In what way do states get this special status?
In 2018, the central government provided an explanation of the process for obtaining the special state designation in answer to a query in the Lok Sabha. The following considerations are included in the National Development Council's suggestion, which the ministry claims is the basis for the criterion for granting special state status.
1. How is the state organized geographically? States with remote, mountainous areas are given preference.
2. A state may also be granted the title of special state if its borders coincide with those of another nation.
3. A state may also be granted this status if its population density is determined by its own characteristics, such as a high proportion of tribal residents.
4. States with weak economies may also be granted special state status. But evaluating it is the Center's responsibility.
5. How realistic are the states' financial resources, or how much of them exist? Is it practical to spend that much money?
What is the reason behind the race to claim special status?
The federal government provides funding to the states in two different ways for development. The terms grant and loan refer to the first and second methods, respectively. Typically, the Center lends the states 70% of its total funding as a loan and grants the remaining 30%. However, the Center grants a state 90% of its funding as a grant and 10% as a loan once it is designated as a special state. In addition, states with special status receive benefits in the areas of income tax, corporation, excise, and customs.
Thirty percent of the Union Budget's scheduled expenditures go to special states. Furthermore, funds are frequently released to a state with special status for the following fiscal year when it is unable to use them.
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