The Report of the Raghuram Rajan Committee for evolving a composite development index of states has been submitted to the Union Finance Minister P Chidambaram. 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.
Chidamabaram informed in a statement that 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 per cent 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 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.