The Raghuram Rajan panel, set up to evolve a composite development index of States, has made observations both convenient and troublesome for the Congress-led UPA regime
India is neither a developed country nor a developing country; it’s an under-developed country. This is what the Raghuram Rajan panel on evolving a composite development index of States virtually says.
It is possibly also one of the reports most damning of the UPA Government and virtually indicates that Manmohanomics since 1991 has not helped the country come out of the syndrome of poverty. The development process, as per its conclusion, is a virtual misnomer.
The committee has not found any State which is developed. Gujarat was found to be in the middle category of less-developed as its development pattern is ‘not uniform’. There are patches which do not conform to parameters of development. The supposedly-developed States like Punjab, Kerala, Uttarakhand, Haryana, Maharashtra, Goa and Tamil Nadu could be considered as ‘relatively developed’.
It means that these States do not come anywhere near the international development standards. The committee found that these States were only ahead in relative Indian terms. In the overall parameters of 10 counts, that included individual per capita consumption, these States also demonstrated districts and regions which are far behind than the supposedly-developed areas in a State. Development is only restricted to certain pockets.
This also raises questions on the globalisation of the economy. Since, in 1997-1998, India was less integrated with the global system, it was cushioned off from the upheavals in the South-East Asian economies. The tumble did not have much effect except for a few businesses which had exposure to South-East Asia.
In 2008, as its integration increased, India found itself in a difficult situation to cope up with, say, the lehman crisis. This has affected its growth, increased the losses of banks — as there are more defaults in repayments, shrunk jobs and lesser developed areas face graver situation. In the process, India’s currency has been the worst hit.
The Raghuram Rajan panel has re-opened the question: Should India rethink how it should reduce its dependence on the US and other Western countriesIJ It has pointed out that pouring foreign direct investment is not helping the hinterlands.
The committee was set up by the UPA Government for an ostensible political purpose. The Centre wanted to placate Bihar Chief Minister Nitish Kumar by granting his State a ‘special category’ status. This category was created by the Finance Commission to basically benefit the politically-sensitive States of the North-East so that they could be given extra financial benefit to overcome their development deficit.
The committee responded by recommending the abolition of the ‘special category’ status and evolving a new index on the basis of severe development deficit. Bihar was clubbed in the category of least-developed. But in reality, when it comes to allocation of funds, it would be way behind Uttar Pradesh.
The committee found that Uttar Pradesh, having worse development indicators, needs a higher allocation of funds. It is a windfall for the State and possibly suits the UPA Government too, keeping in view the general election round the corner.
The panel thus serves more than the development cause of the States. It decides the dynamics of Indian electoral politics through its composite index. It also penalises States that are political opponents of the UPA like Tamil Nadu. As the index puts the State in the highest category of ‘relative development’, it tends to deprive Tamil Nadu of less than half of what would be transferred on an average per capita basis. The State would be getting far less of Central allocations in the process.
Though the State has been clubbed with the highest category, its development deficit in more than half of its districts is striking in terms of poverty, consumption, female literacy, and other indicators that the committee has referred to.
It would also cause political problems in the North-East too. Earlier, the region comprised special category States and enjoyed a particular benefit. Now Meghalaya, Assam and Arunachal Pradesh would continue to get the maximum funds being in the ‘least-developed’ segment. But Manipur, Nagaland, Mizoram, Tripura and Sikkim would get far less being in a higher category of ‘less-developed’. So would Jammu & Kashmir, Himachal Pradesh and Uttarakhand.