Centre Rejects Special Category Status to Bihar, RJD Demands Nitish Kumar’s Resignation

Manas Dasgupta

NEW DELHI, July 22: The Centre on Monday ruled out giving special category status to Bihar sparking off a political row and demand for the chief minister Nitish Kumar’s resignation as special category was believed to be central to his Janata Dal (United) propping up the Narendra Modi-led NDA government in New Delhi.

After the BJP and Mr Modi turned down all the demands of the JD(U) and the Andhra Pradesh ruling Telegu Desam Party (TDP) for key ministerial portfolios and Lok Sabha speaker’s post, securing special category status to Bihar and AP to ensure additional funds for development were believed to be main demand of the two parties to stand by the BJP whose support was vital for the Modi government to stay in power. The BJP with only 240 seats has failed to secure a clear majority on its own unlike in 2014 and 2019.

While the AP Issue is yet to come up, the Bihar case was rejected by the Centre pointing out the state did not conform to the laid down criteria for sanctioning special category status to a state. Ramprit Mandal, JDU MP from Bihar’s Jhanjharpur, had asked the Finance Ministry a question if the government has a plan to provide special status to Bihar and other most backward states to promote economic growth and industrialisation.

In a written response, Minister of State for Finance Pankaj Chaudhary said “case for Special Category Status for Bihar is not made out.” “The Special Category Status for plan assistance was granted in the past by the National Development Council (NDC) to some States that were characterized by a number of features necessitating special consideration.

“These features included (i) hilly and difficult terrain, (ii) low population density and/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,” the reply stated. “Earlier, the request of Bihar for Special Category Status was considered by an Inter-Ministerial Group (IMG) which submitted its Report on 30th March, 2012. The IMG came to the finding that based on existing NDC criteria, the case for Special Category Status for Bihar is not made out,” it added.

A special status ensures more central support to a backward state to expedite its growth. While the Constitution does not provide for a special status for any state, it was introduced on the recommendations of the Fifth Finance Commission in 1969. Among the states that have received a special status so far are Jammu and Kashmir (now a Union Territory), North-eastern states and hill states such as Himachal Pradesh and Uttarakhand. A state with a special category status gets more funding support from the Central in the Union government’s schemes and several concessions in taxes.

A special status for Bihar has been a longstanding demand of the JDU. With the BJP falling short of a majority in this election and tying up with JDU, TDP and other parties to cobble up the magic figure, the Nitish Kumar-led party was expected to push hard for its core demand. The JDU also raised this demand at an all-party meeting before the budget session.

JDU MP Sanjay Kumar Jha said the demand for a special state status for Bihar has been a priority for the JDU. “Bihar should get the status of a special state, this has been the demand of our party since the beginning. Chief Minister Nitish Kumar has held big rallies for this demand. If the government feels that there is a problem in doing this, then we have demanded a special package for Bihar,” he said.

With the Centre making it clear that it has no plan to grant a special status, Bihar’s main Opposition RJD has hit out at the JDU, which is ruling the state in alliance with BJP. “Nitish Kumar and JDU leaders must enjoy the fruits of power at the Centre and continue their drama politics on special status,” the RJD said in a post on X.

A source in the government said the Special Category Status issue was first addressed in the National Development Council meeting in 1969. “During this meeting, the D R Gadgil Committee introduced a formula to allocate Central Assistance for state plans in India. Prior to this, there was no specific formula for fund distribution to States, and grants were given on a scheme basis. The Gadgil Formula, approved by the NDC, prioritized special category States such as Assam, Jammu & Kashmir, and Nagaland, ensuring their needs were addressed first from the pool of Central assistance.”

“Until the 2014-2015 fiscal year, the 11 States with Special Category Status benefited from various advantages and incentives. However, following the dissolution of the Planning Commission and the formation of the NITI Aayog in 2014, the recommendations of the 14th Finance Commission were implemented, leading to the discontinuation of Gadgil Formula-based grants. Instead, the devolution from the divisible pool to all States was increased from 32% to 42%,” the source added.

Currently, no additional States are being granted Special Category Status, as the Constitution does not provide for such categorisation, said the source in the government.

Notably, the YSRCP and BJD have also demanded special category status for Andhra Pradesh and Odisha respectively, at an all-party meeting on Sunday. The RJD leader Manoj Kumar Jha had said Bihar sought both special state status and a special package. He also said the demand for special status for Bihar has been there since the division of Bihar and Jharkhand.

“This demand of Bihar (special state status) is called unrealistic by many people… This demand has been there since the division of Bihar and Jharkhand… Apart from political parties, we want a change in the policies of the central government which considers Bihar as a centre of labour supply… We want both, special state status and special package,” Jha said.

RJD supremo Lalu Prasad took a jibe at Bihar Chief Minister Nitish Kumar after the Centre rejected JD(U)’s longstanding demand for special category status for the state. Responding to queries from journalists about the Centre’s statement in Parliament regarding JD(U)’s demand, Prasad criticised the CM, saying, “Nitish Kumar appears to have compromised Bihar’s aspirations and the trust of its people for the sake of power. He had promised to secure special status for Bihar, but now that the Centre has denied it, he should resign.”