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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

Enrich the answer from other sources, if the question demands.

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IAS Parliament 1 month

KEY POINTS

·        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 2 months

give elaborate review

IAS Parliament 2 months

Good attempt. Keep Writing.

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