Bihar requests special package for industries, flood control measures
Bihar government seeks special financial package from Centre for industries and flood control.
Photo by Laura Chouette
Key Facts
Bihar seeks special package for industries and flood control
Recurring floods severely impact Bihar's industries
UPSC Exam Angles
GS Paper II: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.
GS Paper III: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Potential for questions on fiscal federalism, resource allocation, and regional development.
Visual Insights
Flood-Prone Areas in Bihar
Map showing the districts in Bihar that are most vulnerable to flooding, highlighting the need for flood control measures.
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More Information
Background
The demand for special category status (SCS) and special packages for states in India has a long history, often rooted in regional disparities and developmental needs. The Gadgil-Mukherjee formula, introduced in the late 1960s and revised over time, aimed to allocate central assistance to states based on factors like population, per capita income, and fiscal performance. However, states with lower development indices often argued for additional support to bridge the gap.
The concept of SCS, initially granted to states facing geographical disadvantages, infrastructure deficits, or low resource bases, provided preferential treatment in central funding. Over the years, various states have sought SCS or special packages to address specific economic challenges and promote industrial growth. These demands reflect the ongoing debate about equitable resource distribution and the role of the central government in fostering balanced regional development.
Latest Developments
In recent years, the criteria for granting special category status have become stricter, with the abolition of the Planning Commission and the introduction of the NITI Aayog. The 14th Finance Commission also recommended a significant increase in the devolution of taxes to states, reducing the need for discretionary grants and special packages. However, states continue to seek financial assistance for specific projects and developmental initiatives.
The central government has often responded with project-specific funding or special assistance packages, rather than granting SCS. The debate over fiscal federalism and resource allocation remains a key issue in Centre-State relations, with states advocating for greater autonomy and financial support to address their unique challenges and promote inclusive growth. The future outlook involves exploring innovative financing mechanisms and collaborative approaches to address regional disparities and foster sustainable development.
Frequently Asked Questions
1. What are the key facts about Bihar's request for a special package that are important for the Prelims exam?
For the Prelims exam, remember that the Bihar government is seeking a special financial package from the central government. This package is intended to boost industries and provide support for flood control measures in the state. Recurring floods have severely impacted industries in Bihar, making this package crucial.
2. What is the historical background of states requesting special financial packages from the central government?
The demand for special financial packages has a long history, often stemming from regional disparities and developmental needs. The Gadgil-Mukherjee formula was introduced to allocate central assistance based on factors like population and per capita income. Over time, the criteria have become stricter, with the introduction of NITI Aayog and increased tax devolution to states.
3. Why is Bihar requesting a special package for industries and flood control now?
Bihar is requesting this special package because it faces significant challenges due to recurring floods, which have severely impacted its industries and infrastructure. The package aims to provide financial assistance to help industries recover and implement effective flood control strategies to mitigate future damages. This is a recent development to address these ongoing issues.
4. In the context of Bihar's request, how does a 'special package' differ from 'Special Category Status (SCS)'?
While both aim to provide additional financial assistance to states, a 'special package' is typically a one-time grant or set of grants for specific projects or needs, like flood control or industrial development. 'Special Category Status' (SCS) historically provided states with preferential treatment in central assistance and other benefits. The criteria for SCS have become stricter over time.
5. What are the potential benefits and drawbacks of the central government granting Bihar a special financial package, particularly concerning other states?
Granting Bihar a special package could help its industries recover and improve its flood control infrastructure, boosting the state's economy. However, other states might also demand similar packages, potentially straining the central government's resources. It could also lead to questions of fairness and equity among states.
6. How might Bihar's request for a special package influence UPSC Mains answers related to disaster management and industrial policy?
Bihar's request highlights the intersection of disaster management and industrial policy. In Mains answers, you can use this example to illustrate the challenges faced by states vulnerable to natural disasters and the need for integrated strategies that address both immediate relief and long-term economic recovery. It demonstrates the importance of financial assistance in such scenarios.
Practice Questions (MCQs)
1. Consider the following statements regarding Special Category Status (SCS) in India: 1. SCS was primarily introduced to assist states facing geographical and socio-economic disadvantages. 2. The Gadgil-Mukherjee formula was a key criterion for determining SCS eligibility. 3. The 14th Finance Commission recommended the discontinuation of SCS. Which of the statements given above is/are correct?
- A.1 and 2 only
- B.2 and 3 only
- C.1 and 3 only
- D.1, 2 and 3
Show Answer
Answer: A
Statement 1 is CORRECT: SCS was indeed introduced to assist states facing geographical and socio-economic disadvantages, such as hilly terrain, low population density, and infrastructure deficits. Statement 2 is CORRECT: The Gadgil-Mukherjee formula, and its earlier iterations, played a significant role in determining the allocation of central assistance, including SCS, based on factors like population, per capita income, and fiscal performance. Statement 3 is INCORRECT: While the 14th Finance Commission recommended a higher devolution of taxes to states, it did not explicitly recommend the discontinuation of SCS. However, the commission's recommendations reduced the need for discretionary grants and special packages.
2. Which of the following is NOT a typical characteristic of states that were historically granted Special Category Status in India?
- A.Hilly terrain and low population density
- B.Strategic location along international borders
- C.Sound financial position and robust infrastructure
- D.Economic and infrastructural backwardness
Show Answer
Answer: C
Option C is the correct answer because states granted Special Category Status typically faced economic and infrastructural backwardness, not a sound financial position and robust infrastructure. The criteria for SCS included factors like hilly terrain, low population density, strategic location along international borders, and economic and infrastructural disadvantages.
3. In the context of Bihar's request for a special package, which of the following factors is MOST likely to be considered by the central government?
- A.The state's contribution to national GDP growth
- B.The state's performance in implementing central government schemes
- C.The state's political alignment with the ruling party at the Centre
- D.The state's geographical location and historical significance
Show Answer
Answer: B
Option B is the most likely factor. While all options might play a role, the central government is MOST likely to consider the state's performance in implementing central government schemes as a key indicator of its ability to utilize funds effectively and achieve desired outcomes. This aligns with the emphasis on outcome-based budgeting and performance monitoring in public finance.