Why does Bihar want special category status?

Bihar seeks special category status to receive additional central funding, tax incentives, and support for developmental projects, aiming to overcome its economic and social challenges.

What are the main criteria for special category status?

The criteria include geographic disadvantages, economic backwardness, and infrastructure gaps. States that meet these conditions are considered for special category status.

How would special category status benefit Bihar?

Special category status would provide Bihar with increased central funding, tax incentives to attract businesses, and the ability to launch large-scale developmental projects, boosting the state's growth.

What are the arguments against granting Bihar special category status?

Opponents argue that the financial implications for the central government are significant and that granting the status could set a precedent for other states, complicating policy implementation.

Bihar Demanding for Special Category Status

Table of Contents

Introduction

Bihar Demanding for Special Category Status from the Central Government, which would raise the amount of tax revenue the state receives from the Center. Chief Minister Nitish Kumar of Bihar recently reaffirmed this demand.

Why is Bihar Demanding for Special Category Status?

Historical and Structural Challenges
- Significant economic obstacles, such as a shortage of industrial growth and little investment opportunity, confront Bihar.
- The state’s split caused companies to relocate to Jharkhand, worsening Bihar’s problems with employment and economic development.
Natural Calamities
- Natural disasters such as floods in the north and severe droughts in the south plague the state.
- These frequent calamities interfere with agricultural operations, particularly regarding irrigation systems, and the insufficiency of the water supply impacts livelihoods and the economy’s stability.
Lack of Infrastructure
- Bihar’s poor road network, restricted access to healthcare, and issues with its educational facilities are all symptoms of the state’s weak infrastructure, which impedes the state’s overall growth.
- The Centre’s Raghuram Rajan Committee categorized Bihar as the “least developed category” in 2013.
Poverty and Social Development
- There are a part of family units in Bihar that are underneath the destitution line, contributing to the state’s tall destitution rate.
- Bihar is the state with the greatest percentage of the poor, with 26.59% multidimensionally poor in 2022–2023—much higher than the national average of 11.28%, according to a recent NITI Aayog poll.
- Bihar’s per capita GDP is Rs. 60,000, whereas the national average for 2022–2023 is Rs. 1,69,496.
- The state also trails in many other measures of human development.
Funding for Development
- A further way to get significant funding from the central government to solve persistent socioeconomic issues is to apply for SCS.
- The Bihar administration projected last year that the State will get an extra 2.5 lakh crore rupees over five years for the benefit of 94 lakh crore impoverished families if the special category designation is granted.

What are the Arguments Against Bihar Getting the Special Category Status?

Nonetheless, some detractors contend that since the money would go to poorer states, it may reward bad policies and penalize well-performing governments.
Bihar’s historically weak legal system has posed a significant obstacle to investment and development.
According to the 14th Finance Commission, the Center already transfers 42% of taxes to the states, up from 32%. Any further financial burden on the Center may affect other federal programs and welfare initiatives.
India’s Bihar state is among the fastest-growing in the country. Bihar’s GDP expanded by 10.6% in 2022–2023, above the 7.2% average for the country.
While more money could help in the near term, better governance and an inviting investment climate are necessary for long-term prosperity.
Bihar does not match the need for steep terrain and geographically problematic places, which is seen to be the key cause for difficulty in infrastructure development, even though it fits most of the conditions for the grant of SCS.
The requests have been continuously rejected by the Central government, which cited the 14thFC report, which recommended that no State be granted the SCS to the Center.

What is a Special Category Status?

The Center developed the SCS categorization to aid in the development of states that have socioeconomic and geographic disadvantages.
SCS is not mentioned in the Constitution, and this categorization was carried out based on suggestions made by the Fifth Finance Commission in 1969.
In 1969, Jammu and Kashmir, Assam, and Nagaland were granted status for the first time. The newest Indian state to receive the designation is Telangana.
SCS solely addresses the economic and financial aspects of a situation, in contrast to special status, which grants additional legislative and political privileges.
For example, before the abolition of Article 370, J&K had Special status.

What are the Parameters of a Special Category Status?

Mounted Terrain
Minimal Population Density and/or a Significant Tribal Population Share
Strategic Position Near Boundaries with Adjacent Nations
Infrastructure and Economic Regression
Not feasible State Finances’ Character

What are the Benefits of a Special Category Status?

States with special category status get 90% of the funding needed for a Centrally-Sponsored Scheme from the Center, compared to 60% or 75% for other states; the state governments supply the remaining amounts.
Money that is not spent in a fiscal year is carried over and does not expire.
These states receive significant breaks on income tax, corporation tax, and excise and customs taxes.
States in Special Categories get thirty percent of the Center’s Gross Budget.

