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LATEST NEWS UPDATES | Odisha, Bihar least developed, Gujarat less developed: Raghuram Rajan panel

Odisha, Bihar least developed, Gujarat less developed: Raghuram Rajan panel

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published Published on Sep 27, 2013   modified Modified on Sep 27, 2013
-The Economic Times


NEW DELHI: A high-level panel has recommended new criteria for measuring the backwardness of states and proposed the devolution of funds to them through an index that identifies Odisha and Bihar as the least developed states and Goa as the most developed one.

state

The committee had been set up by the government amid demands for "special category" status by Bihar and was headed by the then chief economic advisor Raghuram Rajan, now the governor of the Reserve Bank of India.

"We think that this index better captures the stage of development in each states," finance minister P Chidambaram said while releasing the Rajan committee report on Thursday. "The committee has shown a way forward in devolution of funds... It is a very reasoned report." The committee has proposed a " multi dimensional index" to measure backwardness of every state using per capita consumption and the poverty ratio among other variables. States scoring 0.6 on this index or more are least developed while those with a score of less than 0.4 are considered relatively developed.

Odisha, Bihar, Madhya Pradesh, Chhattisgarh, Jharkhand, Rajasthan, Uttar Preadesh, Assam, Arunachal Pradesh and Meghalaya are the least developed going by this scale. The least developed states will receive additional funds based on the new criteria Surprisingly, Gujarat, with a score of 0.491, is among the less developed states that include West Bengal, Karnataka, Andhra Pradesh, Sikkim, Himachal Pradesh, Nagaland, Mizoram, Tripura, Jammu & Kashmir and Manipur.

Goa, Kerala, Tamil Nadu, Punjab, Maharashtra, Uttarakhand, Maharashtra, Punjab and Haryana have made it to the relatively developed category and thus may not reap the benefit of enhanced allocations. The panel has proposed a new method for allocating funds from the centre to the states based on both development needs as well as development performance. It has recommended a basic allocation of 0.3% of overall funds to each state plus additional funds based on need and performance.

This would effectively subsume what is now the "special category" methodology used for allocating money from the backward region grant fund. The demand for funds and special attention of different states will be more than adequately met by the twin recommendations.

"The report provides a sound basis of how to go forward in providing much-needed financial assistance to the backward and more backward and most backward states of India because it captures in a better way the degree of backwardness and shows a way forward of how to devolve funds," Chidambaram said, adding that the index captures backwardness of states and acknowledges that Bihar is a backward state.

Asked about the timeframe for the implementation of the new system, he said: "It can't be done this year as allocations have already been made...It will be implemented at an appropriate time, most likely from the next financial year." The Prime Minister has also directed that the recommendations of the committee "may be examined and necessary action in this behalf may be taken", Chidambaram said in a statement.

"We will circulate it to ministries that devolve large amounts of funds... HRD, rural development, Planning Commission...," he added.


The Economic Times, 27 September, 2013, http://economictimes.indiatimes.com/news/economy/indicators/odisha-bihar-least-developed-states-goa-and-kerala-top-chart-rajan-panel/articleshow/23094215.cms


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