Special Category Status for states

• SCS was a classification given by the Central government to assist the development of states that face geographical and socio-economic disadvantages.

• Introduced in 1969 based on the recommendations of the Fifth Finance Commission.

• There is no constitutional provision for categorising any state as a special category state

• However, the 14th Finance commission discontinued this classification.

• The 15th Finance commission came up with another formula to compensate such states through higher tax devolution and state-specific grants.

Criteria for SCS:

To qualify for SCS, states must have fulfilled the following requirements (based on the Gadgil formula):

• Hilly and Difficult Terrain: States need to have challenging terrain.

• Population Density and Tribal Population: They should have low population density and/or a sizable share of tribal population.

• Strategic Border Locations: States in strategic locations along borders with neighbouring countries are considered.

Special Category States

• SCS status was provided to Jammu and Kashmir (currently union territories), Assam, Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand and Telangana.

Benefits of SCS:

• Financial Assistance: States with SCS receive additional financial aid from the central government beyond the recommendations of the Finance Commission. 

• They will get a higher share in Centrally Sponsored Schemes.

• Tax Breaks: They may enjoy tax breaks and other incentives to promote development.

• Priority in Resource Allocation: SCS states get priority in resource allocation for infrastructure, education, and healthcare.