ECONOMY

Raghuram Rajan committee report on backwardness of the states

Ø A panel headed by Raghuram Rajan constituted by the Union government in May this year (2013) has recommended a new index of backwardness to determine which States need special assistance.

Ø The new methodology ranks Odisha as India’s most backward State, Bihar, which has been seeking ‘special’ status, as the second most backward, and Gujarat as one of the “less developed” States.

Ø Goa is India’s most developed State.

Ø The committee was constituted to suggest ways to identify indicators of the relative backwardness of the States for equitable allocation of Central funds.

Ø Central allocations are governed by the Gadgil-Mukherjee formula that places the greatest weight on the State’s population, followed by other factors like per capita income and literacy.

Index of backwardness proposed by the committee

Ø It is composed of 10 equally weighted indicators

1.     Monthly per capita consumption expenditure

2.     Education

3.     Health

4.     Household amenities

5.     Poverty rate

6.     Female literacy

7.     Percentage of SC/ST population

8.     Urbanisation rate

9.     Financial inclusion

10.  Physical connectivity.

Composite Index

Scores out of 1,

Ø States having scores above 0.6 indicates “Least developed’ states.

Ø 0.4 to 0.6 indicates “Less developed”

Ø Less than 0.4 indicates “Relatively developed”

At present 10 States are under Least developed category, 11 states comes under “less developed” category and 7 states are “relatively developed”.

LEAST DEVELOPED STATES

1.     Odisha ( Most backward)

2.     Bihar

3.     Madhya Pradesh

4.     Chhattisgarh

5.     Jharkhand

6.     Arunachal Pradesh

7.     Assam

8.     Meghalaya

9.     Uttar Pradesh

10.     Rajasthan

MOST DEVELOPED STATES

1.     Goa ( Most developed)

2.     Kerala

3.     Tamilnadu

4.     Punjab

5.     Maharashtra

6.     Uttarkhand

7.     Haryana

Report also recommends that

Ø Each of  28 states get 0.3 percent of overall central fund allocated.

Ø In remaining 91.6 %, three – fourths be allocated based on need and one-fourth based on the states’s improvements on its performance, which is to be reviewed every five years.

The classification of Special category states  are deleted.