THE REGION’S STATES WOULD BE JUSTIFIED IN DEMANDING SEPARATE CRITERIA AND THIS HOLDS GOOD FOR THOSE PLACED IN THE TWO LOWER
CATEGORiES,  SAYS RANGAN DUTTA

It is strange that there has been no serious debate in the North-east on the implications of the Composite Underdevelopment Index suggested by a committee headed by Dr Raghuram Rajan, present governor of the Reserve Bank of India. While the indifference of the political class is understandable, as this matter has to be deliberated and approved at a meeting of the National Development Council attended by all chief ministers, as this would entail a major change in the present scheme of grant of Central financial support for Plans to the states and doing away with the dispensation allowed now to special category states.
And, it also knows that in the present political situation, a meeting of the NDC is unlikely to be convened when several states will go to the polls next month and the general election is due in 2014. Till then the recommendations will be under examination in different ministries and by the Planning Commission. However, this is no reason for either the academia or civil society in the North-east to remain indifferent to this report. Rather, it gives an opportunity for retrospection and a serious review of the development performance of the region after its reorganisation into seven states — all placed in the special category in 1971.
This debate is more important than a possible reduction of Central assistance for the Plan currently sectioned on the basis of 70:30 ratio of grant and loan for special category states, as against 70:30 loan grant ratio for other states, caused by the possible acceptance of the recommendation of this committee. Moreover, the obligatory states share in all flagship Central sector schemes, like the Sarva Siksha Abhiyan for the North-east states, are only about 10 per cent against 20-30 per cent for their states and together with the dispensation that 10 per cent of the budget of all Central ministries must be spent in the North-east have indeed given a boost to development of the region, especially its social and physical infrastructure. In the 10th Plan, over Rs 100,000 crore was spent in the region and the utilisation in the 11th Plan is accepted to be much above. Thus, it is clear that, but for this comprehensive Central support, the North-east states could not have achieved over six per cent growth rate so far in the 11th Plan.
The apprehension about the adverse financial impact arising from this report is thus premature as no change could take place in the midst of the financial year; the 13th Finance Commission has started its work on the scheme of devolution of Central revenues to the states to meet their requirement of funds for development and non-development subjects and would certainly consider the narrow tax base of the North-east states, except Assam, in making its award. Possibly, this matter will be decided after the Lok Sabha election and by the new government in 2014 as, apart from Bihar, other states like Odisha have also been demanding their inclusion in the list of special category states on the ground that they also suffer from development lags, poor connectivity and fiscal problems caused by the debt burden built into the plan and Central sector schemes, unavoidable Central loans and market borrowings that led to an widening resource gap. Consequently, they are unable to contribute their share to the Plan nor have adequate funds to run properly the regulatory functions or maintain services in health education, roads and transport and assets created under the previous five-year Plans, which are now the states’ responsibility.
While this issue has been politicised, one might question the very basis of the classification of states. First, the expressions are unhappy as though coined by supercilious foreign experts and betray a lack of sensitivity. The ground realities of states are so diverse that it is not proper to put them in straitjacketed formula, however smart it might appear. It is a sad commentary on both the Centre and the  states concerned that Assam, Meghalaya and Arunachal are in the least developed category after six decades of planning and strategic investment. It is also baffling that Nagaland and Manipur, where governance has collapsed, is placed in the higher “less developed”’ group, which includes states that are “‘extra active’ in the sense that their primary objective has been resource extraction and not inclusive growth or good governance. The expression “relatively developed” — the highest category — is vague and the fact that the report relegates Gujarat and Karnataka to the less developed category is sure to raise questions. Instead, a region-wise classification would have been appropriate, as for instance, the economic performance of small states in the North-east is conditioned by the economic environment of the region and the Central policy framework. The region&’s states will be justified in demanding separate criteria and this holds good for those placed in the two lower categories. A summary trial is no solution to the complexities of challenges of socio-economic development.
The author, a former Assam cadre IAS officer and scientific consultant in the office of the PSA to the GOI is presently a Principal consultant to the International Co-operative Alliance-Asia –Pacific, New Delhi