"...Existing criteria (for according special category status to states) was formulated some time ago. And perhaps it is time to revisit the criteria", Finance Minister P Chidambaram said when asked about his reaction to the demand of special category status by Bihar Chief Minister Nitish Kumar.
During the National Development Council (NDC) meeting last month, Kumar strongly urged the Centre to provide special category status to Bihar to help it tide over the financial problems.
While announcing the formation of the 14th Finance Commission, Chidambaram said, the government has made special reference to the issues concerning debt-stressed states to the panel.
The Commission will also take into account the taxation efforts and the potential for increasing tax-GDP ratio by such states, he said, adding, "all this will help the Finance Commission in making recommendations for states that are far away from the national average".
Among other things, the Commission would be suggesting steps to help states raise additional resources and improve financial position.
The implementation of the proposed Goods and Service Tax (GST) would help in improving tax collection by the states, Chidambaram said, adding the Commission will look into, "the mechanism for compensation in case of any revenue loss".
Besides, he said, the panel will also suggest steps for insulating the pricing of public utility services like drinking water, irrigation, power and public transport from policy fluctuations through statutory provisions.
