Special status existing states ki theesestham annaru

[Android_Halwa]

The decision to grant special category status to States lie with the National Development Council composed of the Prime Minister, Union Ministers, Chief Ministers and members of the Planning Commission, who guide and review the working of the Planning Commission. Initially, three states namely Assam, Nagaland and Jammu & Kashmir were accorded special category status and later on eight other states were also given special category status namely: Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Uttarakhand, Tripura, Himachal Pradesh, and Sikkim and thus the list is now increased to eleven. The bases on the basis of which NDC decides whether a State should be accorded special status or not includes: hilly and difficult terrain; low population density and or sizeable share of tribal population; strategic location along borders with neighboring countries; economic and infrastructure backwardness and non-viable nature of state finances. At the time of resource allocation by the centre to States, these special category States are at a beneficial position. After the Report of Fifth Finance Commission, a formula was fixed for the distribution of resources between the states. This formula was named after the then deputy Chairman of Planning Commission Dr. Gadgil Mukherjee.

The Gadgil-Mukherjee Formula adopted by consensus in 1991 was made the basis for the distribution of tax revenue and grants during 8th Five Year Plan (1992-97) and has since been in use. Among states, the distribution of tax revenue and grants is determined through the formula accounting for population (25%), area (10%), fiscal capacity (47.5%) and fiscal discipline (17.5%). The Finance Commission and the Planning Commission are bodies entrusted with the work of transferring the resources from the Centre to the States. The Planning Commission allocates funds to states through central assistance for state plans. Central assistance can be broadly split into three components: Normal Central Assistance (NCA), Additional Central Assistance (ACA) and Special Central Assistance. Normal Central Assistance favours special category states and they get 30% of the total assistance while the other states share the remaining 70%. NCA is in the form of 90% as grants and 10% loans for special category states, while the ratio between grants and loans is 30:70 for other states. There is no fixed formula for Special Central Assistance and it depends on the basis of the state’s plan size and previous plan expenditures. Besides this, special category states enjoy concessions in excise and customs duties, income tax rates and corporate tax rates as determined by the government. The Planning Commission also allocates funds for ACA for the purpose of assistance for externally aided projects and other specific project. * Teaching and Research Associate, Gujarat National Law University, Gandhinagar. The Finance Commission is entrusted with the work of distribution of central tax revenues among states. The Finance Commission also recommends the principles governing non-plan grants and loans to states. In order to achieve the status of a special category state, a state has to project itself as socioeconomically or strategically vulnerable state however it is ironical that a number of states are demanding their names to be included in the list of special category states in order to exploit the numerous benefits conferred to states which are accorded this special status by NDC.

[Android_Halwa]

Now AP ni a 11 states kante worst situation lo emi ledu, a state ki vunna kastallu kuda AP ki emi levu...

 Assam, Nagaland and Jammu & Kashmir were accorded special category status and later on eight other states were also given special category status namely: Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Uttarakhand, Tripura, Himachal Pradesh, and Sikkim

Basically ie states lo severe rebel problem vunde and being borderign states and threat of communism influence vuntadi ani, and tribes ki kush cheyanika, security both internal and border security ni strengthen cheyadaniki special status assign chesinaru...

 

[Android_Halwa]

5 minutes ago, TOM_BHAYYA said:

Adige naayakulandharni 10gipoyaaru ga ani edusthundu jaggadu.. aademo buggal nimaranike saripotledhani feeling ..!! 

 

Aina opp em cheyatledhani feel aithunna ekaika ruling party ap dhenemo

asale ada musali pranam, garam khoon...

aak telvad, fuk telvad...special status anagane urkostadu...vachude kaka., CBN ae adagali antadu..

enduku vaya kali peeli rechakodthav...

[Android_Halwa]

Just in case, pulka gallaki panikostadi...

A special status is given to a state based on following parameters - 

• 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.

