The report of the Dr. Raghuram Rajan Committee for Evolving a Composite Development Index of States on Thursday submitted its report to Finance Minister P. Chidambaram, and has identified Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Meghalaya, Odisha, Rajasthan and Uttar Pradesh as the country's "least developed" states.
The committee has formulated a multi-dimensional index of backwardness based on per capita consumption as measured by the NSSO, the poverty ratio, and a number of other measures that correspond to the approach to defining poverty outlined in the Twelfth Five Year Plan.
In a statement, Chidambaram said: "The committee has recommended that states that score 0.6 and above on the index may be classified as 'Least Developed' states that score below 0.6 and above 0.4 may be classified as 'Less Developed'; and states that score below 0.4 may be classified as 'Relatively Developed'."
Chidambaram also confirmed that the Committee concluded that the demand for funds and special attention of different states will be adequately met by the twin recommendations, which entail the basic allocation of 0.3 percent of overall funds to each state and the categorisation of states that score 0.6 and above as "least developed" states.
"These two recommendations, along with the allocation methodology, effectively subsume what is now 'special category," Chidambaram added.
The Dr. Raghuram Rajan Committee has also proposed a method for the allocation of funds from the Centre to the States based on the state's development needs, as well as its development performance. "It has also recommended that each state may get a fixed basic allocation of 0.3 percent of overall funds, to which will be added its share stemming from need and performance to get its overall share," Chidambaram said.
Meanwhile, Chidambaram told the media that Prime Minister Dr. Manmohan Singh has given consent to place the report of the Committee in the public domain, and has directed that the suggestions of the Committee should be analyzed, after which appropriate action should be taken.
The Ministry of Finance and Department of Economic Affairs has been asked to examine the report and take necessary action.
The committee was asked to suggest methods for identifying backwardness of states using a variety of criteria and also to recommend how the criteria may be reflected in future planning and devolution of funds from the central government to the states.
