Eleven economically backward hill states of India sharing international boundaries comprise the group of ‘Special Category States’. Lacking in economic resources and being geographically isolated from the rest of the country, they not only suffer from serious physical and economic handicaps, but protracted phases of violent militancy had further stymied the development of many of these states. To address their problems, Centre has awarded them the ‘Special Category Status’ which gives them perpetual access to Central plan assistance on liberal terms, but without creating the necessary institut ... More

Eleven economically backward hill states of India sharing international boundaries comprise the group of ‘Special Category States’. Lacking in economic resources and being geographically isolated from the rest of the country, they not only suffer from serious physical and economic handicaps, but protracted phases of violent militancy had further stymied the development of many of these states. To address their problems, Centre has awarded them the ‘Special Category Status’ which gives them perpetual access to Central plan assistance on liberal terms, but without creating the necessary institutional and accountability mechanisms. The scale of backwardness of individual states is not considered and neither is there any performance expectation from them. In the absence of an appropriate structure, the arrangement only created a group of states which, barring a few exceptions, remained perpetually dependent on central funding for their survival and sustenance. Now that fresh demands are being raised by some states for this status, these issues are assuming increasing importance. However, no objective assessment of the Special Category Status has ever been made in the public domain. This book explores the reality of the special category states, going down to the roots of their backwardness. Examining the reality of these states in the context of asymmetric federalism in India and analysing stupendous amounts of data, it traces their socio-economic progress and public financial management ever since the status was first awarded in 1969. The book presents a critical evaluation of the mechanism of special category status and raises a number of extremely relevant issues.