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This article was first published 10 years ago

No Gujarat on Rajan's list of 7 most developed states

Last updated on: September 26, 2013 17:51 IST

Image: Narendra Modi in Ahmedabad.
Photographs: Amit Dave/Reuters

The Raghuram Rajan panel report has made a case for ending the 'special category' criteria for providing additional assistance to poorer states, as it ranked Goa and Kerala as the most advanced state and Odisha and Bihar the least.

The committee, headed by the then Chief Economic Advisor Raghuram Rajan (now RBI governor) which was set up by the government amid demand for "special category" status by Bihar, suggested a new methodology for devolving funds on states based on a "Multi Dimensional Index".

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No Gujarat on Rajan's list of 7 most developed states

Image: A tourist paraglides on Baga beach in Goa. Goa is India's most developed state, according to the report.
Photographs: Punit Paranjpe/Reuters

Giving details of the report Finance Minister P Chidambaram said the committee has suggested that the 28 states be split into three categories - least developed, less developed and relatively developed - depending upon their MDI scores.

As regards the allocation of funds, the report suggested that each state should get a basic fixed allocation and an additional allocation depending on its development needs and development performance.

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No Gujarat on Rajan's list of 7 most developed states

Image: People attend a procession of decorated elephants during Trichur Pooram festival in Kerala. Report says Kerala is the second-most developed state.
Photographs: Dipak/Reuters

The demand for funds and special attention of different States, Chidambaram said: "Would be more than adequately met by the twin recommendations of the basic allocation of 0.3 per cent of overall funds to each State and the categorization of States that scores 0.6 and above as least developed States."

According to the Committee, these two recommendations, along with the allocation methodology, will effectively subsume what is now "Special Category" status.

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No Gujarat on Rajan's list of 7 most developed states

Image: Colour is thrown on a girl during Holi celebrations in Chennai. Tamil Nadu is the third-most developed state.
Photographs: Babu/Reuters

Bihar along with some other states has been demanding "special category" status to get more funds from the centre. Based on the MDI scores, the 10 least developed states are Odisha, Bihar, Madhya Pradesh, Chhattisgarh, Jharkhand, Arunachal Pradesh, Assam, Meghalaya, Uttar Pradesh and Rajasthan.

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No Gujarat on Rajan's list of 7 most developed states

Image: Golden Temple is illuminated for Baisakhi festival in Amritsar. Punjab is fourth-most developed state in India.
Photographs: Munish Sharma/Reuters

The seven most developed states are Goa, Kerala, Tamil Nadu, Punjab, Maharashtra Uttrakhand and Haryana. According to the report, the eleven less developed states are Manipur, West Bengal, Nagaland, Andhra Pradesh, Jammu and Kashmir, Mizoram, Gujarat, Tripura, Karnataka, Sikkim and Himachal Pradesh.

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No Gujarat on Rajan's list of 7 most developed states

Image: A view of Bandra-Worli sea link in Mumbai. Maharashtra is fifth-most developed state.
Photographs: John Goh/Reuters

The report was likely to be implemented from the next financial year, Chidambaram said, adding "Prime Minister Manmohan Singh has directed that the recommendations of the committee may be examined and necessary action in this behalf may be taken".

The Department of Economic Affairs, he added, will soon examine the report and take necessary action.

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No Gujarat on Rajan's list of 7 most developed states

Image: Main building of The Doon School behind the central lawns in Uttrakhand. The report says Uttrakhand is sixth-most developed state.
Photographs: RickTyers/Wikipedia Commons

The Rajan 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.

The Committee has proposed a general method for allocating funds from the Centre to the States based on both State's development needs as well as its development performance. Each State, as per the new criteria, will 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.

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No Gujarat on Rajan's list of 7 most developed states

Image: Labourers sit near a stall of sculptures at the Surajkund Crafts Fair in Haryana. The state is seventh-most developed in India.
Photographs: Vijay Mathur/Reuters

Multi dimensional index of backwardness, it said, is 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.

As per the report, the states with score of 0.6 and above on the Index have been classified as 'Least Developed'; states with score below 0.6 and above 0.4 'Less Developed'; and states with score of below 0.4 "relatively developed".

To read the full text of the Raghuram Rajan panel report, click here.

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