Raghuram Rajan data backs Nitish Kumar plea: Bihar is 2nd most backward

Sep 27 2013, 12:04 IST
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Index shows, Bihar is more backward than all the north-eastern and other hilly states. (AP) Index shows, Bihar is more backward than all the north-eastern and other hilly states. (AP)
Summary"Least developed" index is dominated by non-UPA ruled states, which make up six of the bottom ten.

A new official index to capture backwardness ranks Orissa and Bihar as the two poorest states, in that order, bolstering the case being made by both these state CMs Nitish Kumar and Naveen Patnaik to be declared backward so as to get Central funds at concessional rates.

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The index, developed by a committee led by Raghuram Rajan when he was chief economic adviser before being appointed RBI governor, shows Bihar is more backward than all the north-eastern and other hilly states to whom the Centre had been giving special support under various Plan schemes.

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Orissa, Bihar, Madhya Pradesh and Chhattisgarh have been ranked as the least developed states, in that order, by the committee. If the panel’s recommendations are accepted, it will translate into a larger share of Central funds for these states. Interestingly, Gujarat figures in the list of “less developed” states and is ranked 12th overall in terms of development. It is less developed compared to Haryana, Uttarakhand and Kerala.

The other interesting aspect is that the “least developed” index is dominated by non-UPA ruled states, which make up six of the bottom ten.

Goa, Kerala and Tamil Nadu are ranked the most developed states. The list has bunched all 28 states in three baskets of “least developed,” “less developed,” and “relatively developed,” with the committee creating an index that used measures such as per capita consumption and poverty ratio.

The committee was a part of Finance Minister P Chidambaram’s budget FY’14. He had promised a relook at the concept of backwardness in the allocation of Plan funds. Bihar Chief Minister Nitish Kumar had made a strong pitch for treating his state as a “special category” to get more funds from the Centre at concessional rates.

The index ranges from zero to one, with one being the most backward and zero the least backward or “relatively developed.”

The other states in the “relatively developed” list include Punjab, Maharashtra, Uttarakhand and Haryana. (See Chart) The committee’s commendations could impact transfer of resources to states through the Backward Regions Grant Fund and under various Central Schemes though the Constitutional devolution of funds would continue to be under the formula worked out by the Finance Commission.

Though the multi-dimensional index of backwardness has called for subsuming the “special category status” for states, it is likely to play a role in

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