The Report of the Dr. Raghuram Rajan Committee for Evolving a Composite Development Index of States has been submitted to the Union Finance Minister Shri P.Chidambaram. The Committee had been 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 to the States.
The Committee has come-up with a Multi Dimensional Index of backwardness (or Underdevelopment/Need Index) 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 may be classified as “Least Developed”; States that score below 0.6 and above 0.4 may be classified as “Less Developed”; and States that score below 0.4 may be classified as “Relatively Developed”. Sikkim, which scores 0.43, has the 9th best index score in all of India and the best index score in East & North-East.
The report has made a case for ending the ‘special category’ criteria for providing additional assistance to poorer states, as it ranked Goa and Kerala as the most advanced states and Odisha and Bihar the least.
Making a statement on the report, Chidambaram said, “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 percent 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.”
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.
Each State, as per the new criteria, will get a fixed basic allocation of 0.3 percent of overall funds, to which will be added its share stemming from need and performance to get its overall share.