Amid demands from stateslike Bihar to revise existing yardsticks for granting specialstatus to backward states, Centre today proposed to evolve anew criteria that would reflect in future planning anddevolution of funds to the states.
Welcoming the announcement, Chief Minister Nitish Kumarsaid in Patna it was a 'victory in-principle' for Bihar inview of its consistent demand for grant of such a status.
In his budget speech, Chidambaram said, "the presentcriteria for determining backwardness are based on terrain,density of population and length of international borders.
"It may be more relevant to use a measure like thedistance of the state from the national average under criteriasuch as per capita income, literacy and other humandevelopment indicators. I propose to evolve new criteria andreflect them in future planning and devolution of funds".
The announcement comes at a time when the UPA is on thelook out for new allies and sees a potential friend in NitishKumar in case the BJP projects Narendra Modi as its face forthe next Lok Sabha elections.
The antipathy between Kumar and Modi is well-known.
Kumar's party had plans to address a rally in New Delhion March 17 on the issue. Bihar government has been consistentin its demand for changing the criteria for determiningbackwardness of a state so that it could get special status.
Kumar told reporters in Patna "we have been demandingreview of the criteria for special status to the states for along time and framing of new criterion for grant of such astatus to backward states like Bihar....I am glad thatChidambaram has referred to revisiting criteria for specialstatus during his budget speech".
The Chief Minister, however, ruled out a politicalmeaning of his lavish praise for the Finance Minister and saidthat no such conjecture should be made as the Centre'scommitment to revisit the special status.
A Congress leader speaking on the condition of anonymitypointed out that Bihar has got "huge funds in the budget."
Special category status attracts investment in a state asinvestors get tax benefits. In 1969 while devising formula forsharing central assistance among states, the Fifth FinanceCommission acting in line to the Gadgil formula, had accordedspecial status to three states on the basis of harsh terrain,backwardness and social problems prevailing in these states.
The number later rose to 11.
The states which have been granted special categorystatus include Arunachal Pradesh, Assam, Himachal Pradesh,Manipur, Meghalaya, Mizoram, Nagaland, Sikkin, Tripura andUttarakhand.
In the budget speech, Chidambaram also announced toallocate a sum of Rs 11, 500 crore in Backwards Regions GrantFund (BRGF), which he described as a "vital source of gapfunding" besides another sum of Rs 1000 crore for Left WingExtremism (LWE) affected areas.
"BRGF will include a State component for Bihar, theBundelkand region, West Bengal, the KBK districts of Odishaand the 82 districts under the Integrated Action Plan," hesaid.
Welcoming the announcement by the Finance Minister onrevisiting the yardsticks for determining backwardness of astate, Rajya Sabha MP from JD-U Ali Anwar Ansari said thatChidambaram's proposal is a victory of JD(U)'s constant demandfor the same and hoped it will lead to the grant of specialstate status to Bihar.
"We have been raising this demand to change thebenchmarks of backwardness of a state so that Bihar can availthe benefits of a special state category for its rapidindustrial and other kinds of development. The announcement isa step towards us achieving that goal," he told PTI.
Kumar had earlier given indications that his politicalsupport to any party after the next Lok Sabha election couldbe linked to that party's stand on granting special status toBihar. BJP had immediately committed its support to thedemand.
The Bihar Chief Minister had planned to address a rallyat Ramlila ground in the national capital on March 17threatening to fill the ground with Biharis in a bid to to putpressure on the Centre to accept the state's long-pendingdemand.
In December last year, he had raised the issue forcefullyat the National Development Council (NDA) and accused theInter-ministerial Group (IMG) set up by Prime MinisterManmohan Singh of not looking into the demand seriously.
As per Gadgil formula, a special category state getspreferential treatment in federal assistance and tax breaks.
The special-category states get significant excise dutyconcessions, and thus help these states attract large numberof industrial units to establish manufacturing facilitieswithin their territory.
Kumar had in December last year met the Prime Ministerand handed over a six-page letter on the demand to providespecial category state status to Bihar to spur growth.