The Report of the Dr.
Raghuram Rajan Committee for Evolving a Composite Development Index of
States has been submitted to the Union Finance Minister Shri
P.Chidambaram. The Committee had been 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.
The Finance Minister Shri P.Chidamabaram informed in a Statement that
the Committee has proposed a general method for allocating funds from
the Centre to the States based on both a State’s development needs as
well as its development performance. The Committee has 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.
The Finance Minister Shri P.Chidamabaram further informed that the
Committee has come-up with 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 which correspond to the multi
dimensional approach to defining poverty outlined in the Twelfth Plan.
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”.
The Finance Minister Shri P.Chidamabaram also stated in his Statement
that the Committee has observed that the demand for funds and special
attention of different States will be more than adequately met by the
twin recommendations of 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. According to the Committee, these two
recommendations, along with the allocation methodology, effectively
subsume what is now “Special Category”.
Using the index, the Committee has identified the “Least Developed”
States as Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Jharkhand,
Madhya Pradesh, Meghalaya, Odisha, Rajasthan and Uttar Pradesh, the
Finance Minister added.
The Finance Minister Shri P.Chidamabaram informed that the Prime
Minister has approved the proposal to place the report of the Committee
in the public domain.
The Finance Minister Shri P.Chidamabaram further informed that the Prime
Minister has also directed that the recommendations of the Committee may
be examined and necessary action in this behalf may be taken.
The Ministry of Finance, Department of Economic Affairs has been asked
to examine the report and take necessary action, the Finance Minister
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