LOST IN THE AGGREGATES- COMMENTARY ON THE REPORT EVOLVING A COMPOSITE DEVELOPMENT INDEX OF STATES

By Prof. Abhilash S. Nair

Since independence, successive governments have endeavored to develop an egalitarian India whose economic development percolates to citizens living across the country. A major step in ensuring this outcome has been the various studies that have identified backwardness of different states in India. Accordingly, the central resource allocation is channeled so as to bridge this development gap. The Raghuram Rajan Committee report is yet another step towards achieving this goal. The report emphasizes on an objective method of identifying backwardness and linking it to central assistance to state, though this issue is being independently studied by the thirteenth finance commission set up under the chairmanship of Shri. Y.V. Reddy.
Any report on central development assistance sets off a race, among the states, to be backward. This report is no exception. The states that have garnered the ‘least developed’ status, seem to have no complaints against the report while others seem to be upset about the report. Having said that, there are some serious concerns which this report may look forward to address before being taken up for implementation. As has been highlighted in many other commentaries on this report, the dissent note by Dr. Shaibal Gupta addresses almost all the concerns raised by academicians and policy makers. However, what is interesting is the way in which the report deliberates and attempts to allay the concerns raised by Dr. Gupta by looking at the impact at an aggregate level. Interestingly, many states that may loose out on central assistance if the report is accepted also raise the same concerns as Dr. Gupta. I shall be commenting on some of these issues in the context of Kerala:
Excerpts from his recently published article in The New Indian Express on 19th October, 2013 Op Ed. For full article please visit  http://epaper.newindianexpress.com/174148/The-New-Indian-Express-Kochi/19102013#page/9/2Abhilash S. Nair is an Associate Professor of Finance, Accounting and Control at IIM Kozhikode.

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