Also read: Unemployment In India 2024

What are the Challenges for Special Category Status?

Economic Challenges in Bihar
- Poverty Levels: One of the poorest states in India is Bihar, where a sizable fraction of the populace lives in poverty. Even with recent economic expansion, poverty is still a major problem that lowers people’s quality of life in general.
- Unemployment Rates: The state also has significant unemployment. Many people are forced to relocate to neighboring states in quest of employment due to limited industrialization and a dearth of job prospects. The local economy is further strained, and social institutions are upended by this movement.
- Infrastructure Issues: In comparison with other developed states, Bihar’s infrastructure is lacking. limited public transit, limited electrical supplies, and poor road networks impede economic growth and discourage investment.
Social Challenges in Bihar
- Education: Bihar’s education system confronts several challenges, such as low literacy rates and subpar infrastructure. Basic utilities are lacking in many institutions, and the dropout rate is startlingly high, particularly for female students.
- Healthcare: There are not enough medical experts or facilities in Bihar, which results in poor quality healthcare services. High rates of child and maternal mortality as well as a general lack of access to necessary healthcare services are caused by this deficit.
- Social Inequality: There is a great deal of social inequality, with big differences according to caste, gender, and economic standing. For significant portions of the populace, these disparities restrict possibilities and feed the cycle of poverty.
Political Dynamics
- Key Political Players: Political heavyweights from both the opposition and the ruling party in Bihar are among those who support the demand for special category status. They contend that this status is justified by the state’s need for growth.
- Government Stance: The national government has taken a conflicted stand on this matter. Despite acknowledging Bihar’s difficulties, several governments have been hesitant to award the state special category status, citing complicated policy and budgetary issues.
- Opposition Views: Bihar’s opposition parties frequently accuse the federal government of ignoring the demands of the state. They support special category status as a means of resolving Bihar’s enduring problems.

Way Forward

To maintain equity and openness, the standards for awarding SCS must be reviewed and improved.
To address the State’s socioeconomic backwardness, the Raghuram Rajan Committee, which was established by the Center, proposed a new approach in 2013 that is based on a “multi-dimensional index” for devolving money rather than a SCS.
Implement measures that encourage economic diversification and self-sufficiency to progressively lessen states’ reliance on federal aid. Encourage the states to produce their sources of income.
Experts contend that for Bihar to see sustained economic progress, the rule of law must be strengthened.
It is necessary to take additional measures to motivate states to draft comprehensive development plans, such as:
- Education Revamp: The RTE Forum, a group of experts, has proposed enhancing teacher preparation, ICDS centers, and pedagogical shifts toward a more technology-integrated and participatory approach.
- Job Creation and Skilling: Bihar’s youth bulge needs skilled labor opportunities. To draw in firms and generate employment, emphasis should be placed on skill-building programs that align with expanding sectors and encourage entrepreneurship through initiatives like the Single-Window Investment Promotion Board (SIPB).
- Infrastructure Development: Growth in general depends on improved infrastructure. Improving irrigation systems to combat droughts and floods should be the main priority, as should building a strong transportation network to link rural and urban regions, draw in investment, and increase agricultural commerce.
- Women’s Empowerment and Social Inclusion: Social stratification and gender equality are problems in Bihar. Initiatives aimed at addressing social inequality by enforcing the law more strictly and fostering social peace were combined with an emphasis on women’s education, skill development, and financial inclusion.

Conclusion

Bihar’s demand for Special Category Status underscores its need for increased tax revenue from the Central Government to address persistent economic and social challenges. Natural calamities, poor infrastructure, and high poverty rates hinder its growth. While critics argue this may reward poor governance, proponents believe it is essential for equitable development and alleviating socio-economic disparities in the state.

Frequently Asked Questions(FAQs)

Why does Bihar want special category status?
Bihar seeks special category status to receive additional central funding, tax incentives, and support for developmental projects, aiming to overcome its economic and social challenges.
What are the main criteria for special category status?
The criteria include geographic disadvantages, economic backwardness, and infrastructure gaps. States that meet these conditions are considered for special category status.
How would special category status benefit Bihar?
Special category status would provide Bihar with increased central funding, tax incentives to attract businesses, and the ability to launch large-scale developmental projects, boosting the state’s growth.
What are the arguments against granting Bihar special category status?
Opponents argue that the financial implications for the central government are significant and that granting the status could set a precedent for other states, complicating policy implementation.

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