What's Special Status to a State & What are the benefits?

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What's Special Status:

The term defines it all.  Special Status to a State is nothing but the Centre treats the State in a special way, like giving additional grants, tax exemptions..etc in all most all the possible matters.  After the bifurcation of Andhra Pradesh in 2014, the Govt. at the Centre has promised the State to give Special Status for 5 years.  The Prime Minister (Manmohan Singh) announced it in the Parliament.  But, unfortunately, elections changed everything.  Now the present Union Govt. is not willing to grant Special Status to Andhra Pradesh or any other state.
       Most people today are not aware of Special Status to a State.  Let's see some things about Special Status and how it differs from Special Package.

Generally given by taking these points into consideration:

  • Hilly and difficult terrain
  • Low population density
  • Strategic locations along the borders of the country
  • Economic and infra backwardness
  • Non-viable nature for state finances

Benefits:

  • Preferential treatment in getting Central funds assistance
  • Concession on excise duty, this attracts industries to the state
  • Significant 30% of the Centre’s gross budget goes to the Special category states
  • These states avail themselves of the benefit of debt swapping and debt relief schemes 
  • In centrally sponsored schemes and external aid special category states get it in the ratio of 90% grants and 10% loans, while other states get 30% of their funds as grants.

These States have the Special Status till date:

Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Jammu & Kashmir, Himachal Pradesh, and Uttarakhand.
Hence, special-category status catalyses the inflow of private investments and generates employment and additional revenue to state. Since centre bears 90% of state expenditure on all centrally-sponsored schemes, state can take more welfare-based schemes from the new savings.

What's Special Package?

Special Package is nothing but some funds to several Ministries of the State.  It can't be compared with Special Status to a State in any manner.  Package gives some financial help to the State one time and that's the end, whereas Special Status to a State is given by the Central Govt for a period of years and as long as the Centre gives the Special Status to the State, the state enjoys tax exemptions and other benefits as stated above.
Source(s):  Satyam Singh, Arpita Yadav

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