Currently, 11 states have been given the 'special state status' -
Assam, Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand, Himachal Pradesh, Jammu and Kashmir

The benefits that a state gets under the provision of being a 'special state' are -

• 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.

[Android_Halwa]

mari, AP qualify aitada special status ki under present laws ? 

 

[Teluguvadu8888]

14 minutes ago, Android_Halwa said:

Asalu idi issue ae kadu, Vachi raise chestadu CBN ie question ni...emi samara, itla aiteh etla...mari intha half baked knowledge thoti etla vayya 2019 la sarkar vachedi..

Maa vaallu vunnantha varaku AP maade antunna oka vargam..Of course Nenu kuda aa vargame anuko 

[Android_Halwa]

For some of the dumb and blind pulkas, jara idi sadukondi ooke special status ani demand chese badulu...

The Special Status to States

Posted on May 2, 2013

Orissa, West Bengal, Bihar, Tamil Nadu are racing for the special status as if it were a trophy to felicitate achievements. Ironically, to achieve special status, a state has to show itself in poor light. To demand the special status for his state Bihar chief minister Nitish Kumar went a step ahead and conducted Adhikar rally on 17th March, 2013 in New Delhi. As the race is getting intense among the states to gain special status, the matter has fallen into political entanglements making it vulnerable to be questioned on its credibility.

We at Netapedia will put forward all the possible details to scrutinize through the lens:

Origin:

The concept of a special category state was first introduced in 1969. The 5th Finance Commission decided to provide certain disadvantaged states with preferential treatment in the form of central assistance and tax breaks. Initially three states Assam, Nagaland and Jammu & Kashmir were granted special status but since then eight more have been included Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura and Uttarakhand.

Conditions to categorize states for special status :

The special status is given to certain states because of their inherent features; like they might have a low resource base and cannot mobilize resources for development. Some of the features required for special status are:

(i) hilly and difficult terrain;

(ii) low population density or sizable share of tribal population;

(iii) strategic location along borders with neighboring countries;

(iv) economic and infrastructural backwardness; and

(v) non-viable nature of state finances.

Who gets to decide to grant the status:

The decision to grant special category status lies with the National Development Council, composed of the Prime Minister, Union Ministers, Chief Ministers and members of the Planning Commission, who guide and review the work of the Planning Commission. Since this has to deal with funds transfer from Centre to state, the two bodies involved at the core are Planning Commission and Finance Commission. Below is an interesting split up of their respective roles and brief calculations that is done by them.

Planning Commission and Special Category

The Planning Commission allocates funds to states through central assistance for state plans. Central assistance can be broadly split into three components:

Normal Central Assistance (NCA)

Additional Central Assistance (ACA)

Special Central Assistance

NCA, the main assistance for state plans, is split to favour special category states: the 11 states get 30% of the total assistance while the other states share the remaining 70%. The 12th Finance Commission recommended that the Centre give only grants, and leave it to the states to raise loans as they wanted. Since then, the 90% grants: 10% loans formula for special-category states is restricted to centrally-sponsored schemes and external aid. For general category states, external aid is passed on in the exact mixture of loan and grants in which it is received at the Centre. And for them, in the case of centrally-sponsored schemes, only 70% of the central funding is given as grant.

Allocation between non special category states is determined by the Gadgil-Mukherjee formula which was finally revised in 2000. Gadgil formula was formulated with the formulation of the fourth five-year plan for the distribution of plan transfers amongst the states. It was named after the then (1969) deputy chairman of the Planning Commission Dr. D R Gadgil. The central assistance provided for in the first three plans and annual plans of 1966-1969 lacked objectivity in its formulation and did not lead to equal and balanced growth in the states. The National Development Council (NDC) meeting held in October 11, 1990; discussed and approved a New Revised formula. This formula came to be popularly known as Gadgil-Mukherjee formula after the name of the then (1990) deputy chairman of Planning commission Dr. Pranab Mukherjee for determining the allocation of central assistance for state plans in India.The new revised formula as approved by NDC is given in the following table. Criteria for inter-state allocation of Plan Assistance

