RBI governor Raghuram Rajan
RBI governor Raghuram Rajan. (Reuters)

The Raghuram Rajan Committee report says that Bihar, Uttar Pradesh, Odisha and Jharkhand are the most backward states in India and Gujarat is 'less developed.'

The Committee was set up by the Finance Minister P Chidambaram under the RBI Governor and former chief economic advisor Rajan to categorize states according to their developmental indices, which will be used to allocate appropriate funds by the Centre to the states.

The report also found Goa, Kerala, and Tamil Nadu as the most advanced states in the country.

The report also stated that Gujarat, touted as a highly urbanized state by chief minister Narendra Modi, is in fact 'less developed.' Modi has been chanting the mantra of the 'Gujarat Model' to promote his prime ministerial aspirations.

The list categorizes Punjab, Maharashtra, Uttarakhand and Haryana as 'relatively developed' states.

Following the findings, the Committee recommended that each state should get a fixed basic allocation of 0.3 percent of overall funds and additional financial support based on need and performance.

The Committee came to the conclusion of the least and most developed states based on the 'multi dimensional index' (MDI) model to transfer funds to the states. They divided the states into three categories after finding out their MDI scores.

The findings of the report will now identify the 'special category' for states.

Chief minister Nitish Kumar has been constantly demanding that Bihar should be classified as a 'special category' state to get more central funds.

The committee recommended that Bihar should get 12.04 percent of the total funds allocated for states by the Centre rather than its current share of 7.42 percent. 8.42 percent has been recommended for Rajasthan as opposed to 4.79 percent, Odisha 6.53 percent as against 4.62 percent and Madhya Pradesh 9.56 percent rather than its current 6.91 percent share. It has also been suggested that Uttar Pradesh should get the largest share of 16.4 percent of the total funds up from its current 10.1 percent, reports Live Mint.