Raghuram Rajan committee submits its report

Raghuram Rajan committee, set up to evolve new criterion for determining backwardness of states, has submitted its are accountable to the government.

Objectives

• The committee, headed through the then Chief Economic Advisor Raghuram Rajan was setup by the government amid demands for “special category” status by Bihar. Because it did not fit the relevant criteria for your status a need was felt to evolve a brand new methodology for devolving funds on states according to their backwardness.

Recommendations

• Proposes to end the current ‘special category’ criteria for providing additional help poorer states (Which is according to Terrain, Population density and Period of international borders)
• It gives a ‘Multi Dimensional Index (MDI)’ to determine backwardness of states
• MDI scores split states into three categories -- least developed, less developed and comparatively developed
• Each state ought to be given a fixed basic allocation of 0.3 percent of overall funds
• States (particularly those scoring 0.6 and above) can get additional assistance based on their development needs and gratifaction

Multi Dimensional Index

• Multi Dimensional Index of Backwardness is dependant on.. 
• Per capita consumption as measured through the NSSO 
• The poverty ratio 
• Other measures at par using the approach adopted to identify poverty within the 12th five-year plan. 

Categorization of states

• Least Developed: States scoring 0.6 and above

Odisha, Bihar, Madhya Pradesh, Chhattisgarh, Jharkhand, Arunachal Pradesh, Assam, Meghalaya, Uttar Pradesh and Rajasthan (from most to least poor)

• Less Developed: States scoring between 0.4-0.6

Manipur, West Bengal, Nagaland, Andhra Pradesh, Jammu & Kashmir, Mizoram, Gujarat, Tripura, Karnataka, Sikkim and Himachal Pradesh

• Relatively Developed: States scoring below 0.4

Haryana, Uttarakhand, Maharashtra, Punjab, Tamil Nadu, Kerala and Goa