Govt pushes for 'special category status' for Seemandhra with Plancom proposal

Written by Subhash Narayan | New Delhi | Updated: Feb 27 2014, 23:54pm hrs
The government may opt to circumvent the National Development Council (NDC) to accord special category status to Seemandhra for a period of five years.

Sources said the Planning Commission has readied a Cabinet note proposing the status for Seemandhra, even though experts say the state wont qualify for the same under the current criteria. Fridays Cabinet meeting is likely to consider the Plan panels proposal, given the urgency with which the proposal has to be implemented as the electoral code of conduct could come into play anytime now.

The eleven states which are now classified as special category states have got the status after approval by the NDC, which consists of chief ministers of all states, besides the Centre. The Centre has so far been resisting the demands from Bihar, Odisha and Rajasthan for the special category tag, and insisted that such proposals would need the NDC approval.

Seemandhra, the region that would remain after the formation of the new state of Telangana from Andhra Pradesh, is getting different treatment as it is politically important for the ruling Congress party to give it special status. Special category states receive 90% Central assistance as grant and just 10% as loan as against the composition of Plan assistance of 30% grant and 70% loan for non-special category states.

The selection of special category states have been made on the basis of various criteria including hilly and difficult terrain, low population density and/or sizeable share of tribal population, strategic location along borders with neighbouring countries, economic and infrastructure backwardness and non-viable nature of state finances. Under most of these, Seemandhra is unlikely to qualify for the status.

As per the norm, special category status of states is not given for a particular time frame. In case of Seemandhra, the status (being given) is for a period of five years and this the Centre can do by taking Cabinet approval for change of use of funds released as Central assistance to the state plan, said a source in the Planning Commission. That essentially means that rather than the special category tag, what Seemandhra would really get is additional Central assistance.

The source added that the ad hoc measure could be reviewed by the next government and if need be, could be converted into a permanent arrangement by convening a meeting of the NDC. The BJP has already announced that if comes to power at the Centre, the term of the special category for Seemandhra would be extended for a period of 10 years.

Planning Commissions deputy chairman Montek Singh Ahluwalia on Tuesday had said that based on the prime ministers statement (in Rajya Sabha), the Commission may move a Cabinet note on the issue. The prime minister has said that for the purpose of Central assistance, it (Seemandhra) will be treated like a special category state. That just requires a Cabinet (approval), Montek had said.

In addition, a few special category states are also permitted by the Centre to provide tax holiday to the industry to give a boost to industrialisation. Seemandhra would have to wait for the finance ministrys approval separately to get this benefit.

The state could also be offered higher allocation from the Backward Region Grants Fund as was done in the case of Bihar last year, which failed to secure a special category status.

The allocation for the 12th (2012-13 to 2016-17) BRGF programme stands at R29,306.00 crore.