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 Finance Minister Shri
P.Chidamabaram informed in a Statement that the 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. The Committee has recommended that each State
may 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.
The Finance Minister Shri
P.Chidamabaram further informed that the Committee has come-up with a Multi dimensional Index 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 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”.
The
Finance Minister Shri P.Chidamabaram also stated in his Statement 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 percent 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”.
Using the index, the Committee has
identified the “Least Developed” States
as Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh,
Meghalaya, Odisha, Rajasthan and Uttar Pradesh, the Finance Minister
added.
The Finance Minister Shri P.Chidamabaram
informed that the Prime Minister has
approved the proposal to place the report of the Committee in the public
domain.
The Finance Minister Shri P.Chidamabaram
further informed that the Prime Minister
has also directed that the recommendations of the Committee may be examined and
necessary action in this behalf may be taken.
The Ministry of Finance, Department
of Economic Affairs has been asked to examine the report and take necessary
action, the Finance Minister added.
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DSM/MJPS/KA
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