Special Category status:
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States which are granted special category status enjoy several benefits. These include
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preferential treatment in getting central funds
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concession on excise duty to attract industries to the state
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a significant 30% of the Centre’s gross budget also goes special category states
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These states can avail the benefit of debt-swapping and debt relief schemes
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In the case of Centrally Sponsored Schemes and external aid, Special Category States get it in the ratio of 90% as grant, and 10% as loans. Other states, however, get 30% of their funds as grants
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Special Category States also get tax breaks to attract investment
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A Special Category Status catalyses the inflow of private investments and generates employment and additional revenue for the state. Besides, the State can create more welfare-based schemes from the new savings since the Center bears 90% of the expenditure on all Centrally Sponsored Schemes. Further, more grants from the Center helps in building state infrastructure and social-sector projects.
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The Constitution of India does not include any provision for the categorization of any state as a Special Category Status state.
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However, in the past, Central Planned Assistance were given to certain states on the ground that they are historically disadvantaged in comparison to others.
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The concept of SCS emerged in 1969 when the Gadgil formula (that determined Central assistance to states) was approved.
Criteria for Special Category Status:
The erstwhile Planning Commission body, the National Development Council (NDC), granted Special Category Status to states based on a number of features, which included:
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Hilly and difficult terrain
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Low population density
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Presence of a sizeable tribal population
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Strategic location along international borders
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Economic and infrastructural backwardness
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Non-viable nature of state finances
Jammu and Kashmir was the first state to get Special Category Status and another 10 states were added over the years, with Uttarakhand being the last in 2010.
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