This is in response to the commentary, A Special Curse for Nitish, by Abheek Barman, published in these pages on March 27. Decoding the politics of special category status masks its economic rationale. Predictions on political alliances occupy media centre-stage. It has overlooked that Bihar began its campaign for special category status several years ago, culminating in the recent rally. This was much before political alliances became fragile. We need to disentangle several issues. The use of the term “backward”, which was introduced in the lexicon of the Planning Commission as early as the Third Five-Year Plan, is often conflicting. It has been used in multiple ways. The Backward Regions Grant Fund (BRGF), which began in 2006-07, addresses backwardness on multiple criteria covering 272 districts. Bihar has 38 backward districts and availed of the earmarked funds. This is different from the special plan to compensate for the economic consequences of the separation of Jharkhand from Bihar. After the enactment of the Bihar Reorganisation Bill, 2000, a special cell under the deputy chairman of the Planning Commission is expected to compensate for the adverse revenue and development consequences of the bifurcation. Contrary to the large sums requested in the memorandum of the state government and the resolution of the Bihar assembly, only incremental sums were available in the Xth and XIth Plans. Based on the recommendations of an inter-governmental group, . 12,000 crore is now proposed for the XIIth Plan. This awaits Cabinet approval. So, we need to segregate the rationale of the Bihar special plan with the BRGF. It is inappropriate to mix apples and oranges. Special category status for states was introduced in 1969. The Gadgil formula announced a more liberal devolution of funds for three states: Assam, Nagaland and Jammu & Kashmir. This was based on the criteria of hilly terrain, sparse population and international borders. Subsequently, this was expanded to 11 states. Special category status enhances the resource capability of the state by altering the mix of Centre-state contribution for centrally-sponsored schemes. It frees state resources, enabling access to external funds, and the associated tax breaks with a sunset clause incentivises private investments. This policy has worked. According to the CSO data of 2011, per-capita income was higher in special category states like Himachal Pradesh (. 47,106), Sikkim (. 47,655), Tripura (. 37,216) and Mizoram (. 36,732) compared to some general category states such as Bihar (. 13,632), with a national average of . 35,993. The percentage of population below the poverty line suggests an improved picture for special category states, with nine out of 11 of these states faring better than the national average of 29.8%. Bihar remains at the bottom with 53.5% of its population below the poverty line. Similarly, in terms of per-capita consumption of electricity, literacy and state-wise share in aggregate valued added in the manufacturing sector, the special category states have a better record than some general category states. Bihar’s share in manufacturing is a meagre 0.4% compared to higher numbers for Himachal Pradesh, Uttarakhand, Assam and J&K, which have a smaller populations compared to Bihar. Also, Bihar’s plea for special category status seeks to reverse policies of the past such as freight equalisation, skewed central investment and political predilections in the devolution of resources. The progress of Bihar has been largely public outlay-driven. The shortage of energy after bifurcation, the denial of coal linkages and a demand-supply gap of 1,500 MW in 2012 discourages value-added activity. The new approach in the Economic Survey and the Budget speech is politically neutral. States are to be ranked on multiple development parameters, on their distance from the national mean and policies devised to get them to the national average in time. Bihar’s recent development is an outcome of improved governance. Retribution for past electoral choices should not withhold the medicine to address a chronic ailment. Special category status is neither curse nor boon. It is to provide a level playing field for Bihar, for a better life and jobs.
The writer is a JD(U) MP
