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  1. Finance Commission Chairman speaks: ‘Special’ tags have outlived utility

Finance Commission Chairman speaks: ‘Special’ tags have outlived utility

Slim are the chances for Andhra Pradesh to receive the special category status from the 15th Finance Commission (2015-2020). The practice of catregorising states for resource transfers from the Centre outlived its utility, the commission chairman NK Singh said.

By: | New Delhi | Published: March 9, 2018 4:29 AM
Finance Commission Chairman, Finance Commission Chairman NK singh, andhra pradesh special status, special tag, finance commission Slim are the chances for Andhra Pradesh to receive the special category status from the 15th Finance Commission (2015-2020). The practice of catregorising states for resource transfers from the Centre outlived its utility, the commission chairman NK Singh said

Slim are the chances for Andhra Pradesh to receive the special category status from the 15th Finance Commission (2015-2020). The practice of categorising states for resource transfers from the Centre outlived its utility, the commission chairman NK Singh said on Thursday, but added that his mandate indeed included working towards “equitable and balanced growth” across regions and lifting those states which are well below national average against various development parameters, above a certain threshold. Singh’s promise, however, doesn’t mean much to Andhra Pradesh as a backwardness index similar to the ones recent finance commissions have employed is unlikely to put it particularly down in the pecking order, to be able to qualify for a largesse. AP is resource-constrained (its revenue deficit is very high), but it doesn’t fare very badly among states in terms of development indicators such as education, health, household amenities, poverty rate, female literacy, physical connectivity and the like which a backwardness index is likely to comprise.

Singh was responding to a question during the Indian Express group’s Idea Exchange programme as to how his commission was to take on board Andhra Pradesh’s demand for special category tag (finance minister Arun Jaitley has, citing the 14th Finance Commission report that recommended elimination of categories among states, refused to accede to the demand). Late Wednesday evening, Andhra chief minister N Chandrababu Naidu had withdrawn two TDP ministries from the Union Cabinet, protesting the Centre’s refusal to accept the state’s demands for the special category tag and various attendant and other financial succours. Successive finance commissions ascribed high weights to both population and the index of backwardness while determining inter se distribution of resources among states, Singh noted, adding that it was well within the 15th Commission’s brief to revisit the index. “We will have fresh data (to compute) an index of backwardness,” he said. Earlier, a panel headed by former RBI governor Raghuram Rajan had developed the multidimensional index to identify backwardness among states. As per the Rajan index, Odisha came in as the country’s least developed state, followed by Bihar and Madhya Pradesh, while then undivided Andhra Pradesh did not figure even on the list of the 10 under-developed states. “One of the things which is part of my terms of reference is certainly to look at equitable regional growth…all the finance commissions, which looked into the question of extent to which some states are well below the average mean of national per capita income on human resource development index, in terms of infrastructure etc., have (given) special attention (to such states).

The special categoy status in the case of for very backward states was one of the means for backward states to catch up with the national average. However, the issue really before us is not special category status, but to address our terms of reference (ToR). One of the areas in ToR is fostering equitable and balanced regional development. Certainly, we will look at index of backwardness of the states,” Singh, also a former finance secretary, said. Although the Centre denied SCS to AP – this tag is practically confined to the eight states in the north-east and the hilly states of J&K, Himachal Pradesh and Uttarakhand – it has promised the coastal state “monetary equivalent” of what the title would entail. It also said all promises made to the new AP under the AP Reorganisation Act 2014 would be fulfilled. Jaitley had indicated that giving AP special category tag would open a pandora’s box as it could give credence to such demands already voiced by Bihar, Chhattisgarh, Jharkhand, Odisha, Rajasthan and Uttar Pradesh.

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