Criteria	Weight (%)
Population	60
Per Capita Income	25
Fiscal Management	7.5
Special Problems	7.5
Total	100

Special category states also receive specific assistance addressing features like hill areas, tribal sub-plans and border areas. Beyond additional plan resources, special category states can enjoy concessions in excise and customs duties, income tax rates and corporate tax rates as determined by the government. The Planning Commission also allocates funds for ACA (assistance for externally aided projects and other specific project) and funds for Centrally Sponsored Schemes (CSS). State-wise allocation of both ACA and CSS funds are prescribed by the centre.

The Finance Commission

The Planning Commission allocations can be important for states, especially for the functioning of certain schemes, but the most significant Centre-state transfer is the distribution of central tax revenues among states and this is done by the Finance Commission. Functions of the Finance Commission can be explicitly stated as: Distribution of net proceeds of taxes between Centre and the States, to be divided as per their respective contributions to the taxes.The Finance Commission decides the actual distribution and the current Finance Commission have set aside 32.5% of central tax revenue for states. In addition, it recommends the principles governing non-plan grants and loans to states. Examples of grants would include funds for disaster relief, maintenance of roads and other state-specific requests. Unlike the Planning Commission, the Finance Commission does not distinguish between special and non special category states in its allocation.

What benefits does a state enjoy on getting the special status:

As per Gadgil formula, a special category state gets:
– Preferential treatment in federal assistance and tax breaks
– Significant excise duty concessions
– Thus, these states attract large number of industrial units to establish manufacturing facilities within their territory leading to their economy flourishing
– The special category states do not have a hard budget constraint as the central transfer is high
– These states avail themselves of the benefit of debt swapping and debt relief schemes (through the enactment of Fiscal Responsibility and Budget Management Act) which facilitate reduction of average annual rate of interest
– Significant 30% of the Centre’s gross budget goes to the Special category states
– In centrally sponsored schemes and external aid special category states get it in the ratio of 90% grants and 10% loans. For the rest of the states as per the recommendations of the 12th Finance Commission, in case of centrally sponsored schemes only 70% central funding is there in the form of grant. The rest of the states receive external aid in the exact ratio (of grants and loans) in which it is received by the Center.

Now let us look at the various perspective of ministers; some of whom are favoring and some of them are against granting special status to Bihar:

Presently the Inter-ministerial panel has been denying special status to Bihar on two grounds- the first is that it is not a hill state and the second its population density is not less.
Chief Minister Nitish Kumar has been fighting for the rights of his state on the grounds of electricity consumption which is lowest in the country. Electricity being the backbone for development of any state and more power consumption indicates more prosperity, then Bihar lags far behind.

On analyzing Bihar’s condition, the state has improved to its true word under Nitish Kumar when he came to power in 2005. The Bihar model of development is now gaining followers. For an instance J&K inspector general of police wanted to know Bihar’s model of police investigation and innovations in criminal investigations. Earlier, the Bihar police with a skeleton staff of largely unmotivated and poorly trained officers lacked the ability to address these challenges and now Bihar’s police force model of scientific investigations and speedy trials are being adopted by india’s top performing states. In Bihar a new crime fighting model was adopted in 2006 and since then the number of murders has dropped by 13 percent, robberies have declined by 46 percent and kidnappings for ransom have dropped by 65 percent, according to government figures. Since 2006, 12,861 criminals have been sentenced to life in prison, while 33,588 others have been sentenced for serious crimes, with a total of 80,199 convictions registered overall. In the years before 2006, conviction rates were never even compiled.

