Why Bihar, AP Are Unlikely to Get Special Status in Modi 3.0 Despite Nitish & Naidu Being Key Allies

New Delhi: Two veteran politicians of the coalition era emerged as the kingmakers in the just-concluded Lok Sabha elections as the Bharatiya Janata Party (BJP) fell short of the majority. Nitish Kumar-led Janata Dal United and Chandrababu Naidu-led Telugu Desam Party supported NDA government was formed at the Centre with Narendra Modi swearing-in as the Prime Minister of the country for the third time in a row.

Two similarities were pointed out between the two allies of the BJP. Firstly, both party supremos - Nitish Kumar and Chandrababu Naidu - are experienced players of coalition politics and have witnessed the coalition era of 1990s first hand. Second, both Nitish Kumar and Chandrababu Naidu have been seeking 'special category status' for their respective states for a long time now. Many claimed that special category status may be used as bargaining chip by the two veteran leaders.

The Congress-led Opposition also mocked Nitish Kumar and Chandrababu Naidu for supporting the BJP-led NDA, asking to clarify if the leaders will still pursue the demand of special category status. "Will the prime minister deliver the special category status for Andhra Pradesh like he promised in the holy city of Tirupati in March 2014...Unless (Chandrababu) Naidu garu takes this issue up aggressively, there is little hope that the• 'one-third' Pradhan Mantri will act," said Congress general secretary Jairam Ramesh a day before Naidu's oath taking ceremony.

However, despite the support of Nitish Kumar and Chandrababu Naidu being crucial for the BJP, the two states - Bihar and Andhra Pradesh - are unlikely to be granted the 'special category status' in Modi 3.0 government.

What is Special Category Status?

Special Category Status is a classification given by the Central government to states which have been facing geographical or socio-economic disadvantages. While the Indian Constitution has no mention of Special Category Status, it was included in the Fifth Finance Commission in 1969.

Several states including Jammu and Kashmir, Assam, Nagaland, Himachal Pradesh, Uttarakhand and Telangana have been accorded the special category status.

Why SCS is Unlikely For Bihar and Andhra

There no more exists a provision of according special category status to states as it was done away with the concept in 2015 itself. As the 13 financial commission was dissolved, the 14th commission did not make any distinction between special and general category states.

The new commission suggested that the resource gap being witnessed by the states must be dealt with through tax devolution. Simply, the special category status no more exists, hence, could not be accorded to any state demanding it. However, if the central government wishes, it could bring back the provision. 

If the BJP-led NDA government decides to revisit the status and meet the demands of Bihar and Andhra Pradesh for a special category status, the proposal has to be referred to the 16th Finance Commission under Arvind Panagariya or to the NITI Aayog for their clearance.

Financial Packages Ahead?

The biggest benefit of being accorded a special category status was that the states got 90 per cent of the financial contribution from Centre for all centrally sponsored schemes, while their contribution was limited to only 10 per cent. For the general category states, this ratio happens to be 60:40. 

The two states may receive special packages like funds for supporting infrastructure development in Amravati, Andhra's new capital.  Central government has the option to grant additional financial aid package to states having revenue deficit and facing resource gap. Andhra Pradesh and Bihar may be granted additional funds under this scheme.