M’laya among ‘least developed’ states

End ‘special category’ status for states: Rajan Committee

New Delhi: The Raghuram Rajan Committee has recommended doing away with the special category status mostly of the eight Northeastern states and bracketed three of them – Meghalaya, Assam and Aruanchal Pradesh as “least developed” which will now have to share major portion of the Central assistance with huge Bemaru (sick) states – UP, Bihar, Madhya Pradesh and four others.

The Committee, which was set up for “Evolving a composite development index of states, in its report, which submitted to Finance Minister P Chidambaram on Thursday, recommended a new formula for disbursing Central assistance. The report also puts a question mark on how the three NE states including Meghalaya got the least developed status when each of them are claiming good progress for long.

The three states in the region have been tagged with the erstwhile Bemaru provinces which have now been split. Odisha, Bihar, Madhya Pradesh and Chhattisgarh are the least developed states (or the most backward) in that order followed by Jharkhand, Aruanchal Pradesh, Assam, Meghalaya, Uttar Pradesh and Rajasthan, according to the government committee whose recommendations, if accepted, will mean a larger share of central funds for these states.

Goa, Kerala and Tamil Nadu are India’s most developed states, according to the report of the committee that looked into the backwardness of states.

In NE, Manipur, Nagaland, Mizoram, Tripura and Sikkim are considered as less developed along with seven more states and the rest as relatively developed.

Till date all the eight NE states along with Jammu Kashmir, Himachal Pradesh were getting special category status because of certain criteria like underdevelopment, hill region, border areas. But now these states have to vie with large states like Bihar, Uttar Pradesh, Madhya Pradesh, Bihar, Odiaha and Rajasthan for the central assistance.

While none of the NE states are under relatively developed category, Manipur, Nagaland, Mizoram, Tripura and Sikkim are considered “less developed”. They share the rank with Gujrat and Karnataka among others.

The committee arrived at this conclusion by creating an index that used measures such as per capita consumption and poverty ratio. The index ranges from zero to one, with one being the most backward and zero the least backward or the ‘relatively developed’, according to the committee.

The other states in the ‘relatively developed’ list include Punjab, Maharashtra, Uttarakhand and Haryana. Interestingly, Gujarat figures in the list of less developed states. Indeed, it is ranked 12 in terms of development.

Finance minister P. Chidambaram had set up a committee under former Chief Economic Advisor Raghuram Rajan currently Reserve Bank of India (RBI) governor, to examine the backwardness criterion, in a move that was attributed to the Congress party-led government’s attempt to woo Bihar chief minister Nitish Kumar. The Bihar government has been asking that it be classified as a ‘special category’ state so that it could get access to more Central funds.

The Rajan committee has proposed a general method for allocating funds from the Centre to the states based on both a state’s development needs as well as its development performance, Chidambaram said in a statement. According to the committee’s calculations, Bihar should get 12.04% of the total funds allocated for states by the Centre, as against its current share of 7.42% under the total central assistance to state plans and centrally sponsored schemes. Rajasthan should get 8.42% as against 4.79% at present, Odisha 6.53% as against 4.62% and Madhya Pradesh 9.56% as against 6.91%.

Uttar Pradesh will continue to corner the largest share of central assistance at 16.4% of total funds, as against 10.1% earlier. States that score 0.6 and above on the index may be classified as least developed, states that score between 0.4 and 0.6 may be classified as less developed, and states that score below 0.4 may be classified as relatively developed, according to the recommendations of the committee.

The committee has asked that each state be allocated 0.3% of the overall funds. An amount will be added to this share depending on the need and performance of each state to arrive at the state’s overall share.

According to the committee, the fixed allocation and classification based on the index will adequately address the demand of funds from states.

Talking to the reporters Chidamabaram stated that the Committee has observed that the demand for funds and special attention of different states will 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. According to the Committee, these two recommendations, along with the allocation methodology, effectively subsume what is now “Special Category”.

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