Special category state

July 2016, Paper-II
Question
Which among the following is not a criterion for declaring a special category state?
a) Overpopulation
b) Poor infrastructure
c) Hilly and difficult terrain
d) Non- viable state finances
Answer A
The concept of a special category state was first introduced in 1969 when the 5th Finance Commission sought to provide certain disadvantaged states with preferential treatment in the form of central assistance and tax breaks. Initially, three states Assam, Nagaland and Jammu & Kashmir were granted special status but since then eight more have been included (Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura, and Uttarakhand).
The rationale for special status is that certain states, because of inherent features, have a low resource base and cannot mobilize resources for development. Some of the features required for special status are:
(i) hilly and difficult terrain;
(ii) low population density or sizeable share of tribal population;
(iii) strategic location along borders with neighboring countries;
(iv) economic and infrastructural backwardness; and
(v) non-viable nature of state finances.