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Friday, 14 June 2013 00:00
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More states, like Orissa, want their pound of flesh

Given how Bihar chief minister Nitish Kumar has managed to get more grants out of a government that is looking for allies in a post-2014 scenario, it’s not surprising that Orissa chief minister Naveen Patnaik should try and get a piece of the action—he too has talked of political discrimination and sought special category status for Orissa. The problem with both demands, and any more that will be forthcoming as we near closer to elections, is that they are not rooted in any reality. In the case of Bihar, for instance, the state got 8.8% of all central transfers in FY13 as compared to its population share of 8.6% and many times more its 2.6% share in India’s GDP or its 2.4% share in the taxes states collect on their own. While Bihar’s problem is the lack of industry—the share of industry in state GDP was a mere 4.9% in FY12—in the case of Orissa, it has been the inability to get big projects going despite its rich mineral resources. Posco and Vedanta are obvious examples, with the central government ministries playing no small role in this.


None of the states, predictably, have offered any concrete evidence as to how they are discriminated against—the Finance Commission transfers actually benefit states that are poorer and fiscally worse off—nor how a special category status will benefit them in the absence of good infrastructure in the state for industry to want to come and set up shop there. For one, if more states are made special category, their share of the pool of central resources will decline—reduce the pool for general category states who anyway get a lot less from the Centre than either their share in India’s population or GDP, and they will revolt. That’s the choice before the UPA if it decides to win over friends by classifying them as backward.


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