Has Nitish Kumar been sold a pup with backward status?

For a state that has laid claim to being the fastest-growing in the country over the last few years, Bihar is racing backwards under Chief Minister Nitish Kumar’s demand for giving his state special category status. Special category states receive 90 percent of their central funds as grants, while general category ones receive only 30 percent gratis. The rest comes as loans. With the UPA government at the centre fighting for survival, Kumar is being humoured on his special status demand, but he may get little more than the dubious privilege of having his entire state declared as backward. And there’s not much money in it too. Barring one district, 37 of the 38 districts of Bihar already carry the backward tag. This entitles these districts to receive additional development allocations from the Planning Commission – which is not exactly going to flood the state with money or investments. The demand for special status – which is currently given only to hill states where investment is inherently difficult to attract due to terrain – may earn Nitish Kumar some talking points with the electorate, but he can’t be in any doubt that “special status” is not something the UPA can confer on Bihar without the unanimous approval of other states at the National Development Council (NDC). [caption id=“attachment_677628” align=“alignleft” width=“380”]  Does Nitish need more than just the UPA to benefit from the special status? PTI[/caption] The irony is this: Nitish Kumar cannot get his “special status” from the centre alone. He will have to build a coalition of states to get himself this status, and why would rich states like Gujarat or Tamil Nadu want to do this at their cost? Put another way, if Nitish Kumar stands in the way of Narendra Modi, Modi can well stand in the way of Bihar’s special status. But being labelled backward, it seems, is possible. Way back in 2005, an inter-ministerial task group had identified 36 districts of Bihar as backward; one more was later added. Now, even the last remaining district will be added – making the whole of Bihar backward. Whether this is a reason for Nitish Kumar to celebrate is something for him to ponder over when he is going head-to-head with Modi not only on the growth platform, but also secular-liberal credentials. Nitish Kumar has ruled over Bihar for a little over seven years, and he won his second term for promising to be the messiah of development. His fight for special status is intended to channel additional financial resources to his historically-backward and economically-disadvantaged state. But in pitching for special status, and by declaring that he will back any government at the centre that will give him this, he appears to have made a political pitch without reckoning with the reality that he will only get backward status - for very little additional benefit. Backwardness can’t be a politically salable idea in a state which has seen pitched battles between backward and forward castes. Backwardness reminds his people about the Lalu-Rabri regime, not his own forward-looking coalition with the BJP. Even globally, underdeveloped or backward nations are called developing nations, for backwardness is considered a demeaning term. Whether Biharis will love to be termed backward is the big question. UPA strategists are trying to convince Bihar that declaring the whole state as “backward” is as good as the real thing Nitish has demanded, but the issue has only succeeded in raising a political question-mark over whether Nitish Kumar will be bailing out the UPA in case Mulayam Singh withdraws support. A bigger question is whether Nitish Kumar’s political support is being demanded for so little benefit – backward status, not special status. A senior Planning Commission official told Firstpost that only the National Development Council (NDC) is empowered to grant special status to a state. As such, “one state’s gain is other state’s loss. It is virtually impossible to make other states agree and build a consensus. Why should another state’s taxpayers pay for the follies of the Lalu-Rabri regime or even their unmindful predecessors?” The official said that the Planning Commission had played only a secretarial role by preparing a note on special status for cabinet clearance. In the budget the Finance Minister had indicated that he may consider changing the criteria for special status. It does not have the right to do this without unanimous NDC approval, he said. Another interesting twist is that apart from five other states, Rajasthan is also demanding special status. A Congress-ruled state, Rajasthan will go to the polls in October-November. It would be politically imprudent on for the Congress to deny such a status for its own state and give it to Bihar. Consider the statement given by the Deputy Chairman of the Planning Commission on the eve of the NDC meet in December last year: “Bihar does not meet the existing criteria according to which a state is deemed eligible for special category state. We do recognise that Bihar and some parts have a special problem and as part of BGRF (Backward Regions Grant Fund) we have a Bihar package.” The latest promise by the UPA brass, as reported by some newspapers, comes down to precisely the same thing, but with a political spin, a Planning Commission official told Firstpost. Getting all 38 districts categorised as backward does not automatically entitle the state for any tax benefits for new industries. Currently, 11 states, which include all north-eastern states and the hill states of J&K, Himachal Pradesh and Uttarakhand, are special category states (SCS), while 18 other states and six Union Territories are general category states (GCS). The extension of tax incentives to Uttarakhand resulted in a net loss for Uttar Pradesh, as several industries went to Hardwar and Rudrapur in the plains of Uttarakhand rather than to UP. The Inter Ministerial Group (IMG) had earlier rejected Bihar’s plea after judging the state on the basis of five conditions — hilly and difficult terrain, low population density and sizeable share of tribal population, strategic location along the borders with neighbouring countries, economic and infrastructure backwardness and non-viable state finances.  Special category states receive special treatment in the allocation of funds by the Planning Commission. While general category states get 70 percent of central funds as loans and the balance 30 percent as grants, special category states get 10 percent as loans, and 90 percent as grants. Bihar’s claim is rooted in the definition of backwardness in the Planning Commission’s inter-ministerial  task group of 2005, which identified 36 districts of Bihar as backward. The Backward Regions Grants Fund now covers 272 districts in the country - all districts in Bihar and 12 out of 20 in West Bengal. A Hindustan Times report said Bihar’s special plan for 2013-14 is likely to be around Rs 2,000 crore against Rs 1,500 crore this year. That’s not much to make political capital out of. Nitish Kumar may find that special category status is not a favour the UPA can grant unilaterally. He will have to build allies for it. Maybe he has been sold a pup with the backward category.