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Odisha and Bihar, along with poll-bound Madhya Pradesh, Chhattisgarh and Rajasthan, are among India’s 10 ‘Least Developed’ States.
Goa and Kerala, along with five other States in the ‘Relatively Developed’ category, are the most advanced. Gujarat, headed by BJP Prime Ministerial candidate Narendra Modi, figures in the ‘Less Developed’ category and is twelfth overall.
These are the findings of a panel headed by former Chief Economic Advisor Raghuram Rajan, now the RBI Governor. The panel was tasked with evolving a composite development index amidst demands for ‘Special Category’ status by Bihar and other poor States seeking more central assistance.
The Rajan panel has recommended doing away with the ‘Special Category’ criterion. Instead, it wants allocations to States be based on a multidimensional index, which was the basis for the above rankings. If the recommendations are accepted, the ‘Least Developed’ States may get additional funds, from the next financial year.
The index categorised the 28 States into three categories. States that scored 0.6 and above have been classified as ‘Least Developed’. Those that scored below 0.6 and above 0.4 are ‘Less Developed’ and those with scores below 0.4 are ‘Relatively Developed’.
The criteria
Backwardness has been measured on the basis of monthly per capita consumption, the poverty ratio, education, health, household amenities, female literacy, percentage of Scheduled Caste/Tribe population, urbanisation rate, financial inclusion, and connectivity. The panel has proposed a general method for allocation of central funds, based on each State’s development needs as well as its development performance. It wants each State to get a fixed allocation of 0.3 per cent of overall funds. The amount derived from the State’s need and performance will be added to this.
Adequate compensation
The Committee has observed that the demand for funds by different States will be more than adequately met by the basic allocation of 0.3 per cent of overall funds and the categorisation of States that score 0.6 and above as ‘Least Developed’. The report, which was made public on Thursday, has been submitted to Finance Minister P. Chidambaram. “This (multidimensional index) captures stages of development in a better manner and shows a way forward,” Chidambaram said at a press conference. He added that the Economic Affairs Department will examine the report and take the necessary action.
Currently, whether a State qualifies for the ‘Special Category’ or not is determined on the basis of terrain, population density, location, and infrastructure, among other criteria.
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