Having fed the audience with such data on criminal cases we intend to drive home the point that the law and order of Bihar has drastically changed. People who once migrated from this state in search of safety and job opportunities are returning home. Earlier because of lack of robust private sector in Bihar, the condition of infrastructure was poor in state. Thanks to high external investment levels and human and financial capital flight that people now are getting to see leading clothing brands and fine restaurant chains in huge malls. In the past five years, Bihar has been on a high growth path, consistently recording double-digit rate: 12% in 2008-09; 11% (2010-11) and 13% (2011-12). The only exception was 2009-10 when the state’s GDP grew by a modest 7.09%.

However, granting special category status to Bihar would mean Nitish Kumar undermining his own achievements. Bihar has improved over the past six years economically due to good governance and proper law and order situation. By rallying for the special state status Nitish Kumar is subverting his own political accomplishments is a sad move to see. Also on taking a broader look, if Bihar translates political power into fiscal benefits, then other state satraps will be similarly empowered. West Bengal’s Mamata Banerjee and Tamil Nadu’s Jayalalithaa have already made similar demands. Clearly, Mr Kumar and the Centre need to meet each other halfway. The Centre must recognise that Bihar has been hard done by in terms of investment, and somehow find the resources to correct that. On the other hand, instead of sticking upto his single-point demand, Mr Kumar could think of carving other ways to ensure that the Centre gives Bihar the assistance it needs and not just focus on the term ‘special status’.

Recently much to Nitish Kumar’s delight, in the Budget speech 2013, Chidambaram proposed to evolve new criteria for granting special status to states and reflect them in future planning and devolution of funds. Mr. Chidambaram is of the view that the present criteria for determining backwardness are based on terrain, density of population and length of international borders. He suggested it may be more relevant to use a measure like the distance of the state from the national average under criteria such as per capita income, literacy and other human development indicators. Kumar who was evidently all praises for the Finance Minister had opened doors for media to speculate about his attraction towards the UPA government and highlighted his sour terms with the NDA on promoting Narendra Modi as the prime ministerial candidate 2014. This has put Kumar in a critical state where JDU’s alliance would matter heavily in which UPA and BJP are on either side of the balance. The final decision is yet to be made and we have to see if the decision will be a victory of political considerations or of righteous judgement.

[Android_Halwa]

Kotha sarkar vachinaka, planning commission peekesi NITI aayog teesukochinaru...kotha frame work tho..

new frame work lo asalu special category word ae ledu....existing states ki thapa..

if AP wants to be considered specially, then it has to go back to the rules framed in 1959...

 

[Teluguvadu8888]

1 minute ago, Android_Halwa said:

For some of the dumb and blind pulkas, jara idi sadukondi ooke special status ani demand chese badulu...

The Special Status to States

Posted on May 2, 2013

Orissa, West Bengal, Bihar, Tamil Nadu are racing for the special status as if it were a trophy to felicitate achievements. Ironically, to achieve special status, a state has to show itself in poor light. To demand the special status for his state Bihar chief minister Nitish Kumar went a step ahead and conducted Adhikar rally on 17th March, 2013 in New Delhi. As the race is getting intense among the states to gain special status, the matter has fallen into political entanglements making it vulnerable to be questioned on its credibility.

We at Netapedia will put forward all the possible details to scrutinize through the lens:

Origin:

The concept of a special category state was first introduced in 1969. The 5th Finance Commission decided to provide certain disadvantaged states with preferential treatment in the form of central assistance and tax breaks. Initially three states Assam, Nagaland and Jammu & Kashmir were granted special status but since then eight more have been included Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura and Uttarakhand.

Conditions to categorize states for special status :

The special status is given to certain states because of their inherent features; like they might have a low resource base and cannot mobilize resources for development. Some of the features required for special status are:

(i) hilly and difficult terrain;

(ii) low population density or sizable share of tribal population;

(iii) strategic location along borders with neighboring countries;

(iv) economic and infrastructural backwardness; and

(v) non-viable nature of state finances.

