In a move which may end the most sought after “special category” status by various States, a panel headed by former Chief Economic Advisor Raghuram Rajan has suggested a new method for allocation of funds to States which is based on a ‘Multi Dimensional Index (MDI)’, while ranking Goa and Kerala as the most advanced States under it, and bracketing Bihar and Odisha as the least developed.
This new methodology will subsume the prevailing “special category” status, which seeks to provide additional funds to poorer States, under which Bihar had been seeking the “special” status. MDI of backwardness is based on per capita consumption as measured by the NSSO, the poverty ratio, and a number of other measures which correspond to the multi dimensional approach to defining poverty outlined in the Twelfth Plan.
The Raghuram Rajan panel on Thursday handed over its report titled Evolving a Composite Development Index of States to Finance Minister P Chidambaram, who while giving out details of its content to the media, said that the committee has suggested splitting the 28 States into three categories — least developed, less developed and relatively
developed — depending upon their MDI scores. Based on the MDI scores, the 10 least developed States are Odisha, Bihar, Madhya Pradesh, Chhattisgarh, Jharkhand, Arunachal Pradesh, Assam, Meghalaya, Uttar Pradesh and Rajasthan. The seven most developed States are Goa, Kerala, Tamil Nadu, Punjab, Maharashtra, Uttrakhand and Haryana.
According to the report, the 11 less developed states are Manipur, West Bengal, Nagaland, Andhra Pradesh, Jammu & Kashmir, Mizoram, Gujarat, Tripura, Karnataka, Sikkim and Himachal Pradesh.
The States with score of 0.6 and above on the Index have been classified as 'least Developed'; States with score below 0.6 and above 0.4 'less Developed'; and States with score of below 0.4 'relatively developed'.
As per the panel's suggestion, each State should get a basic fixed allocation and an additional allocation depending on its development needs and development performance.
Meanwhile, senior BJP leader and former Deputy Chief Minister of Bihar Sushil Kumar Modi on Thursday expressed disappointment with the Raghuram Rajan panel report which bracketed Bihar among backward States and said it will get nothing for it. "The Raghuram Rajan panel report is like 'Khoda Pahar nikli chuhiya (making a mountain out of a mole hill) ... Bihar will gain nothing out of it," he said in a tweet and assailed Chief Minister Nitish Kumar for creating a hype that the Centre had acceded to his request to set it up to clear the decks for grant of special status to the State.
Terming the Raghuram Rajan Committee report as "unfortunate", Odisha Chief Minister Naveen Patnaik on Thursday said the State would continue its fight for the Special Category Status.
The demand for funds and special attention of different States, Chidambaram said, "would be more than adequately met by the twin recommendations of the basic allocation of 0.3 per cent of overall funds to each State and the categorisation of States that score 0.6 and above as least developed States".
The Raghuram Rajan committee was set up by the Government amid demand for "special category" status by Bihar.
The report is likely to be implemented from the next financial year. The Department of Economic Affairs will soon examine the report and take necessary action, the Minister added.
The Rajan Committee was asked to suggest methods for identifying backwardness of States using a variety of criteria and also to recommend how the criteria may be reflected in future planning and devolution of funds from the Central Government.