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22/06/2022 - Economy

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June 22, 2022

Despite equity oriented transfers from the central government, there is a widening inter-state inequalities. Explain (200 Words)

Refer - Business Line

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IAS Parliament 9 days


·        State governments are largely responsible for the development of backward areas.

·        It has one of the lowest CAGR of 9.9 per cent during the 30-year period. Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Uttar Pradesh and Rajasthan continue to be at the bottom, indicating that the tag ‘BIMARU’ is yet to be shaken off by them.

·        Institutional transfers by way of Finance Commission and by the erstwhile Planning Commission have been based on both equity and efficiency.

·        The transfers from erstwhile Planning Commission based on the Gadgil-Mukherjee formulae had also allocated higher weightage to backwardness.

·        Contrary to per capita GSDP, the skewness has shown a moderating trend as the coefficient of variation of transfers of resources from the Centre has declined from 418 per cent in 1991-92 to 230 per cent in 2021-22.

·        The introduction of area as a distinct factor in inter-se allocation with a minimum weight of 2 per cent to each State benefiting smaller States with a smaller geographic area at the cost of bigger States.

·        Moreover, horizontal distribution making these transfers equalising may also not be fair to the middle and high income States as they contribute far more to the Central taxes.


Sathishkumar 15 days

give elaborate review

IAS Parliament 15 days

Good attempt. Keep Writing.



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