Bihar Chief Minister Nitish Kumar has once again raised an issue relating to the federal transfer structure which he maintained was proving to be the main constraint in the development of poor States like Bihar.
Mr. Kumar called on Union Finance Minister Pranab Mukherjee on Sunday and submitted a memorandum outlining how poorer States in the general category became victims of the “inadequate federal transfer system” unlike those in the special category, which received significant fiscal relief.
Charging that “the cardinal principle of fiscal federalism” had not been applied in the case of Bihar, among the poorest general category States, he pleaded for more Central transfer for its development spending.
Demanding special assistance to compensate for its fiscal disadvantage, Mr. Kumar gave figures to show how poorly the State compared with others in per capita income, and development expenditure.
In his assessment Bihar needed an additional Central transfer of Rs. 25,295 crore per annum to bring it on par with the national average of per capita development spending.
He said the grant of Rs. 8753 crore extended under the Backward Regions Grant Fund (BRGF) during the 11th Plan amounted to just Rs. 1750 crore per annum, leaving a gap of Rs. 23,545 crore if the principle of equalisation of federal transfer were to be applied.
He also said the State suffered in matters of central subsidies and investment of central enterprises. As against its share of 8.2 percent under both heads in proportion to its population, the State received only 2.67 percent and 1.82 percent respectively, he complained.
Demanding special category status, Mr. Kumar complained to Mr. Mukherjee that the committee set up to examine the State's claims had not submitted its report by the deadline of December 31, 2011. He urged him to expedite the matter and provide for more allocation in the coming budget and the 12th Plan document.
His other demands included Rs. 20,000 crore under BRGF during the 12th Plan and increase in limits for market borrowings.
