The 70:30 loans-to-grants ratio that the Bihar Chief Minister seeks to overturn would imply that more grants to Bihar would automatically lead to faster development. But Bihar’s use of funds hasn’t been particularly efficient. Take the Pradhan Mantri Gram Sadak Yojana, a centrally funded transfer scheme designed to provide connectivity to rural habitations (not revenue village or Panchayat) through provision of all-weather roads. Bihar’s utilization in 2009-10 was below that of 14 other states.
And it isn’t just Bihar. Take Orissa, another state which has also at some point sought special status. Recently, Planning Commission member Abhijit Sen questioned the Orissa government’s low level of utilisation of central funds released for various development projects and welfare schemes. Sen said that in areas such as power, urban development and partly rural development, the state had failed to utilise even 50% of the assistance provided by the Centre. Read More