In a major setback to Naveen Patnaik government as well as the ruling BJD, the Planning Commission has made it clear that Odisha does not qualify for the grant of Special Category Status.

“You will appreciate that under the existing for criteria approval by the National Development Council, Odisha does not qualify for grant of Special Category Status,” Planning Commission deputy chairman Montek Singh Ahluwalia said in a letter to Chief Minister Naveen Patnaik.

Mr. Ahluwalia’s communication came in response to Mr. Patnaik’s letter to Prime Minister Manmohan Singh on the matter of special category state status for Odisha written on November 24, 2011.

Planning Commission’s letter rejecting Odisha’s demand of special category state status came at a time when ruling BJD had launched an agitation and initiated signature campaign to fulfill its long standing demand. The State Assembly had also passed a unanimous resolution supporting the state government’s demand of special category status for Odisha.

Describing Odisha’s finance as stable and viable with sound indicators of fiscal deficit, outstanding liabilities and interest payments to total revenue receipt, Mr. Ahluwalia said, “The balance of current revenue (BCR) is also positive which contributes to plan resources. Thus this (non-viable nature of state finance) criterion is not satisfied.”

Mr. Ahluwalia in the letter mentioned that there were five features required for a state to get the status of Special Category State Status. They were: Hilly and difficult terrain, low population density and /or sizeable share of tribal population, strategic location along borders with neighbouring countries, economic and infrastructural backwardness and non-viable nature of state finances.

In response to the Odisha government’s request for special category status, the Planning Commission deputy chairman said that it has been examined with regard to existing criteria.

“Odisha does not satisfy the criterion of hilly and difficult terrain although forests in some areas do pose some difficulties,” Mr. Ahluwalia said, adding, the density of population of the state relative to general density of population in special category states is not low.

The proportion of tribal population in case of Odisha is relatively high as compared to the general category states, but is lower than several special category states, he said.

“The criterion of strategic location along international borders is not satisfied,” Mr. Ahluwalia said. As regards the criterion of economic and infrastructural backwardness, the situation in Odisha presents a “mixed picture,” the planning commission said.

In the field of infrastructure, Odisha’s status is less than national average in terms of irrigation potential created and railway route per 100 square kilometres, he added.

However, in terms of National Highway density, other roads and power infrastructure, Odisha’s potential is “satisfactory,” he pointed out, stating that “this criterion appears to be the only partially satisfied.”

Mr. Ahluwalia clarified that states under special category generally have a low resource base and are not in a position to mobilise resources for their developmental needs even though the per capital income of some of these states is relatively high.

Moreover, Mr. Ahluwalia said a number of special category states were constituted out of former small Union Territories of districts of some other states, necessarily involving creation of administrative infrastructure that was out of proportion to their resource base.

Above all, he said the decision to grant special category status to a particular state is to be taken by the National Development Council (NDC), which is the sole body competent to do so.

“The decision (to accord special category status) is based on an integrated consideration of all the factors and the peculiar situation of the state,” Mr. Ahluwalia said in the letter.