD(U) winning 12.
After the election results were declared on June 4, Congress General Secretary Jairam Ramesh affirmed that his party would honor the commitment to grant special status to Andhra Pradesh, a promise made by former Prime Minister Manmohan Singh, if they come to power.
Reports also indicate that the JD(U) is advocating for special status for Bihar.
Notably, the JD(U) has reaffirmed its alliance with the NDA.
What is Special Category Status?
Special Category Status is a designation given by the Central government to aid the development of states facing geographical and socio-economic challenges.
States with Special Category Status:
Eleven states, including Assam, Nagaland, Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand, and Telangana, have been granted special category status. Telangana received this status upon its creation, following its separation from Andhra Pradesh.
Benefits of Special Category Status States
Special category status provides several benefits to the designated states. Firstly, these states receive higher funding, with 90% of the funds for centrally-sponsored schemes provided by the Centre, compared to 60% or 75% for other states. The remaining funds are contributed by the respective state governments. Additionally, special category states can carry forward unused funds from one fiscal year to the next, ensuring effective resource utilization. These states also benefit from tax concessions, including exemptions in excise and customs duties, as well as income tax and corporate tax. Furthermore, special category states receive a higher allocation from the Centre’s Gross Budget, amounting to 30%, which offers significant financial support for their development efforts.
‘Special Status’ vs ‘Special Package’ for Andhra Pradesh
The debate over ‘special status’ versus ‘special package’ for Andhra Pradesh has resurfaced, with the Telugu Desam Party (TDP) playing a crucial role in the formation of the next NDA government. For Chandrababu Naidu, this is a vital issue as he faced heavy criticism for not securing the state’s “rights” from the Centre, leading to the TDP’s exit from the BJP-led NDA in 2018 and its subsequent loss in the state assembly elections.
The TDP’s demand for ‘special category status’ (SCS) for Andhra Pradesh cannot be easily addressed with a special ‘assistance package’ like the one proposed in 2016-17.
The demand for SCS for Andhra Pradesh dates back to the state’s contentious bifurcation and Prime Minister Manmohan Singh’s 2014 assurance during the passage of the AP Reorganisation Act that the parent state would receive SCS for five years as compensation for losing its revenue-rich capital, Hyderabad.
Despite being part of the NDA, Naidu was unable to secure SCS due to tightened finances under Modi’s central government. Instead, the Centre offered ‘special assistance’ for five years, including the repayment of loans and interest for certain projects.
However, the release of ‘special assistance’ funds faced obstacles, with increased red tape restricting the flow of funds. This led to dissatisfaction in Andhra Pradesh, as the state argued that the compensation promised under SCS would have been much greater than what was offered under the ‘special assistance’ package.
Facing criticism and opposition pressure, Naidu withdrew from the NDA in 2018, citing “injustice” to the state due to the denial of SCS.
