"No one can ignore Odisha's demand. It deserves special category status. It is a genuine right," said Odisha Chief Minister, Naveen Patnaik, earlier this month. The Odisha State assembly has passed a resolution requesting special category status and their demands follow Bihar's recent claim for special category status. The concept of a special category state was first introduced in 1969 when the 5th Finance Commission sought to provide certain disadvantaged states with preferential treatment in the form of central assistance and tax breaks. Initially three states Assam, Nagaland and Jammu & Kashmir were granted special status but since then eight more have been included (Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura and Uttarakhand). The rationale for special status is that certain states, because of inherent features, have a low resource base and cannot mobilize resources for development. Some of the features required for special status are: (i) hilly and difficult terrain; (ii) low population density 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. [1. Lok Sabha unstarred question no. 667, 27 Feb, 2013, Ministry of Planning] The decision to grant special category status lies with the National Development Council, composed of the Prime Minster, Union Ministers, Chief Ministers and members of the Planning Commission, who guide and review the work of the Planning Commission. In India, resources can be transferred from the centre to states in many ways (see figure 1). The Finance Commission and the Planning Commission are the two institutions responsible for centre-state financial relations.
Figure 1: Centre-state transfers (Source: Finance Commission, Planning Commission, Budget documents, PRS)
Planning Commission and Special Category The Planning Commission allocates funds to states through central assistance for state plans. Central assistance can be broadly split into three components: Normal Central Assistance (NCA), Additional Central Assistance (ACA) and Special Central Assistance. NCA, the main assistance for state plans, is split to favour special category states: the 11 states get 30% of the total assistance while the other states share the remaining 70%. The nature of the assistance also varies for special category states; NCA is split into 90% grants and 10% loans for special category states, while the ratio between grants and loans is 30:70 for other states. For allocation among special category states, there are no explicit criteria for distribution and funds are allocated on the basis of the state's plan size and previous plan expenditures. Allocation between non special category states is determined by the Gadgil Mukherjee formula which gives weight to population (60%), per capita income (25%), fiscal performance (7.5%) and special problems (7.5%). However, as a proportion of total centre-state transfers NCA typically accounts for a relatively small portion (around 5% of total transfers in 2011-12). Special category states also receive specific assistance addressing features like hill areas, tribal sub-plans and border areas. Beyond additional plan resources, special category states can enjoy concessions in excise and customs duties, income tax rates and corporate tax rates as determined by the government. The Planning Commission also allocates funds for ACA (assistance for externally aided projects and other specific project) and funds for Centrally Sponsored Schemes (CSS). State-wise allocation of both ACA and CSS funds are prescribed by the centre. The Finance Commission Planning Commission allocations can be important for states, especially for the functioning of certain schemes, but the most significant centre-state transfer is the distribution of central tax revenues among states. The Finance Commission decides the actual distribution and the current Finance Commission have set aside 32.5% of central tax revenue for states. In 2011-12, this amounted to Rs 2.5 lakh crore (57% of total transfers), making it the largest transfer from the centre to states. In addition, the Finance Commission recommends the principles governing non-plan grants and loans to states. Examples of grants would include funds for disaster relief, maintenance of roads and other state-specific requests. Among states, the distribution of tax revenue and grants is determined through a formula accounting for population (25%), area (10%), fiscal capacity (47.5%) and fiscal discipline (17.5%). Unlike the Planning Commission, the Finance Commission does not distinguish between special and non special category states in its allocation.
The Piracy Bill was introduced in Lok Sabha on April 24, 2012. According to the Statement of Objects and Reasons, there has been a significant increase in attacks by pirates, particularly in the Gulf of Aden and off the coast of Somalia. This has affected security of maritime traffic and personnel plying between Asia, Europe and Africa. Moreover, enhanced naval presence in the Gulf of Aden is now causing pirates to shift operations close to India’s Exclusive Economic Zone. As a result, a number of Somali pirates are presently in the custody of Indian police authorities. However, since piracy as a crime is not included in the Indian Penal Code (IPC), this has led to problems in prosecution. The Piracy Bill intends to fill this gap and provide clarity in the law. The Bill, if passed by Parliament, would extend to the entire Exclusive Economic Zone of India (EEZ). Under international law, EEZ is a seazone over which a country has special rights for exploration and use of marine resources. It stretches outward from the coast, up to 200 nautical miles into the sea. The Bill defines 'piracy' as any illegal act of violence or detention for private ends by the crew or passengers of a private ship or aircraft on high seas or at a place outside the jurisdiction of any State. This definition is akin to the definition of piracy laid down under the 'United Nations Convention on the Law of the Sea'. The Bill seeks to punish piracy with imprisonment for life. In cases where piracy leads to death, it may be punished with death. It also provides that if arms, ammunition are recovered from the possession of the accused, or if there is evidence of threat of violence, the burden of proof for proving innocence would shift to the accused. The Bill empowers the government to set up designated courts for speedy trial of offences and authorizes the court to prosecute the accused regardless of his/ her nationality. It also provides for extradition. You can access the Bill text here.
