Lok Sabha Question No. 4304 (UNSTARRED), answered on 2023-03-27
Subject: Special Category Status of Bihar
Ministry: FINANCE
Asked by: Vijay Kumar

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF EXPENDITURE

## LOK SABHA UNSTARRED QUESTION NO. † 4304

TO BE ANSWERED ON MONDAY, MARCH 27, 2023/CHAITRA 6, 1945 (SAKA)

## SPECIAL CATEGORY STATUS OF BIHAR

## †4304. SHRI VIJAY KUMAR

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government proposes to grant a status of special category State to Bihar and if so, the details thereof and time by when it is likely to be done;
- (b) if not, the reasons therefor; and
- (c) whether Prime Minister had announced to provide a special package to the State of Bihar in an election rally in Bihar and if so, the details and the status thereof?

## ANSWER

## THE MINISTER OF STATE FOR FINANCE (SHRI PANKAJ CHAUDHARY)

(a) & (b): 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.   Earlier, the request of Bihar for Special Category Status was  considered  by  an  Inter-Ministerial  Group  (IMG)  which  submitted  its  Report  on  30 th March, 2012.  The IMG came to a finding that based on existing NDC criteria the case for Special  Category  Status  for  Bihar  is  not  made  out.    The  Fourteenth  Finance  Commission (FFC) had not made any distinction between General Category States and Special Category States  in  the  horizontal  distribution  of  shareable  taxes  amongst  the  States.  As  per  the recommendations of the FFC, the Union Government had decided to increase the share of net shareable taxes to the States from 32% earlier to 42% for the period 2015-20. The same has also been retained by the Fifteenth Finance Commission at 41% (1% adjusted on account of creation of Union Territory of Jammu & Kashmir) for the periods 2020-21 and 2021-26. The objective has been to fill the resource gap of each State to the extent possible through Tax

Devolution.  Also,  Post  Devolution  Revenue  Deficit  Grants  have  been  provided  to  States where Tax Devolution alone could not cover the assessed gap.

(c):  The  Union  Government  had  announced  Prime  Minister's  Package  for  Bihar,  2015 amounting to Rs.1.25 lakh crore to undertake sectoral development in the State of Bihar. In addition, financial support of Rs.40,657 crore was also announced  for other investments in the  State.  Further,  income  tax  relief  on  new  capital  investment  in  the  form  of  Additional Investment Allowance and Higher Additional Depreciation in 21 backward districts was also notified on 17.08.2015 as part of the package. Implementation of sectoral items included in the Prime Minister's Package for Bihar, 2015 was done by the concerned Ministries/Departments through their own budget lines. Department of expenditure, Ministry of  Finance  has  provided  Grants-in-aid  towards  residual  liabilities  of  Rs.8,282  crore  of  the Special  Plan  for  Bihar  -  State  Component  included  in  the  Prime  Minister's  Package  for Bihar, 2015 and has released an amount of Rs.7,816.1385 crore to the State of Bihar under the head 'Special Assistance' under 'Transfers to States'.

********