From C K Nayak
New Delhi: The Raghuram Rajan Committee which had recommended to abolish special category status mostly of the eight Northeastern states and bracketed three of them – Meghalaya, Assam and Arunachal Pradesh as “least developed” will not replace the old Gadgil Mukherjee formula altogether which gives some respite to the whole region.
“Raghuram Rajan Committee has recommended that ‘some’ of the development funds may be allocated by the Centre through methodology adopted by it and has also recommended that the approach recommended in the Committee’s report is not intended to replace all existing methodologies,” Minister for Planning and Parliametnary Affairs Rajeev Shukla has made it clear in a communication to Wansuk Syiem, M.P. Rajya Sabha. There are various arrangements through which Central Funds flow to the State Governments and Gadgil Mukherjee formula governs a part of such transfers, he said.
Wansuk wanted to know whether Government feels that the time-tested Gadgil-Mukherjee formula for fund allocations has outlived its relevance to the emerging socio-economic scenario.
As per the Raghuram Rajan Committee report, the remote and backward Northeastern states would have to share major portion of the central assistance with huge Bemaru 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 recommended for a new formula for central assistance.
The report also puts a question mark on how the three NE states 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 beacsue of certain criteria like undedevelopment, hill region, border areas.
But now these states have to vie with large states like Bihar, Uttar Pradesh, Madhya Pradesh, Bihar, Odisha 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 Gujarat 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 the committee under Rajan, then chief economic adviser in the finance ministry and 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.
But Chidamabaram had defended 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 categorization 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”.