NEW DELHI, Sep 26:
A high-level committee today came out with a new methodology of additional assistance to ten ‘least developed’ states like Bihar and Odisha, a move that can trigger new alignments for the ruling Congress with parties like JD(U) during the next Lok Sabha elections.
Finance Minister P Chidambaram made public the recommendations of the report of the Committee for Evolving a Composite Development Index of States, chaired by former Chief Economic Advisor Raghuram Rajan, which were hailed by Bihar Chief Minister and JD(U) leader Nitish Kumar.
“Finally this report is primarily about the allocation of funds. The Central Government may want to offer additional forms of support to states that are particularly underdeveloped.
“The 10 ‘least developed’ states that currently score above 0.6 (on Multi Dimensional Index of backwardness) could, for instance, be targeted for additional assistance,” the five-member committee said in its recommendations.
The ‘least developed’ states are Odisha, Bihar, Madhya Pradesh, Chhattisgarh, Jharkhand, Arunachal Pradesh, Assam, Meghalaya, Uttar Pradesh and Rajasthan.
The recommendations along with allocations methodology effectively subsume what is now ‘special category’ among the states.
Chidambaram said the report will be examined and would be implemented from the the next financial year.
Kumar, who has been campaigning for special category status for Bihar and additional dose of funds for development, hailed the report as a “big victory” for principles and put Bihar on the path of development.
Chidambaram had struck a chord with Kumar on the issue of development of backward states.
Asked whether he would support the Congress in the elections in line with his stand that he would back anyone conferring special category status to Bihar, Kumar said the political strategy as to whom to align with in elections will be decided at the JD(U) camp in Rajgir on October 28-29.
Like Kumar, Odisha Chief Minister and BJD chief Naveen Patnaik has also been campaigning for special category status to his State and more funds.
11 states were described as ‘less developed’. They are Manipur, West Bengal, Nagaland, Andhra Pradesh, Jammu and Kashmir, Mizoram, Gujarat, Tripura, Karnataka, Sikkim and Himachal Pradesh.
Haryana, Uttarakhand, Maharashtra, Punjab, Tamil Nadu, Kerala and Goa have been classified as ‘relatively developed’ states.
The committee constituted in May this year 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 Centre to the states.
The committee has proposed a general method for allocating funds from the Centre to the states based on both state’s development needs as well as its development performance.
It has recommended that each state may get a fixed basic allocation of 0.3 per cent of overall funds, to which will be added its share stemming from need and performance to get its overall share.
The committee has come up with a Multi Dimensional Index (MDI) of backwardness 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 Committee has recommended that States that score 0.6 and above on the Index be classified as ‘Least Developed’; states that score below 0.6 and above 0.4 be classified as ‘Less Developed’; and states that score below 0.4 be classified as ‘Relatively Developed’.
Chidamabaram said the demand for funds and special attention of different states 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.
According to the report, the two recommendations, along with the allocation methodology, would effectively subsume what is now called ‘Special Category’ scheme.
The committee recommended that ‘least developed’ states, as identified by the Index, will be eligible for other forms of central support that the Central Government may deem necessary to enhance the process of development.
It said the approach recommended in the report was not intended to replace all existing methodologies but should be thought of as one that will channel some fund allocations based on need and performance.
Other methodologies may serve different purposes and should be used in parallel to allocate other funds.
The committee recommended that the index and allocation formula be examined after ten years and revisions proposed based on experience.
It further suggested that underdevelopment index should be updated on five years. (PTI)
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