About SCS

• SCS is a classification given by the Centre to assist in development of those states that face geographical and socio-economic disadvantages.
• It was first introduced in 1969 on recommendations of Fifth Finance Commission (FC). 
• In 1969, Jammu & Kashmir (J&K), Assam, and Nagaland were granted SCS.
  • Later, Sikkim, Tripura, etc. were given SCS.
• SCS States used to receive grants based on Gadgil-Mukherjee formula.
• constitution does not include any provision for categorization of any State in India as an SCS state. 
  • However, a wide range of special provisions are available to as many states that have been listed under Articles 371, 371-A to 371-H, and 371-J.
• Following the recommendations of the 14th FC, SCS ceased to exist and thus no SCS has been granted to any State.
  • Current funding pattern to North Eastern and Himalayan States etc. is on account of recommendations of the Sub-Group of Chief Ministers and not as per their SCS.

Benefits of Granting SCS to States

• In the SCS States, Centre-State funding of centrally sponsored schemes is divided in 90:10, far more favorable than 60:40 for general category States. 
• In case of unspent money, states with SCS have the provision to carry it forward.
• SCS states are exempted from customs duty, corporate tax, income tax, and other taxes to attract investment.