Rajan panel dubs Gujarat ‘less developed’, raises BJP hackles

Using a new development index, a panel headed by new Reserve Bank of India Raghuram Rajan in his earlier role as chief economic advisor has created a storm by identifying Gujarat as a less developed state, well behind Maharashtra.

The panel's report, submitted to finance minister P Chidambaram on Thursday put Maharashtra among the seven most developed states and Gujarat at the bottom of 11 'less developed' states starting a fresh bout of sparring between the Bharatiya Janata Party and Congress.

The panel ranked Odisha and Bihar along with eight others as 'least developed' and Goa and Kerala, and Jammu & Kashmir among the seven 'relatively developed' states.

Rajan recommended a fresh approach to devolution of funds to states and moved away from the special category classification to devise three categories - least developed, less developed and relatively developed. According to the index, there are 10 least developed states, 11 less developed and seven relatively developed states in the country.

The slotting of Gujarat, which has attracted attention due to its much-touted 'development model', in the 'less developed', has escalated the already bitter political debate.

Welcoming the report, the Congress said that the much publicised Gujarat model was fictitious, while the BJP said that the Narendra Modi-led state did not need any ranking because the people and investors have already ranked it the most developed region in the country.

The expected 'Twitter war' has already broken out among Modi supporters, who are generally ardent, and his opponents, who are equally convinced of his undesirability as a future prime minister of India.

The other states in the less developed category are Manipur, West Bengal, Nagaland, Andhra Pradesh, Jammu & Kashmir, Mizoram, Tripura, Karnataka, Sikkim and Himachal Pradesh.

The least developed states include Madhya Pradesh, Chhattisgarh, Jharkhand, Arunachal Pradesh, Assam, Meghalaya, Uttar Pradesh and Rajasthan.

The relatively developed states according to the index are Haryana, Uttarakhand, Maharashtra, Punjab, Tamil Nadu, Kerala and Goa.

The panel has developed a multi-dimensional index of backwardness based on monthly per capita consumption expenditure, education, health, household amenities, poverty rate, female literacy, percentage of Scheduled Caste / Tribe population, urbanisation rate, financial inclusion and connectivity.

The panel said less developed states rank higher on the index for aid and would get larger allocations based on the need criteria. However, this potential sop is unlikely to soothe the ruffled feathers of Modi and his supporters.

"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," Chidambaram told reporters in New Delhi on Thursday.

"The committee has recommended that each state may get a fixed basic allocation of 0.3 per cent of overall funds, to which will be added its share stemming from need and performance to get its overall share."

The panel was set up after persistent demands from Bihar chief minister Nitish Kumar, who insisted on special category status to help the state access more funds for development. This sparked off a demand from several other states such Odisha for special category status.

While the new index will ensure more funds for Bihar from the central kitty, it has stopped short of conferring the "special category" tag on the state, prompting Shaibal Gupta, seen as Nitish's nominee on the panel, to submit a 10-page dissent note.

"It is a very decent report. For example under this index Odisha is at the bottom of the list and then Bihar. Therefore it recognises that Odisha, Bihar, Madhya Pradesh are among the most backward states of India. That is, I think, the demand," Chidambaram said.

"The demand of these states is 'please recognize the fact that for a variety of reasons we are the most backward states'. I think this index captures the degree of backwardness and acknowledges that Bihar is among the most backward states of India. Special category is the present categorisation. Now they are moving away from that," finance minister said while detailing the recommendations of the panel.

"This is not an answer to all the demands of the states. This is meant only to be a way forward on how to devolve funds to the more backwards states and areas of India,'' he added.