Because, if you do it in a hurry, then this might set a precedent, which is not going to be fiscally possible because more and more States will be making the same demand if we do this here, and that would mean extreme pressure on the government’s fiscal resources - Rajiv Kumar, former vice-chairman, NITI Aayog

Tricky demand:

• 14th Finance Commission raised share of States in taxes
• It abolished Special Category Status
• TDP pulled out of NDA govt in 2018 demanding spl tag

New Delhi: The Union government needs to examine the long-standing demand of Andhra Pradesh and Bihar for special category status (SCS) carefully and not in a hurry, as it could set a precedent and may put extreme pressure on the Centre’s fiscal resources, former NITI Aayog vice-chairman Rajiv Kumar said on Sunday. Andhra Pradesh has been demanding special category status after its bifurcation in 2014 on the grounds of revenue loss as Hyderabad became the capital of Telangana. Bihar has also been demanding the special status since 2005 when Nitish Kumar was sworn in as its Chief Minister. The State also suffered revenue loss after the mineral-rich Jharkhand was carved out of it in 2000.

“This (SCS) is their (Bihar and Andhra Pradesh) long-standing demand. This is a demand, which needs to be considered very carefully because you have to carefully examine in detail the economic parameters on the basis of which this demand is being made,” he told in a video interview.

For special category status States, the Centre meets 90 per cent of the funds required in a centrally sponsored scheme against 60 per cent in the case of normal category States. The remaining funds are provided by the State government.

“Because, if you do it in a hurry, then this might set a precedent, which is not going to be fiscally possible because more and more states will be making the same demand if we do this here, and that would mean extreme pressure on the government’s fiscal resources,” the economist added. The 14thFinance Commission raised the share of States in taxes collected by the Centre to 42 per cent from 32 per cent but abolished special category States.

“So, I think this issue has to be reviewed and carefully studied. Maybe the Finance Commission should do this task,” he opined.

Under relentless opposition attack over its failure to secure special category state status for Andhra Pradesh, in 2018, the State’s ruling party Telugu Desam Party (TDP) pulled out of the Modi government.

Recently, Congress Party General Secretary Jairam Ramesh asked the Prime Minister whether he would fulfill his 2014 election promise and the ten-year-old demand of his ally and JD(U) chief Nitish Kumar by giving special category status to Bihar. “There has been a demand for this, but the PM did not break his silence on the issue,” he added.