"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.
Several Rajya Sabha seats go to elections this year. The President and the Vice-President are also due to be elected by August. We analyse the impact of the recent State Assembly elections on the composition of the Rajya Sabha and the outcome of the Presidential polls. Rajya Sabha - How will its composition change? Since Rajya Sabha members are elected by the elected members of State Legislative Assemblies, a change in the composition of State Assemblies can affect the composition of Rajya Sabha. A total of 61 Rajya Sabha seats are up for election in April and July. This includes 10 seats from Uttar Pradesh and 1 seat from Uttarakhand. In light of the recent Assembly elections, we work out two scenarios to estimate the composition of Rajya Sabha in 2012. Members of Rajya Sabha are elected through the system of proportional representation by means of the Single Transferable Vote (STV). In an STV election, a candidate is required to achieve a certain minimum number of votes (called the 'quota') to be elected. (For more details on the STV system, click here) For instance, in the case of Uttar Pradesh (UP) 10 Rajya Sabha seats go to election this year. Candidates will be elected to these 10 seats by the 403 elected MLAs of the Uttar Pradesh State Assembly. Each MLA will rank the candidates based on his/ her preference. After successive rounds of elimination, candidates who are able to secure at least 37 {or 403/(10+1) } votes will be declared elected. In the new UP Assembly, Samajwadi Party (SP) has a total strength of 224 members. As a result, SP can elect at least 6 (or 224/37) Rajya Sabha MPs of its choice. BSP's strength of 80 will allow it to elect 2 (or 80/37) MPs to Rajya Sabha. Similarily, the BJP with a strength of 47 MLAs can have one candidate of its choice elected to the Rajya Sabha. This leaves 1 seat. The fate of this seat depends on the alliances that may be formed since no other party in UP has 37 or more seats in the Assembly. If the Congress (28 seats) and RLD (9 seats) join hands, they may be able to elect a candidate of their choice. We build two scenarios which give the likely range of seats for the major coalitions and parties. The actual result will likely fall between these scenarios, depending on alliances for each election. Of the two scenarios, Scenario II is better for the UPA. It is based on the assumption that the UPA is able to put together the necessary support/ alliances to get its candidates elected to seats with indeterminate status. Scenario I is based on the assumption that the UPA is not able to put together the required support. As a result, the seats in question get allocated to candidates from other parties/ coalitions. (See Notes for the composition of the coalitions) Composition of Rajya Sabha
| Party/ Coalition | Current composition | Scenario I | Scenario II |
| Total seats |
245 |
245 |
245 |
| UPA |
93 |
95 |
98 |
| NDA |
66 |
67 |
65 |
| Left |
19 |
14 |
14 |
| BSP |
18 |
15 |
15 |
| SP |
5 |
9 |
9 |
| BJD |
6 |
8 |
7 |
| AIADMK |
5 |
5 |
5 |
| Nominated |
7 |
12 |
12 |
| Others |
21 |
20 |
20 |
| Vacant |
5 |
0 |
0 |
It appears that there would not be a major change in the composition of the Rajya Sabha. Which party's candidate is likely to become the next President? The next Presidential election will be held in June or July. The electoral college for the Presidential election consists of the elected members of Lok Sabha, Rajya Sabha and all Legislative Assemblies. Each MP/ MLA’s vote has a pre-determined value based on the population they represent. For instance, an MP's vote has a value of 708, an MLA from UP has a vote value of 208 and an MLA from Sikkim has a vote value of 7. (Note that all MPs, irrespective of the constituency or State they represent, have equal vote value) As is evident, changes in the composition of Assemblies in larger States such as UP can have a major impact on the outcome of the Presidential election. The elections to the office of the President are held through the system of proportional representation by means of STV (same as in the case of Rajya Sabha). The winning candidate must secure at least 50% of the total value of votes polled. (For details, refer to this Election Commission document). By this calculation, a candidate will need at least 5,48,507 votes to be elected as the President. If the UPA were to vote as a consolidated block, its vote tally would reach 4,50,555 votes under Scenario II (the one that is favourable for the UPA). Therefore, the UPA will have to seek alliances if it wants a candidate of its choice to be elected to the office of the President. Scenarios for Presidential elections (figures represent the value of votes available with each party/ coalition)
| Party/ Coalition | Scenario I | Scenario II |
| UPA |
4,48,431 |
4,50,555 |
| NDA |
3,05,328 |
3,03,912 |
| Left |
51,574 |
51,574 |
| BSP |
43,723 |
43,723 |
| SP |
69,651 |
69,651 |
| BJD |
30,923 |
30,215 |
| AIADMK |
36,216 |
36,216 |
| Others |
1,11,166 |
1,11,166 |
| Total |
10,97,012 |
10,97,012 |
| Minimum required to be elected |
5,48,507 |
5,48,507 |
What about the Vice-President? Elections to the office of the Vice-President (VP) will be held in July or August. The electoral college will consist of all members of Lok Sabha and Rajya Sabha (i.e. both elected and nominated). Unlike the Presidential elections, all votes will have an equal value of one. Like the President, the VP is also elected through the system of proportional representation by means of STV. The winning candidate must secure at least 50% of the total value of votes polled. Presently, two seats are vacant in the Lok Sabha. If we exclude these from our analysis, we find that a candidate will need at least 395 votes to be elected as the VP. Under our best case scenario, the UPA holds 363 votes in the forthcoming VP elections. As is the case with Presidential elections, the UPA will have to seek alliances to get a candidate of its choice elected to the office of the Vice-President. Scenarios for VP elections (figures represent the value of votes available with each party/ coalition)
| Party/ Coalition |
Scenario I |
Scenario II |
| UPA |
360 |
363 |
| NDA |
216 |
214 |
| Left |
38 |
38 |
| BSP |
36 |
36 |
| SP |
31 |
31 |
| BJD |
22 |
21 |
| AIADMK |
14 |
14 |
| Nominated |
14 |
14 |
| Others |
57 |
57 |
| Total |
788 |
788 |
| Minimum required to be elected |
395 |
395 |
Notes: [1] UPA: Congress, Trinamool, DMK, NCP,Rashtriya Lok Dal, J&K National Conference, Muslim League Kerala State Committee, Kerala Congress (M), All India Majlis-e-Ittehadul Muslimeen, Sikkim Democratic Front, Praja Rajyam Party, Viduthalai Chiruthaigal Katchi [2] NDA: BJP, JD(U), Shiv Sena, Shiromani Akali Dal [3] Left: CPI(M), CPI, Revolutionary Socialist Party,All India Forward Bloc
