Chandrababu Naidu and Nitish Kumar are both indispensable to the NDA Government. They have now revived their old demands of special category status for their states with renewed vigour, which they had so passionately demanded in the past. Andhra Pradesh was promised this status on the floor of Parliament by no less than the then Prime Minister Manmohan Singh when Telangana was carved out of it to include two of its most prosperous districts ~ Hyderabad and Ranga Reddy. These districts earned the bulk of revenues for the undivided state. Nitish Kumar has raised this demand time and again and has even prepared a special paper on this, highlighting why Bihar absolutely needed this status to address its backwardness.

Eleven economically backward hill states of India, including eight North-eastern states and the three Himalayan states including J&K, now an UT, Uttarakhand and Himachal Pradesh, comprised the group of “Special Category States”. These states, created at different points of time in the history of independent India, suffered from many drawbacks arising from their remoteness and geographical isolation, lack of resources, capital and infrastructure, economic backwardness being their only inheritance from the past. The Centre sought to address this asymmetry, partly through Constitutional provisions under Schedules V and VI, and partly through the mechanism of awarding them ‘special category status’ which was designed to solve the problems of their economic backwardness by giving them liberal access to Central funds.

This was rather an unimaginative solution that relied solely upon the use of funds, ignoring the inherent structural weaknesses and capacity constraints of these states. Like many of our national policies regarding backward areas, this too was an ad-hoc solution, applied without insight into the nature of their problems. States were accorded this status by the National Development Council based on Planning Commission recommendations on fulfilling an arbitrarily defined set of criteria that included: (1) hilly and difficult terrain, (2) low population density and/or sizeable share of tribal population, (3) strategic location along borders with neighbouring countries, (4) economic and infrastructural backwardness, and (5) non-viable nature of state finances.

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Once the status is awarded, the specific assistance pattern follows to the state in perpetuity. There is no stipulation as to what was intended to be achieved by such a status, or the time period within which this is to be achieved. The........

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