Nitish Kumar’s JD(U) on Saturday passed a resolution during its national executive meeting, calling for Special Status category for Bihar. Bihar Chief Minister Nitish Kumar has consistently raised this demand, citing the state’s economic challenges and poverty. He has argued that Bihar has not received adequate economic support. He once again made this demand in November last year during the release of the caste census.

“The demand for special state status for Bihar is not new. It is a crucial step towards accelerating Bihar’s growth trajectory and addressing the state’s unique challenges,” a senior JDU leader after the meeting.

The demand for special category status for Bihar gains importance now because Prime Minister Narendra Modi’s BJP depends on support from Nitish Kumar’s JD(U), which holds 12 seats in the newly elected Lok Sabha, to remain in power. When the BJP fell short of the majority mark of 272 seats, the TDP and JD(U) stepped in to take the NDA to 293 seats.

“When Narendra Modi takes the oath as the Prime Minister for the third time, the people of Bihar expect a special package that will put the state on the path to becoming a more developed economy,” JD(U) spokesperson Arvind Nishad had earlier said.

RJD leader Tejashwi Yadav, who was on the same flight as the Bihar CM when he was on his way to Delhi after the Lok Sabha results were announced earlier this month, reportedly had a word with his former boss.

Yadav advised Kumar that he should leverage his position as “kingmaker” in the NDA to ensure special status for the state.

“NDA has numbers but we want the government which will be formed to take care of Bihar and ensure that it gets special status. It is a good opportunity for Nitish Kumar if he is the kingmaker, he should make sure that Bihar gets a special status and conduct caste-based census in the entire country,” Yadav told media.

What is a special category state?

Special category states (SCS) are designated by the Centre to support the development of regions facing geographical and socio-economic challenges. This classification, although not constitutionally mandated, originated from the recommendations of the 5th Finance Commission.

In 1969, under Chairman Mahavir Tyagi, the commission applied the Gadgil Formula to grant special category status to Jammu & Kashmir, Assam, and Nagaland. Historically, this status was intended for plan assistance by the National Development Council under the erstwhile Planning Commission.

Currently, 11 states hold this designation: Assam, Nagaland, Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand, and Telangana, the newest addition since its creation in 2014 from Andhra Pradesh.

The criteria for determining special category states, rooted in the Gadgil Formula, includes hilly terrain, low population density, significant tribal populations, strategic international borders, economic and infrastructural backwardness, and non-viable state finances.

Earlier, SCS states received approximately 30% of central assistance as per the Gadgil-Mukherjee formula. However, with adjustments by the 14th and 15th Finance Commissions and the abolition of the Planning Commission, this assistance has been integrated into an increased 41% devolution from the divisible pool in the 15th Finance Commission.

Special category states receive 90% of funds for Centrally-Sponsored Schemes from the Centre, compared to 60% or 75% for other states, with states contributing the remainder. Unutilised funds are carried forward

These states also enjoy concessions in excise and customs duties, income tax, and corporate tax.

Also, 30% of the Centre’s Gross Budget is allocated specifically to special category states.