Special Category Status (SCS) : Important Topics for UPSC Exams​

Special Category Status (SCS) : Important Topics for UPSC Exams

What is ‘Special Category Status’?

  • The classification was started after the suggestion given by the 5th finance commission in the year 1969.

  • By identifying that some regions in our country are historically disadvantaged in contrast to others, Central plan assistance to the SCS States has been granted in the past by the erstwhile Planning Commission body, National Development Council (NDC).

  • The NDC granted this status based on the features of the States which included:

    • hilly and difficult terrain,

    • low population density or the presence of sizeable tribal population,

    • strategic location along international borders,

    • economic and infrastructural backwardness and

    • non-viable nature of State finances.

  • However, there is no Constitutional provision to take such steps it is only in the hands of the executives to take such decisions as and when they seem necessary and same goes for the criteria while selecting states for central assistance under this scheme.

What kind of assistance does the SCS States receive?

  • They used to receive grants based on the Gadgil-Mukherjee formula, which effectively allowed for nearly 30 percent of the Total Central Assistance to be transferred to the SCS States as late as 2009-10.

  • Centrally Sponsored Schemes for the SCS States was given with 90% Central share and 10% State share.

  • However, after the suggestion from NITI AAYOG and the 14th finance commission recommendation, central plan assistance to the SCS states is subsumed in the increased sharing of the divisible tax pool (42% from 32%) and no longer there in the plan expenditure. Further, plan and non-plan system is no longer there.

  • Money which remains as unutilized does not lapse and gets carry forward in the next year.

  • Substantial reduction in excise & customs duties, income tax and corporate tax.


What were the Problems in the working of SCS?

  • SCS selection was not transparent and many times political reasons determined the destiny of the states

  • Lobbying by some states and regional parties led to opportunist classifications.

  • The Selection criteria were in the hands of the central government and states did not have much say.

  • As per many reports and data, it is quite evident that even after awarding Special category status not much economic progress has been noticed among states.


Now there is no provision of SCS, however, the executives or the parliament may devise some scientific methods in the NITI AAYOG to enhance cooperative federalism and address the backwardness, poverty, development related challenges of the country.

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