FinMin panel rates Gujarat 12th most developed state

Bihar, Odisha set to get more Central funds even without special status

The Bharatiya Janata Party’s (BJP’s) prime ministerial candidate, Narendra Modi, might be selling his development work in Gujarat to the electorate. But his state does not figure even among the 10 most developed ones. Among the country’s 28 states, Gujarat has been ranked 12th — surpassed even by the hill state of Uttarakhand (sixth) — according to the “underdevelopment index” formulated by a panel under Raghuram Rajan (as chief economic advisor in the finance ministry).

If that wasn’t enough dismay for Modi, his state has been classified in the second rung of developed states, that is, “less developed states”, along with West Bengal, Tripura, Manipur, Nagaland, Jammu & Kashmir, etc.

And, it’s not Modi alone. The two other states the development models of which BJP is trying to cash in on — Madhya Pradesh and Chhattisgarh — have also been put in the bracket of least developed states. Keeping company are Bihar, Odisha, Jharkhand, Arunachal, Assam, Meghalaya, Uttar Pradesh and Rajasthan.

The new index, proposed by the Rajan committee, is based on averages of ten sub-components — monthly per-capita consumption expenditure, education, health, household amenities, poverty rate, female literacy, share of scheduled castes and scheduled tribes in the total population, urbanisation rate, financial inclusion, and connectivity.

The purpose of the index is to decide on a way to allocate Central funds to states.

Prime Minister Manmohan Singh has approved the committee’s recommendations to be put in public domain. He wants the suggestions to be examined and necessary action on those taken.

For long, Bihar has been lobbying for a special-category status to ensure larger funds from the Centre come to it as grants, and not loans. The new index seems to serve the state’s purpose, though Finance Minister P Chidambaram has clarified that these are just recommendations and a final call would be taken after all stakeholders — departments, ministries and the Planning Commission — have given their feedback.

If the recommendations are accepted, the present criteria for giving the special-category status to a state — that a state should be in a remote or hilly area — will give way to a new definition. For instance, Uttarakhand, currently a special-category state, will become “relatively developed” state.

Bihar has been classified as the second-least developed state, after Odisha. After CPI (M) General-Secretary Prakash Karat on Wednesday floated the idea of a larger secular and democratic unity to combat Modi, the idea of the new index, it seems, could help the United Progressive Alliance government woo both the Janata Dal (United) and the Biju Janata Dal (BJD).

Chidambaram, however, is careful in interpreting the index in political terms. “The index was prepared by experts.”

According to the recommendations, each of the 28 states would get 0.3 per cent of total Central funds. This will take care of 8.4 per cent of funds. Of the remaining 91.6 per cent, the committee has recommended allocating three-fourths on the basis of needs (underdevelopment index) and a fourth on performance.

UNDERDEVELOPMENT INDEX FOR STATES
Least developed
Rank     State

1. Odisha
2. Bihar
3. Madhya Pradesh
4. Chhattisgarh
5. Jharkhand
6. Arunachal Pradesh
7. Assam
8. Meghalaya
9. Uttar Pradesh
10. Rajasthan

Less developed
Rank     State

11. Manipur
12. West Bengal
13. Nagaland
14. Andhra Pradesh
15. Jammu & Kashmir
16. Mizoram
17. Gujarat
18. Tripura
19. Karnataka
20. Sikkim
21. Himachal Pradesh

Relatively developed
Rank     State

22. Haryana
23. Uttarakhand
24. Maharashtra
25. Punjab
26. Tamil Nadu
27. Kerala
28. Goa

The 1st rank denotes the least developed of the states, while 28th means the most developed
Source: The report of the Raghuram Rajan committee on evolving a composite development index of states