Centre denies Bihar's 'special category' status; no new designation allowed
.webp)
The Centre, on Monday, rejected the JD(U)’s request for ‘special category’ status for Bihar during the all-party meeting.
No new states are being awarded ‘special category’ status at present, as the Indian Constitution does not accommodate such classification.
On Sunday, Manoj Kumar Jha, a leader of the Rashtriya Janata Dal (RJD), said Bihar is requesting both special state status and a distinct financial package. He noted that the call for special status for Bihar has persisted since the state was split into Bihar and Jharkhand.
“This demand of Bihar (special state status) is called unrealistic by many people... This demand has been there since the division of Bihar and Jharkhand... Apart from political parties, we want a change in the policies of the central government which considers Bihar as a centre of labour supply... We want both, special state status and special packages,” Jha told news agency ANI.
The Gadgil formula
The issue of special category status was initially discussed in a National Development Council (NDC) meeting held in 1969. During this session, the DR Gadgil Committee proposed a formula for distributing central assistance to state plans in India. Before this, there was no dedicated formula for fund allocation, and grants were allocated based on individual schemes. The Gadgil Formula, which received NDC approval, gave precedence to special category states such as Assam, Jammu & Kashmir, and Nagaland, ensuring that their requirements were prioritised in the allocation of Central assistance.
In 1969, the 5th Finance Commission recognised the historical challenges faced by certain regions and introduced the special category status. This designation afforded specific disadvantaged states special benefits, such as central assistance and tax relief. The National Development Council allocated Central Plan Assistance to these states based on this status.
Up until the financial year 2014-2015, the 11 states granted special category status enjoyed various benefits and incentives. However, with the dissolution of the Planning Commission and the establishment of the NITI Aayog in 2014, the 14th Finance Commission’s recommendations led to the cessation of Gadgil Formula-based grants. Consequently, the share of the divisible pool allocated to all states was increased from 32 per cent to 42 per cent.
Tax devolution and allocation changes
Starting in 2015, the 14th Finance Commission removed the differentiation between general category and special category states in the distribution of shareable taxes. It raised the portion of net shareable taxes allocated to states from 32 per cent to 42 per cent for the 2015-2020 period.
The 15th Finance Commission continued this allocation at 41 per cent for the periods 2020-2021 and 2021-2026, adjusting by 1 per cent due to the establishment of the Union Territory of Jammu & Kashmir. This adjustment was designed to address resource disparities among states through tax devolution, with Post-Devolution Revenue Deficit Grants provided when tax devolution did not fully cover the identified gaps.
Other Latest News
.webp)
The Supreme Court on Friday agreed to list for an early hearing the appeal of US-based creditor Glas Trust Company LLC against a judgment of the NCLAT, which had stayed insolvency proceedings against ed-tech firm BYJU's and approving its Rs 158.9 crore dues settlement with the BCCI.
A bench comprising Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Misra was urged by senior advocate NK Kaul, appearing for the ed-tech major, that the case needed to be heard at the earliest.
.webp)
India's rupee became the second worst Asian currency in August, after Bangladesh's Taka. While most Asian currencies gained against the dollar, both Rupee and Taka weakened. The Indian unit was down 0.17 per cent in August and 0.13 per cent in September so far against the dollar. While the currency weakened in the last two months, the Reserve Bank of India’s intervention ensured that volatility was least as the currency traded in a tight range. Intervention also prevented the rupee from hitting the psychological level of 84 per dollar.
.webp)
Investors' wealth plummeted by Rs 4.12 trillion during the morning trade on Friday as markets faced a massive correction tracking a weak trend in global peers and fresh foreign fund outflows.
Falling for the third day running, the 30-share BSE Sensex tanked 896.7 points or 1.09 per cent to 81,304.46 during the morning trade.
.webp)
The Directorate of Enforcement (ED) carried out raids at the residence of former principal of RG Kar medical college and hospital, Sandip Ghosh, among othre places in Kolkata in a case pertaining to the financial irregularities in the RG Kar Medical College and Hospital.
.webp)
The Goods and Services Tax (GST) Council in its meeting on Monday is likely to decide on four options regarding tax treatment of health insurance, with the cost to the exchequer potentially ranging from nearly Rs 650 crore to Rs 3,500 crore.
These four options have emerged from a detailed analysis by the Council’s fitment panel, which includes revenue officials from both central and state governments, and follow a request from the Department of Financial Services (DFS) to reduce taxes on health insurance products to make them more affordable and accessible.
.webp)
.webp)
.webp)
.webp)
.webp)
