Backward state bias still on, says FM

Finance Minister P Chidambaram today said the Centre would continue to play its role as the purveyor of distributive justice and said the policy bias in favour of backward states would continue.

This reiteration of policy came against the background of a Rs 10,000 crore allocation to the Planning Commission to help fund priorities in the common minimum programme.

During the discussions over the 11th Finance Commission, then Karnataka Chief Minister SM Krishna and others had met former Prime Minister Atal Bihari Vajpayee with the demand that continued compensation to backward states was a punishment for developed states and an incentive to underdeveloped ones to stay underdeveloped.

The finance minister's statement today made it clear that the Centre would continue to give the balance of the underdevelopment advantage to backward states.

Chidambaram, who was speaking at the India Today Chief Ministers' Conclave, said a lot of blame was attached to delivery systems. He said he had been blamed for throwing good money after bad.

But he said the same delivery system had achieved a miracle in education in Kerala, had been a success story in the public distribution system in West Bengal and had worked so well for Tamil Nadu's family planning policies that the state had been able to bring the natural growth rate to replacement levels.

In Maharashtra, the food for work programme had helped in staving off hunger through the rural employment guarantees scheme and Tamil Nadu had been providing mid-day meals for 40 years.

He said what the backward states needed to provide was better governance so that the money given to them was properly utilised.

He asked the state to sit together and benchmark best practices in delivery and utilisation.

"At the last India Today conclave, I had argued for smaller states. Then I was a private individual. Now it will be politically incorrect to make the suggestion that smaller states are desirable" he said, but added that smaller states needed to be congratulated, any way.

Chidambaram said what was depressing was that the states had, more or less, stayed in the same development bands this year, where they were in the last India Today ranking a year ago. "This has dangerous implications, that states growing faster have the advantage to grow faster, while others will continue to be denied the advantages. Divisions between states will continue. We need to bridge this gap" the finance minister said.

He also said while big states tended to be politically stable, creating an atmosphere of investment, there were pockets that were very backward. Smaller states were politically unstable so long-term funding was reluctant in coming, but development was more equitable.