Kerala asks Centre to reject Raghuram Rajan report

By: admin
Updated: 03 Oct 2013 08:13 AM

Thiruvananthapuram: Congress led UDF
government in Kerala has asked Prime Minister Manmohan Singh to reject the
Raghuram Rajan panel report evolving new formula for devolution of funds
to states.

In a letter to Singh, Chief Minister Oommen Chandy urged the Centre not to
accept the recommendations of the panel holding that the "new method would
be totally against the provisions of the constitution and the concept of
fiscal federalism".

The panel had made a case for ending 'special category' criteria to
provide additional assistance to poorer states, as it ranked Goa and
Kerala as the most advanced states and Odisha and Bihar the least.

The committee, headed by the then Chief Economic Advisor Raghuram Rajan
(now RBI Governor) which was set up by the Centre amid demand for "special
category" status by Bihar, suggested a new methodology for devolving funds
on states based on a 'Multi Dimensional Index'.

Chandy said "It would be totally against the provisions of the
constitution the concept of fiscal federalism and the existing scheme of
devolution of development funds by the Planning Commission to even
consider any of the recommendations of the committee.

Stating that the methodology adopted by the committee was "seriously
flawed" as it does not include major economic factors, Chandy said the
Panel also had not held consultation with states and other stakeholders.

Expressing serious concern over the recommendations, Chandy also pointed
out that the report has been prepared on a very short time of four months.

Distribution of resources as recommended by the panel would only help to
aggravate existing imbalances, Chandy said.