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West Bengal's demand for a financial package has been relegated to by the NDA government at the Centre. However, some of the other neighboring states--Bihar, Odisha and Jharkahand--are vociferously seeking a special category status, which if granted, could translate into significant financial gains for the state, even as West Bengal might be grappling with a huge debt burden.
For the past few years, West Bengal has been demanding a debt moratorium of Rs 2 lakh crore and financial assistance, while some of the other states, particularly Bihar had been lobbying for a special category status.
According to sources close to the state government, West Bengal's demands for moratorium are not under consideration as the amount of debt is too high for a moratorium.
West Bengal's debt to GSDP ratio in 2013-14 (budget estimates) stood at 34. 6 per cent, while that of Bihar stood at 23.3 per cent.
Further, a document on the List of Parliament Assurances Pending as on 10.9.2014 (published on 29.9.2014)--out of the 16 assurances, the highest number pertains to granting special status to Bihar and other states. Some of the other states have sought a for a special status are, and demands pending for the last six months, include Jharkhand, Odisha, Rajasthan, Andhra Pradesh, Telangana and Chhattisgarh, according to the document.
In 2013, it was conveyed to the states of Jharkhand, Odisha and Rajsasthan that they did not fully meet the criteria of a special state. In case of Bihar, an inter-ministerial group (IMG) also came to a similar finding, but the decision has not yet been conveyed to the state, according to the document. However, representations made by all the states which have sought the status are under consideration of the government, the document says.
Under Special Category Status, a state will typically receive 90% of funds as grants and 10% as loans in the Centrally Sponsored Schemes (CSS). In contrast, other states typically receive 30% funds as loans and 70% as grants. This apart, the status also allows these states avail themselves of the benefit of debt swapping and debt relief schemes.
At present, 11 states have been accorded Special Category Status, Arunachal Pradesh, Assam, Manipur, Meghalaya Mizoram, Nagaland, Sikkim, Tripura, Jammu & Kashmir, Himachal Pradesh and Uttarakhand.
So far, the only assistance West Bengal has received from the Centre is the Backward Region Grant Fund package of more than Rs 8000 crore in 2011.
Some of the criteria for falling under the special category status include, hilly and difficult terrain; low population density or sizeable share of tribal population; strategic location along borders with neighbouring countries; economic and infrastructural backwardness; and non-viable nature of state finances.
Last year, a panel headed by present RBI governor, Raghuram Rajan panel report had recommended ending the special category criteria for fund allocation, while providing additional assistance to poorer states. It ranked Goa and Kerala as the most advanced states and Odisha and Bihar the least. The committee has suggested that the 28 states be split into three categories -- least developed, less developed and relatively developed. West Bengal was placed in the less developed category, while Odisha, Bihar, Jharkhand and Rajasthan were placed in least developed category.