Who gets to decide to grant the status:

The decision to grant special category status lies with the National Development Council, composed of the Prime Minister, Union Ministers, Chief Ministers and members of the Planning Commission, who guide and review the work of the Planning Commission. Since this has to deal with funds transfer from Centre to state, the two bodies involved at the core are Planning Commission and Finance Commission. Below is an interesting split up of their respective roles and brief calculations that is done by them.

Planning Commission and Special Category

The Planning Commission allocates funds to states through central assistance for state plans. Central assistance can be broadly split into three components:

Normal Central Assistance (NCA)

Additional Central Assistance (ACA)

Special Central Assistance

NCA, the main assistance for state plans, is split to favour special category states: the 11 states get 30% of the total assistance while the other states share the remaining 70%. The 12th Finance Commission recommended that the Centre give only grants, and leave it to the states to raise loans as they wanted. Since then, the 90% grants: 10% loans formula for special-category states is restricted to centrally-sponsored schemes and external aid. For general category states, external aid is passed on in the exact mixture of loan and grants in which it is received at the Centre. And for them, in the case of centrally-sponsored schemes, only 70% of the central funding is given as grant.

Allocation between non special category states is determined by the Gadgil-Mukherjee formula which was finally revised in 2000. Gadgil formula was formulated with the formulation of the fourth five-year plan for the distribution of plan transfers amongst the states. It was named after the then (1969) deputy chairman of the Planning Commission Dr. D R Gadgil. The central assistance provided for in the first three plans and annual plans of 1966-1969 lacked objectivity in its formulation and did not lead to equal and balanced growth in the states. The National Development Council (NDC) meeting held in October 11, 1990; discussed and approved a New Revised formula. This formula came to be popularly known as Gadgil-Mukherjee formula after the name of the then (1990) deputy chairman of Planning commission Dr. Pranab Mukherjee for determining the allocation of central assistance for state plans in India.The new revised formula as approved by NDC is given in the following table. Criteria for inter-state allocation of Plan Assistance

Criteria	Weight (%)
Population	60
Per Capita Income	25
Fiscal Management	7.5
Special Problems	7.5
Total	100

Special category states also receive specific assistance addressing features like hill areas, tribal sub-plans and border areas. Beyond additional plan resources, special category states can enjoy concessions in excise and customs duties, income tax rates and corporate tax rates as determined by the government. The Planning Commission also allocates funds for ACA (assistance for externally aided projects and other specific project) and funds for Centrally Sponsored Schemes (CSS). State-wise allocation of both ACA and CSS funds are prescribed by the centre.

The Finance Commission

The Planning Commission allocations can be important for states, especially for the functioning of certain schemes, but the most significant Centre-state transfer is the distribution of central tax revenues among states and this is done by the Finance Commission. Functions of the Finance Commission can be explicitly stated as: Distribution of net proceeds of taxes between Centre and the States, to be divided as per their respective contributions to the taxes.The Finance Commission decides the actual distribution and the current Finance Commission have set aside 32.5% of central tax revenue for states. In addition, it recommends the principles governing non-plan grants and loans to states. Examples of grants would include funds for disaster relief, maintenance of roads and other state-specific requests. Unlike the Planning Commission, the Finance Commission does not distinguish between special and non special category states in its allocation.

What benefits does a state enjoy on getting the special status:

As per Gadgil formula, a special category state gets:
– Preferential treatment in federal assistance and tax breaks
– Significant excise duty concessions
– Thus, these states attract large number of industrial units to establish manufacturing facilities within their territory leading to their economy flourishing
– The special category states do not have a hard budget constraint as the central transfer is high
– These states avail themselves of the benefit of debt swapping and debt relief schemes (through the enactment of Fiscal Responsibility and Budget Management Act) which facilitate reduction of average annual rate of interest
– Significant 30% of the Centre’s gross budget goes to the Special category states
– In centrally sponsored schemes and external aid special category states get it in the ratio of 90% grants and 10% loans. For the rest of the states as per the recommendations of the 12th Finance Commission, in case of centrally sponsored schemes only 70% central funding is there in the form of grant. The rest of the states receive external aid in the exact ratio (of grants and loans) in which it is received by the Center.

