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Rajan report gladdens Nitish

The panel led by Raghuram Rajan, former Chief Economic Adviser in the finance ministry and the incumbent Governor of Reserve Bank of India, in its report has made a case for ending the ‘special category’ criteria for providing additional aid to poorer states and suggested a new methodology for devolving funds on states based on a ‘Multi Dimensional Index (MDI)’.

The six-member expert committee constituted by the Centre on fixing a new criterion for determining the backwardness of Indian states, on Thursday gave its reports, claiming Odisha, Bihar and Madhya Pradesh to be the least developed states in the country. Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Meghalaya, Odisha, Rajasthan and Uttar Pradesh have been identified as the ‘least developed’ states by the Raghuram Rajan Committee.

The panel was set up in the wake of the demand for special category status for Bihar by its chief minister Nitish Kumar, who held a rally in Delhi to push for this in March. Finance minister P Chidambaram had promised in his Budget speech in February that the criteria would be revised to include states such as Bihar.

Welcoming the report Bihar chief minister Nitish Kumar, who had long pressed the Centre for granting special status to his state, said, ‘It is even better that there will be something newer than the special category. It means the doors are now open for more help to us and that is what our demand was. We said earlier that new parameters have to be implemented.’

Giving details of the report, finance minister P Chidambaram on Thursday 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. Granting of special category status would allow Bihar to receive ‘untied’ central funds or grants as 30 per cent of total government assistance is kept aside for such states.
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