Should Bihar get ‘special category’ status?

Six states — Bihar, Chhattisgarh, Goa, Jharkhand, Orissa and Rajasthan — at different points in time have been demanding special category status. Nitish Kumar, the Chief Minister of Bihar, however, has been the most vocal.

The issue has recently come to the forefront, with the inter-ministerial group (IMG) rejecting the State’s demand. The Bihar Chief Minister contested that decision in a letter to the Prime Minister in December. The IMG was formed by the Prime Minister in September 2011 to examine Bihar’s request for according it special category status.

The IMG rejected Bihar’s Plea after judging the State on the basis of five conditions — hilly and difficult terrain, low population density and sizeable share of tribal population, strategic location along borders with neighbouring countries, economic and infrastructure backwardness and non-viable State finances. Kumar has criticised the IMG for reaching ‘pre-ordained conclusions’. While the battle of words continues between the Centre and Bihar, it may be useful to approach the issue more objectively.

India has in all 35 regions comprising 28 States, six union territories and the national capital territory, New Delhi. The mountainous States of the north and north-eastern part of India are considered ‘special category’ by the Planning Commission. Following this classification, 11 out of the 28 States are identified as special category States (SCS) and the rest as general category States (GCS).

The SCS are termed so, as they receive a special treatment in the allocation of funds released by the Planning Commission for planned development, on account of harsh terrain, backwardness and social problems prevailing in these States.

Out of the financial allocation to the GCS, 70 per cent is in shape of loans and the balance 30 per cent is a grant, whereas for the SCS the proportions, respectively, are 10 per cent and 90 per cent.

CRITERIA FOR BACKWARDNESS

Some observers look at the issue purely from a fiscal perspective and do not find Bihar to be disadvantaged enough to be accorded ‘special category’ status. In this context, the moot question is whether Bihar is relatively more backward compared with other States, as to deserve special treatment. Thus, the merit of Bihar’s demand for special category status needs to be defined in terms of ‘backwardness’. The 2005 report of the Inter Ministry Task Group (IMTG) constituted by the Planning Commission, which identified 170 most backward districts, including 55 extremist affected districts, provides a good idea of the relative backwardness of States.

The IMTG conceptualised regional disparity in terms of unequal resource endowment, uneven human development, inadequate infrastructure and poor fiscal resources. However, the IMTG felt that backward regions in general have remained so largely on account of inadequate exploitation of resource potential, and not due to the absence of resources themselves.

As such, it decided to drop resource availability as a parameter to identify backwardness. The Task Group viewed human development as a primary concern, implying that deprivation in income as well as basic health and educational facilities should be taken into account while identifying backwardness.

Given the data constraints, the IMTG considered share of agricultural labourers in the population, the level of agricultural wages and output per agricultural worker to reflect the dependence of a region on low-income-based primary sector activity. These variables were supplemented with data relating to per capita credit and deposits to capture the level of monetisation and saving. To capture the deprivation on the health and education front, it took cognisance of both process and outcome variables.

On the health front, the crude death rate was taken as the outcome and full immunisation and institutional delivery as the process variables. For education, female literacy rate was the outcome and gross enrolment ratio and availability of secondary schooling facilities as the process variables. The state of infrastructure was captured through indicators like percentage of households without electricity and rural households, with drinking water sources at a distance greater than 500 metres as well as the percentage of households not availing of bank services.

WHY NOT BIHAR?

The IMTG acknowledged that a robust budget and capacity to raise revenue using tax and non-tax handles are essential for investment in public goods. However, the IMTG chose not to consider any additional parameter linked to budgetary capacity as it felt the indicators on human development and infrastructure were sufficient to capture backwardness. In addition to the above parameter, the IMTG considered percentage of Scheduled Caste and Scheduled Tribe population as an overall proxy for regional backwardness. Based on its detailed exercise, the IMTZ identified 170 backward districts across States.

It is observed that Bihar not only had the highest number, but also the highest proportion of backward districts compared with any other state. As many as 36 out of 38 districts in Bihar were backward as per the rankings of IMTG. It is also a fact that Bihar has occupied the last rank in terms of real per capita GSDP among all States in all the years 2000 through 2012. Bihar accounted for roughly 2.8 per cent of the GDP but 8.2 per cent of the country’s population during 2009-12.

Kumar wants an expert group to be constituted to examine and recommend appropriate policy measures to overcome development disabilities of Bihar. This appears to be a fair demand when the government’s study itself suggests preponderance of backwardness in Bihar. It appears that the Centre is reluctant to address the valid concerns of Bihar.

(The author is Professor and Associate Dean, Xavier Institute of Management, Bhubaneswar. Views are personal.)