"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.
By Rohit & Anirudh A modified 'Modernization of State Police Forces' scheme was started by the central government in 2000-01. One of the objectives was to help police forces in meeting the emerging challenges to internal security in the form of terrorism, naxalism etc. The scheme aims to modernize police forces in terms of:
Under this scheme, States have been clubbed into different categories and Centre-State cost sharing is category specific. Since 2005-06, States have been categorized as category ‘A’ and ‘B’ with 100% and 75% Central funding respectively. All the North Eastern States, namely Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim have been placed in category ‘A’ and thus, are entitled to receive 100% Central assistance for implementation of their annual approved plans. Recently, CAG decided to evaluate the working of the scheme and commissioned ‘performance audit’ reviews covering select general category and special category States. Each review covers a contiguous five year period between 2000 and 2007, but varies across selected states. For the periods under review, each state had a plan outlay (the total amount proposed to be spent in modernizing the state's police forces). However, in most cases, the actual release of funds fell significantly short of this outlay - in some cases the Centre did not contribute its share, in others the States lagged behind. For instance, in the case of Bihar, the Centre released only 56% of its share; while in the case of Rajasthan and West Bengal, the States did not release any funds at all. The graph below shows the actual releases by the Centre and the States (as percentages of their share in the proposed outlays): 
Further, even the funds that were released were not fully utilized. Thus, the amount finally spent fell significantly short of the initial proposal. The graph below shows the actual expenditure by State: 
Following are some of the other main findings from the CAG report:
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Table 1: Summary of main findings in the CAG audit for different states for Modernisation of State Police Forces |
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Purpose for which money was sanctioned |
Summary of CAG Findings |
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Planning (Every state has to propose an Annual Action Plan every year. The plan is approved by the Ministry of Home Affairs and money is released as per the plan.) |
§ Submissions by the states to the MHA were delayed. § There were also delays in the clearance granted by the MHA. § In various states such as, a) Andhra Pradesh – the government spent money on works not covered by the Annual Action Plan. b) Bihar – Persistent delays in preparation of the Plan by the state police. c) West Bengal – the plans drawn up by the state did not include items covered under the scheme. |
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Mobility |
§ Overall shortage of vehicles was observed. Most of the new vehicles replaced the old ones. § The police response time was too long in some states. § To give examples from some states: a) Andhra Pradesh – 58 percent of vehicles procured were utilised for replacing old vehicles. b) Bihar – the shortage of vehicles was 43 percent. c) Uttar Pradesh – 2400 vehicles were procured against a shortage of nearly 10,000 vehicles. |
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Residential and non-residential buildings |
§ There were considerable delays in construction of buildings in most states. Consequently, police forces’ own security was in jeopardy. § In states such as: a) Andhra Pradesh – 53 percent of staff quarters and 43 percent of official buildings were not completed (2007). b) Bihar – The total requirement of housing was nearly 60,000. Only six percent of this were included in the Plan. c) Jharkhand – District Control rooms remained non-functional because of shortage of manpower. |
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Weapons |
§ Police force in states continue to depend on outdated weapons. § Shortages of weapons also happened as acquisition from ordnance factories was very slow. § The weapons that were procured were mostly kept in the district headquarters. § In some states such as, a) Bihar – AK-47s were kept at the disposal of bodyguards of VIPs. b) West Bengal – Adequate weapons were not supplied to extremist prone police stations. |
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Communication |
§ Police Telecommunication Networks were not set up successfully in some states. In others, network was functional only up to the district level. § Shortages of various communication equipments were also observed. § In some states such as, a) Bihar - The Police Telecommunication Network system (costing Rs. 4.96 crore) remained non-functional due to non-construction of tower. b) Maharashtra – Of the 850 purchased Remote Station Units, 452 were lying in stores. |
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Forensic Science Laboratory/ Finger Printing Bureau |
§ In most States the Forensic Science Laboratories lacked adequate infrastructure. § In the absence of automatic finger print identification systems, investigation was being done manually in some States. § In some states such as, a) Maharashtra - There were significant delays in receipt and installation. There was also shortage (284 vacant posts) of technical manpower. b) West Bengal - Performance of the Forensic Science Laboratory was poor and in some cases, the delay in issue of investigation reports was as high as 45 months. |
