The committee, headed by the then chief economic advisor Raghuram Rajan (the present RBI governor) was set up by the government amid demand for special category status by Bihar. The report also has suggested a new methodology for devolving funds on states based on a multi dimensional index (MDI) under which the the 28 states can be split into three categories — least developed, less developed and relatively developed — depending upon their MDI. scores.
The index ranges from 0 to 1 with 1 being the most backward and 0 the least backward. Paradoxically, Gujarat, which has grabbed the media headlines for its Gujarat Model of developmental activities in the last decade is also listed among less developed states. It is ranked 12 in terms of development. 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.
The report also suggested that each state should get a basic fixed allocation and an additional allocation depending on its development needs and performance. According to these recommendations each state will have a basic allocation of 0.3% of overall funds.
As per the committee’s calculations, Bihar should get 12.04% of the total funds allocated for states by the centre, as against its current share of 7.42% under the total central assistance to state plans and centrally sponsored schemes. Rajasthan should get 8.42% as against 4.79% at present, Odisha 6.53% as against 4.62% amd Madhya Pradesh 9.56% as against 6.91%.Uttar Pradesh will continue to have the largest share of central assistance at 16.41% of total funds, as against 10.09% earlier.
The committee opined that the the fixed allocation of funds and the MDI classification will address the demand of funds from states.
The success of the Kerala model development is yet again proven beyond doubt with the State recording a robust growth rate of 9.5 percent during the financial year of 2011-12. The growth rate of Kerala is not only the highest among all southern states but also way above the national average of 6.5% for the corresponding period
The state’s economy made a jump start from 8.05% of the preceding year, which points to a vibrant all round growth. NRI remittances continue to be the main factor in Kerala’s development history with the remittances touching Rs 55,000 Crore, which was 23 per cent more than the previous year’s remittances that stood at Rs 45,000 crore.
However, the agricultural scenerio paints a sorry picture as it has recorded a negative growth of 1.6 per cent for the first time in recent times and a sharp drop of 4.5% in agricultural income. Kerala continues to retain its pace of development in education and its school drop out rate fell by 4.5 per cent. Though Kerala, continues to be the most literate state, the fact that unemployment rates shot up to the fourth highest in the country will be a cause of concern for the state. At present , there are 45 lakh people listed in the employment exchanges, which is up from 43 lakh in 2010-11. This might sound paradoxical considering the fact that Kerala is home to over 25 lakh migrant labourers, which shows that Keralaites are not willing to take up any available jobs on offer to keep the wolves away from their doors. Being highly choosy, the workforce of Kerala looks for easy means to make money, often leaving the arduous and manual jobs to the migrant labour force.
The industry watchers and economic gurus have highlighted the urgent need for the State administration to give impetus to agriculture. It has also warned the state on the unchecked urbanisation, which is putting pressure on natural resources like drinking water, which could push the state into a crisis. It is high time that we learn to cut a balance between the needs of man and its consequences on nature to ensure a stable and long term growth pattern.