After delivering election campaign speech for his party at Tamenglong, the Prime Minister launched the Backward Regions Grant Fund (BRGF) on his way back in Assam. Let me quote verbatim from the Guidelines the objectives of the scheme: “The Backward Regions Grant Fund is designed to redress regional imbalances in development. The fund will provide financial resources for supplementing and converging existing developmental inflows into identified districts, so as to:

(a) Bridge critical gaps in local infrastructure and other development requirements that are not being adequately met through existing inflows,

(b) Strengthen, to this end Panchayat and Municipality level governance with more appropriate capacity building, to facilitate participatory planning, decision making, implementation and monitoring, to reflect local felt needs,

(c) Provide professional support to local bodies for planning, implementation and monitoring their plans,

(d) Improve the performance and delivery of critical functions assigned to Panchayats, and counter possible efficiency and equity losses on account of inadequate local capacity”.

The scheme is consequent upon the Report of the Expert Group on Planning at the Grassroots Level: An Action Programme for the Eleventh Five Year Plan submitted to the Government of India in March of 2006. Chandel, Churachandpur and Tamenglong are the districts from Manipur covered by the scheme. As per the report, there are many activities to be completed by July of 2006 at the State levels. We are not sure if Manipur ever undertook any of the activities by our all-knowing ministers and super-knowledgeable bureaucrats. Anyway that is beside the point. What I want to deliberate is on the criteria for distribution of funds.

Funding Criteria: For the untied portion of the funds, the sharing pattern is as follows:
Every district receiving a fixed minimum amount of Rs. 10 crore per year; and
The remaining portion would be distributed on the basis of 50/50 as per the population and the geographical share of the district in the total population/geography of all the backward districts.

It is this funding criterion which goes against the interests of the regions like Manipur, and it is something which we need to press for correction. Any development intervention should attain certain level of critical investment in order for the intervention to have any perceptible as well as sustainable impact. It is this basic principle which has never been observed in any development intervention in the region.

Here I would like to emphasise that the development heart-burn in India need to be addressed in a two pronged way – one at the level of the States and another at the level of the districts. The first approach can address the issues of the smaller and demographically as well as geographically heterogeneous States like Manipur, while the latter approach would be appropriate for the larger and more developed States in the country. But it is always the latter approach which has carried the day for in the Indian democracy the voices of the larger States are always more vocal at the decision-making level.

Here I am reminded of two reports of 1969. Towards the end of the Third Five Year Plan the necessity of addressing the regional imbalances in development was accepted in a much more involved way than ever. The necessity of specific policy instruments designed exclusively to promote industrial development in backward areas was recognized during this period. The Committee of the National Development Council decided in its meeting on 13 September1968 to set up two working groups, one dealing with the identification of backward areas and another with the incentives for starting new industries in backward areas. The first one dealing with the identification of backward areas is commonly known as the Pande Working Group and the second dealing with the incentives as the Wanchoo Working Group. These two working groups were set up by the Planning Commission in pursuance of the National Development Council resolution. The Pande Working Group submitted its report on Identification of Backward Areas in February 1969 and the Wanchoo Working Group on Fiscal and Financial Incentives for Starting Industries in Backward Areas in April 1969. Whereas the criteria suggested by these two working groups for identification of backwardness and provision of financial and fiscal incentives might be of little relevance here, I must hasten to add that both the groups put emphasis on identification of backwardness at the State or Union Territory levels. Well this is exactly what has been reversed by the National Development Council in its meeting in September 1969 by adopting the districts as the level at which backwardness is to be defined.

What is much more interesting is the conspicuous non-reference to these two reports by the recent report of the expert group on the basis of which the BRGF has been launched.

The Threshold: Before I talk of the threshold level of investment for development, let me make a clarification on the reference to the classification of Special Category States as if these States have been done a great favour. This classification is only about the pattern of funding, and by no way addresses the issue of scale and scope of investment. But it is only scale and scope which can take care of effectiveness and sustainability of the developmental impact.

The funding criteria of BRGF are biased against the States like Manipur in three critical ways. First, it is known that even an activity delivered in a linear way, like power, involves a higher cost in the North Eastern Region than the rest of India. One unit of power can be transmitted with 11 paise in the rest of the country; it involves 35-75 paise in the region. One unit of investment in Amravati in Maharashtra would not achieve the same level of impact in Tamenglong in Manipur, though both belong to the same category of backward regions.

Secondly, the 50 percent on population and another 50 percent on the geographic size goes again against the interests of the States like Manipur. Despite the higher level of investment needed in Tamenglong for the same level of developmental impact as in Amravati, the existing pattern of funding would favour the latter much more than the former.

The official definition of geography in India for development interventions is just the plain area. It needs to be replaced by a definition which takes into account the ruggedness of geography in order to allow for the differences in the geographically heterogeneous country while deciding the size of developmental investments.

Thirdly, the above two effects gets further aggravated, in the sense of widening the distance between, say Tamenglong and Amravati, when the number of districts covered are large in the larger States as per current geographic definition. To wit, the total aggregate impact of the investments in the 36 districts of Bihar, 6 of Gujarat, 24 of Madhya Pradesh, 12 of Maharashtra, etc. would be huge and meaningful. But that of the three in Manipur would, given the existing funding pattern, be hard to feel.

What is Needed: What is needed now is a correction to the funding criterion by taking into consideration the contextual realities of States like Manipur if the intervention is to have any meaning at all. We would not like to hear a paternalistic shout at the end of the day that the same benefits are being extended to the region as well but without yielding the results. Let us invest to yield to begin with.