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Training |
§ It was observed that the percentage of police personnel trained was very low. § Training infrastructure was also inadequate. § In some states such as, a) Bihar - Only 10 per cent of total force was trained. b) West Bengal - Live training was not imparted for handling useful weapons and this severely affected the performance of police forces. |
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Sources: CAG Compendium of Performance Audit Reviews on Modernisation of Police Force; PRS. Note: The audit has been done broadly from 2000 to 2007. Consequently, the period of audit for different states may vary. |
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Table 1: Summary of main findings in the CAG audit for different states for Modernisation of State Police Forces |
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Purpose for which money was sanctioned |
Summary of CAG Findings |
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Planning (Every state has to propose an Annual Action Plan every year. The plan is approved by the Ministry of Home Affairs and money is released as per the plan.) |
§ Submissions by the states to the Ministry of Home Affairs (MHA) were delayed. § There were also delays in the clearance granted by the MHA. § In various states such as, a) Andhra Pradesh – the government spent Rs 32 crore on works not covered by the Annual Action Plan. b) Bihar – Persistent delays in preparation of the Plan by the state police. c) West Bengal – the plans drawn up by the state did not include items covered under the scheme. |
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Mobility |
§ Overall shortage of vehicles was observed. Most of the new vehicles replaced the old ones, and no additions were made. § The police response time was too long in some states. § To give examples from some states: a) Andhra Pradesh – 58 percent of vehicles procured were utilised for replacing old vehicles. b) Bihar – the shortage of vehicles was 43 percent. c) Uttar Pradesh – 2400 vehicles were procured against a shortage of nearly 10,000 vehicles. 203 ambassador cars were procured, though only 55 were approved by the MHA. |
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Residential and non-residential buildings |
§ There were considerable delays in construction of buildings in most states. Consequently, police forces’ own security was in jeopardy. Satisfaction levels with the housing provided were also very low. § In states such as: a) Andhra Pradesh – 53 percent of staff quarters and 43 percent of official buildings were not completed (2007). b) Bihar – The total requirement of housing was nearly 60,000. Only six percent of this were included in the Plan, and only 1045 units were completed by 2006. c) Jharkhand – District Control rooms remained non-functional even after spending Rs 2 crore because of shortage of manpower. |
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Weapons |
§ It was observed that the police force in states continue to depend on outdated weapons. § Shortages of weapons also happened as acquisition from ordnance factories was very slow. § The weapons that were procured were mostly kept in the district headquarters. § In some states such as, a) Bihar – AK-47s were kept at the disposal of bodyguards of VIPs. b) West Bengal – Adequate weapons were not supplied to extremist prone police stations. |
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Communication |
§ Police Telecommunication Networks were not set up successfully in some states. In others, network was functional only up to the district level. § Shortages of various communication equipments were also observed. § In some states such as, a) Bihar - The Police Telecommunication Network system (costing Rs. 4.96 crore) remained non-functional due to non-construction of tower. b) Maharashtra – Of the 850 purchased Remote Station Units, 452 were lying in stores. |
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Forensic Science Laboratory/ Finger Printing Bureau |
§ In most States the Forensic Science Laboratories lacked adequate infrastructure. § In the absence of automatic finger print identification systems, investigation was being done manually in some States. § In some states such as, a) Maharashtra - There were significant delays in receipt and installation. There was also shortage (284 vacant posts) of technical manpower. b) West Bengal - Performance of the Forensic Science Laboratory was poor and in some cases, the delay in issue of investigation reports was as high as 45 months. |
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Training |
§ It was observed that the percentage of police personnel trained was very low. § Training infrastructure was also inadequate. § In some states such as, a) Bihar - Only 10 per cent of total force was trained. b) West Bengal - Live training was not imparted for handling useful weapons and this severely affected the performance of police forces. |
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Sources: CAG Compendium of Performance Audit Reviews on Modernisation of Police Force; PRS. Note: The audit has been done broadly from 2000 to 2007. Consequently, the period of audit for different states may vary. |
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