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LATEST NEWS UPDATES | Government should reward progressing states, not backwardness

Government should reward progressing states, not backwardness

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published Published on Aug 15, 2013   modified Modified on Aug 15, 2013
-The Economic Times


The government, reportedly, is creating a new composite development index to rank states that use new, more comprehensive criteria. Since the 12th Finance Commission recommended special grants for backward regions, in addition to special allocation of Plan funds to so-called Special Category states, there has been some enthusiasm among state leaders for accentuating their respective state's backwardness. Bihar chief minister Nitish Kumar has invested a lot of political capital in getting his state aspecial status, thus becoming eligible for greater transfer of funds from the Centre.

By creating a new index that would take into account more dimensions of development performance, we would certainly have a better understanding of where states stand relative to one another. But this should not lead to any perverse incentive to remain backward. Central funds should flow not so much to backward states as to those that show exemplary effort to combat that blight. States' own tax effort, improvement in health and education indicators, achievements in physical infrastructure creation and such other yardsticks can be used to devolve funds to backward states.

Those who strive the best should be rewarded the most, not those who stay the most backward, either because the resources are misused or looted or because poor governance thwarts economic activity. India is still too poor a country to afford the luxury of pouring money down the drain into cesspools of corruption and misgovernance, merely to satisfy political whims.

Bihar is backward primarily because of poor governance and relative lawlessness. The state is blessed with rich alluvial soil, abundant water and plenty of sunshine. It can become the sugar capital of the world, only if maintenance of law and order improves to a level that allows factories to come up close to where cane is grown, so that crushing can take place immediately after harvest. Under Nitish Kumar, some progress has been made on this count, but not enough. This is where Bihar has to focus, not on classification categories.


The Economic Times, 15 August, 2013, http://economictimes.indiatimes.com/opinion/editorial/government-should-reward-progressing-states-not-backwardness/articleshow/21837291.cms


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