Now let us look at the various perspective of ministers; some of whom are favoring and some of them are against granting special status to Bihar:

Presently the Inter-ministerial panel has been denying special status to Bihar on two grounds- the first is that it is not a hill state and the second its population density is not less.
Chief Minister Nitish Kumar has been fighting for the rights of his state on the grounds of electricity consumption which is lowest in the country. Electricity being the backbone for development of any state and more power consumption indicates more prosperity, then Bihar lags far behind.

On analyzing Bihar’s condition, the state has improved to its true word under Nitish Kumar when he came to power in 2005. The Bihar model of development is now gaining followers. For an instance J&K inspector general of police wanted to know Bihar’s model of police investigation and innovations in criminal investigations. Earlier, the Bihar police with a skeleton staff of largely unmotivated and poorly trained officers lacked the ability to address these challenges and now Bihar’s police force model of scientific investigations and speedy trials are being adopted by india’s top performing states. In Bihar a new crime fighting model was adopted in 2006 and since then the number of murders has dropped by 13 percent, robberies have declined by 46 percent and kidnappings for ransom have dropped by 65 percent, according to government figures. Since 2006, 12,861 criminals have been sentenced to life in prison, while 33,588 others have been sentenced for serious crimes, with a total of 80,199 convictions registered overall. In the years before 2006, conviction rates were never even compiled.

Having fed the audience with such data on criminal cases we intend to drive home the point that the law and order of Bihar has drastically changed. People who once migrated from this state in search of safety and job opportunities are returning home. Earlier because of lack of robust private sector in Bihar, the condition of infrastructure was poor in state. Thanks to high external investment levels and human and financial capital flight that people now are getting to see leading clothing brands and fine restaurant chains in huge malls. In the past five years, Bihar has been on a high growth path, consistently recording double-digit rate: 12% in 2008-09; 11% (2010-11) and 13% (2011-12). The only exception was 2009-10 when the state’s GDP grew by a modest 7.09%.

However, granting special category status to Bihar would mean Nitish Kumar undermining his own achievements. Bihar has improved over the past six years economically due to good governance and proper law and order situation. By rallying for the special state status Nitish Kumar is subverting his own political accomplishments is a sad move to see. Also on taking a broader look, if Bihar translates political power into fiscal benefits, then other state satraps will be similarly empowered. West Bengal’s Mamata Banerjee and Tamil Nadu’s Jayalalithaa have already made similar demands. Clearly, Mr Kumar and the Centre need to meet each other halfway. The Centre must recognise that Bihar has been hard done by in terms of investment, and somehow find the resources to correct that. On the other hand, instead of sticking upto his single-point demand, Mr Kumar could think of carving other ways to ensure that the Centre gives Bihar the assistance it needs and not just focus on the term ‘special status’.

Recently much to Nitish Kumar’s delight, in the Budget speech 2013, Chidambaram proposed to evolve new criteria for granting special status to states and reflect them in future planning and devolution of funds. Mr. Chidambaram is of the view that the present criteria for determining backwardness are based on terrain, density of population and length of international borders. He suggested it may be more relevant to use a measure like the distance of the state from the national average under criteria such as per capita income, literacy and other human development indicators. Kumar who was evidently all praises for the Finance Minister had opened doors for media to speculate about his attraction towards the UPA government and highlighted his sour terms with the NDA on promoting Narendra Modi as the prime ministerial candidate 2014. This has put Kumar in a critical state where JDU’s alliance would matter heavily in which UPA and BJP are on either side of the balance. The final decision is yet to be made and we have to see if the decision will be a victory of political considerations or of righteous judgement.

Yendi kaka idi intha vundi..

[Android_Halwa]

Some more information..

