Home » Bihar, Current, Issues & Debates, Nation, Society & Economy » Development redefined: Rajan panel recommends new criteria for fund allocation for states

Development redefined: Rajan panel recommends new criteria for fund allocation for states

 

 

Rajan panel: rising above 'special status'?

Rajan panel: rising above ‘special status’?

New Delhi: A six-member expert committee constituted by the Centre on fixing a new criterion for determining the backwardness of Indian states on Thursday gave its reports, claiming Odisha, Bihar and Madhya Pradesh are the least developed states in the country. The panel led by Raghuram Rajan, former Chief Economic Adviser in the Finance Ministry and the incumbent Governor of Reserve Bank of India, said in its report that Goa, Kerala and Tamil Nadu are the most developed states in the country.

The Raghuram Rajan panel report has made a case for ending the ‘special category’ criteria for providing additional assistance to poorer states and suggested a new methodology for devolving funds on states based on a ‘Multi Dimensional Index (MDI)’.  Giving details of the report, Finance Minister P Chidambaram today said the committee has suggested that the 28 states be split into three categories – least developed, less developed and relatively developed – depending upon their MDI scores.

As regards the allocation of funds, the report suggested that each state should get a basic fixed allocation and an additional allocation depending on its development needs and development performance. The panel was formed by the Centre to finalise the new criteria to determine backwardness of states for granting special category status and was asked to submit its report in two months. The panel was set up in the wake of the demand for special category status for Bihar by its Chief Minister Nitish Kumar, who held a rally in Delhi to push for this in March.

Finance Minister P Chidambaram had promised in his Budget speech in February that the criteria would be revised to include states such as Bihar. Granting of special category status would allow Bihar to receive “untied” central funds or grants as 30% of total government assistance is kept aside for such states. The move was welcomed by Bihar Chief Minister Nitish Kumar, who had long pressed the Centre for granting special status to his state. Though experts agreed that Bihar did qualify as a backward state, they were unimpressed with the Finance Ministry’s move to set up such a committee to revise the criteria.

Kumar, however, countered this by saying that an in-principle decision had already been made to classify Bihar as a backward state with the constitution of the committee. On 18 April, the Cabinet Committee on Economic Affairs approved a Rs.12,000 crore special plan for Bihar under BRGF for the five-year period from 2013-14 to 2016-17.

The other members of the expert committee are Shaibal Gupta, a member of the Asian Development Research Institute in Patna; Bharat Ramaswami, professor, Indian Statistical Institute; Najeeb Jung, Vice-Chancellor of Jamia Millia Islamia University; Niraja G. Jayal, a professor at the Centre for the Study of Law and Governance, Jawaharlal Nehru University; and Tuhin Pandey, adviser, Planning Commission. The committee was asked to look at the gap between a state’s statistics and the national average in terms of per-capita income and other human development indicators, and evolve a composite development index.

Share in top social networks!

Leave a Reply

© 2010 BiharDays    
   · RSS · ·
Powered By Indic IME