Important Aspects of Raghuram Rajan Committee Report

Article Updated on 26 Sep, 2013
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The report of Dr. Raghuram Rajan Committee for Evolving a Composite Development Index for Indian states was submitted to the Union Finance Minister P. Chidambaram on 26 September, 2013. 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

Following are the important recommendations/suggestions/ findings of this committee -

  • 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 Committee has come-up with a Multi Dimensional Index (MDI) 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 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
  • The Committee has recommended doing away with ‘Special Category’ status for states. According to the Committee, the twin recommendations of basic allocation and categorization under “Least Developed”, along with the allocation methodology, will effectively subsume what is now “Special Category
  • 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
  • Based on the MDI scores, the 11 “Lesser Developed” states are – Manipur, West Bengal, Nagaland, Andhra Pradesh, Jammu & Kashmir, Mizoram, Gujarat, Tripura, Karnataka, Sikkim and Himachal Pradesh
  • Based on the MDI scores the 7 “Relatively Developed” states are Goa, Kerala, Tamil Nadu, Punjab, Maharashtra, Uttarakhand and Haryana

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