Special Category status and centre-state finances

April 12th, 2013VishnuLeave a commentGo to comments

 

“No one can ignore Odisha’s demand. It deserves special category status. It is a genuine right,” said Odisha Chief Minister, Naveen Patnaik, earlier this month. The Odisha State assembly has passed a resolution requesting special category status and their demands follow Bihar’s recent claim for special category status.

The concept of a special category state was first introduced in 1969 when the 5th Finance Commission sought to provide certain disadvantaged states with preferential treatment in the form of central assistance and tax breaks. Initially three states Assam, Nagaland and Jammu & Kashmir were granted special status but since then eight more have been included (Arunachal Pradesh,  Himachal Pradesh,  Manipur, Meghalaya, Mizoram, Sikkim, Tripura and Uttarakhand). The rationale for special status is that certain states, because of inherent features, have a low resource base and cannot mobilize resources for development. Some of the features required for special status are: (i) hilly and difficult terrain; (ii) low population density or sizeable share of tribal population; (iii) strategic location along borders with neighbouring countries; (iv) economic and infrastructural backwardness; and (v) non-viable nature of state finances. ¹ The decision to grant special category status lies with the National Development Council, composed of the Prime Minster, Union Ministers, Chief Ministers and members of the Planning Commission, who guide and review the work of the Planning Commission.

In India, resources can be transferred from the centre to states in many ways (see figure 1). The Finance Commission and the Planning Commission are the two institutions responsible for centre-state financial relations.

Figure 1: Centre-state transfers (Source: Finance Commission, Planning Commission, Budget documents, PRS)

Planning Commission and Special Category

The Planning Commission allocates funds to states through central assistance for state plans. Central assistance can be broadly split into three components: Normal Central Assistance (NCA), Additional Central Assistance (ACA) and Special Central Assistance. NCA, the main assistance for state plans, is split to favour special category states: the 11 states get 30% of the total assistance while the other states share the remaining 70%.  The nature of the assistance also varies for special category states; NCA is split into 90% grants and 10% loans for special category states, while the ratio between grants and loans is 30:70 for other states.

For allocation among special category states, there are no explicit criteria for distribution and funds are allocated on the basis of the state’s plan size and previous plan expenditures. Allocation between non special category states is determined by the Gadgil Mukherjee formula which gives weight to population (60%), per capita income (25%), fiscal performance (7.5%) and special problems (7.5%).  However, as a proportion of total centre-state transfers NCA typically accounts for a relatively small portion (around 5% of total transfers in 2011-12).

Special category states also receive specific assistance addressing features like hill areas, tribal sub-plans and border areas. Beyond additional plan resources, special category states can enjoy concessions in excise and customs duties, income tax rates and corporate tax rates as determined by the government.  The Planning Commission also allocates funds for ACA (assistance for externally aided projects and other specific project) and funds for Centrally Sponsored Schemes (CSS). State-wise allocation of both ACA and CSS funds are prescribed by the centre.

The Finance Commission

Planning Commission allocations can be important for states, especially for the functioning of certain schemes, but the most significant centre-state transfer is the distribution of central tax revenues among states. The Finance Commission decides the actual distribution and the current Finance Commission have set aside 32.5% of central tax revenue for states. In 2011-12, this amounted to Rs 2.5 lakh crore (57% of total transfers), making it the largest transfer from the centre to states. In addition, the Finance Commission recommends the principles governing non-plan grants and loans to states.  Examples of grants would include funds for disaster relief, maintenance of roads and other state-specific requests.  Among states, the distribution of tax revenue and grants is determined through a formula accounting for population (25%), area (10%), fiscal capacity (47.5%) and fiscal discipline (17.5%).  Unlike the Planning Commission, the Finance Commission does not distinguish between special and non special category states in its allocation.

[SonaParv_522]

Vaallu teesestunnam ani cheppagaane nuvvu nammesava uncle. Intha amayakudivi anukolaa.