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Analysis of Article 370, Special Category Status, New Framework for Grants

Analysis of Article 370

  • Article 370 of the Indian Constitution is a ‘temporary provision’ which grants special autonomous status to Jammu and Kashmir.
  • Except for defence, foreign affairs, finance and communications, the Parliament needs the state government’s concurrence for applying all other laws.

Special Status of J & K

Special Status to State

  • The state’s residents live under a separate set of laws, including those related to citizenship, ownership of property, and fundamental rights, as compared to other Indians.
  • Indian Parliament cannot increase or reduce the borders of the state and Indian citizens from other states cannot purchase land or property in Jammu & Kashmir.
  • Emergency Provisions:
  • The Union government cannot declare emergency on grounds of internal disturbance or imminent danger unless it is made at the request or with the concurrence of the state government.
  • Centre can declare emergency in the state only in case of war or external aggression.
  • The Center has no power to declare financial emergency under Article 360 in the state.
  • A Constitution amendment becomes applicable to J & K only after the President issues an order.


Procedure for removal of Article 370

  • To remove Article 370, an amendment of the Indian Constitution under Article 368 is required. But at the same time, to remove 370 the recommendation of the “Constituent Assembly” is necessary.
  • Thus means it would require the “State’s concurrence” under clause (1) (d) of the existing Article.


Can Article 370 be Revoked Unilaterally?

  • According to the clause 3 of Article 370, “The President may, by public notification, declare that this article shall cease to be operative, ‘provided that he receives the “recommendation of the Constituent Assembly of the State (Kashmir).”
  • Thus, Article 370 can be revoked only if a new Constituent Assembly of Kashmir recommends revocation.
  • Since the last Constituent Assembly was dissolved in January 1957 after it completed the task of framing the state’s Constitution, so if the parliament agrees to scrap Article 370, a fresh constituent Assembly will have to be formed.
  • The constituent Assembly will consist of the same MLAs elected to the State Assembly. Simply put, the Centre cannot repeal Article 370 without the nod of J&K State.


Special Category Status For States

  • The concept of a special category state was first introduced in 1969 by the 5th Finance Commission.
  • The rationale for special status was that certain states, because of inherent features –
  • Hilly State
  • Border Region
  • Tribal Land
  • Currently, there are 11 states with Special Category Status – Jammu & Kashmir, Uttarakhand, Himachal Pradesh and all North Eastern states.


Benefits to Special Category States

  • A major portion of the Normal Central Assistance (56.25%) is distributed to 11 Special Category States and the remaining (43.75%) among 18 General Category States.
  • Only Special Category States receive Special Plan Assistance and Special Central Assistance grants.
  • The assistance for Externally Aided Projects flows to Special category States as 90 per cent grant whereas for General Category States, it flows as loans.
  • The state share in Centrally Sponsored Schemes is usually lower for Special Category States as compared to General Category States.
  • Special-category states get a significant excise duty concession & other such tax breaks that attract industries
  • There is no preferential treatment to SCS when it comes to sharing of the central tax revenue.


Issues with Special Category status

  • The way Special Category Status was assigned to a state has been a matter of debate.
  • No guarantee that even after awarding Special category status, economic progress will take place.
  • The amount of proceeds that states receive has increased after 14th finance commission recommendations have been accepted


Demand for Special Category Status

  • Demand for Special Category Status for Andhra Pradesh has led to State-wide protests in AP, and heated debates in Parliament.
  • The demand has been present since the bifurcation of the state. Bihar, Chhattisgarh, Jharkhand, Odisha and Rajasthan have been demanding this status for quite some time now.


Special Category Status: Recent Approach of Government

  • Following the increase in tax devolution to States from 32 to 42 per cent of divisible pool of central taxes, the Centre has dispensed with normal plan assistance, special central assistance and special plan assistance from 2015-16 onwards
  • The share of normal central assistance in total plan assistance, which was the predominant channel of central plan assistance to States had come down to just 15 per cent with the proliferation of Centrally Sponsored Schemes (CSS).
  • The only attraction that remains is the benefit of assistance for externally aided projects (90 per cent grant). There are very few externally aided projects in the ‘Special Category States’.
  • The Union Budget 2015-16 has drastically reduced the allocations under Accelerated Irrigation Benefit Programme (AIBP).
  • Finance Commission does not distinguish between special and non-special category states in its allocation.

Special Category Status

Way Ahead

  • Granting special status to any new State may result in domino effect and lead to demands from other States.
  • It is also not economically beneficial for States to seek special status as the benefits under the current dispensation are minimal.
  • States facing special problems should try and seek a package from centre for focussed development.
  • The packages provided by centre could be in tranches and incentive based after assessing the progress of states.


New Framework for Grants

  • The government on the recommendation of the subgroup of chief ministers restructured the grants.
  • As per the decision of Government, the existing funding pattern of schemes defined as ‘core of the core’ have been retained.
  • The funding pattern of ‘core’ schemes, which also form part of the National Development agenda, will be shared 60:40 between the Centre and the States (90:10 for the 8 North Eastern States and 3 Himalayan states).
  • In case a scheme/sub-scheme in the above classification that has a Central Funding pattern of less than 60:40, the existing funding pattern will continue.
  • The other optional schemes will be optional for the State Governments and their fund sharing pattern will be 50:50 between the Centre and the States (80:20 for the 8 North Eastern States and 3 Himalyan States).
  • Total number of CSS has been brought down to 28.


Core of the Core (6 Schemes)

  • Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA)
  • National Social Assistance Programme
  • Umbrella Scheme for the Development of Scheduled Castes
  • Umbrella Programme for Development of Scheduled Tribes (Tribal Education and Van Bandhu Kalyan Yojana)
  • Umbrella Programme for Development of Backward Classes and other vulnerable groups
  • Umbrella Programme for Development of Minorities (a) Multi Sectoral Development Programme for Minorities. (b) Education Scheme for Madaras and Minorities.

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