Special Category Status for Bihar | 13 Jun 2024

Why in News?

Bihar’s Chief Minister Nitish Kumar reiterated the state's longstanding demand for special category status from the Centre. 

• This status would lead to an increase in the tax revenues that Bihar receives from the Centre.

Key Points

• One of the key concerns is Bihar's low per capita income, which is around ₹60,000, among the lowest in the country. Additionally, the State lags behind the national average in various human development indicators.
• Furthermore, Bihar's fiscal situation has been negatively impacted by factors such as the bifurcation of the State, leading to industries moving to Jharkhand, lack of adequate water resources for irrigation, and frequent natural disasters. 
• Bihar's caste based survey of 2022 shows that nearly a third of the State’s people live under the poverty line.
  • In 2023, the Bihar government estimated that the granting of the special category status will help the State receive an additional 2.5 lakh crore rupees over five years to spend on the welfare of 94 lakh crore poor families.
• Historically, States like Bihar and Uttar Pradesh suffered slow growth and high poverty levels due to poor rule of law that discouraged investments considered crucial to boosting growth.
• But now, as one of the fastest growing States in the country, despite originating from a lower starting point, Bihar has managed to increase its per capita income level and also the size of its overall economy at a brisk pace in recent years.
  • In 2022-23, for instance, Bihar’s Gross Domestic Product (GDP) grew at 10.6% as against the national average of 7.2% while its per capita income level in real terms grew by 9.4% in 2023.