Panagariya for law reform by executive measures

Chief Ministers from Opposition parties must also want development-friendly reforms to win their elections’.

Reforms to some important laws such as the Mahatma Gandhi National Rural Employment Guarantee Act are feasible through executive action, NITI Aayog Vice-Chairman Arvind Panagariya told The Hindu in an exclusive interview.

He was responding to a question on possible reforms aimed at achievinga double-digit GDP growth rate the government could undertake if continuing disruptions in Parliament impeded its legislative agenda. “A variety of avenues to reforms exist,” Dr. Panagariya said.

One way to make land acquisition less time-consuming, forinstance, was for the States to adopt the Tamil Nadu government’s strategy. Since land was on the Concurrent List, Tamil Nadu inserted a Statespecific schedule, Fifth Schedule, into the 2013 Act. The State legislation listed in this schedule is exempt from the Act.

Edited Excerpts:

If the Union government dilutes the provisions of its land acquisition Bill, and with the ordinance on it having lapsed, industry is likely to feel let down. What would be your recommendation to the government and the States on the way forward?

The issue is not industry being let down, but setback to job creation and poverty alleviation. Rapid growth during the 2000s has given rise to an aspirational India. Many among the poor, including marginal farmers and landless agricultural workers, now seek superior economic opportunities. Job creation at decent wages for these groups requires rapid growth in not just agriculture but also industry and services. The 2013 Act undermines such growth.

One way to make land acquisition less time-consuming is for the States to proceed with their own amendments to the 2013 Act under Section 254(2) of the Constitution. Tamil Nadu has already done this; its amended law has been in force since January 5, 2015. The amendment inserts a State-specific schedule, Fifth Schedule, into the 2013 Act as it applies to Tamil Nadu. State legislation listed in this schedule is exempt from the Act. Other States could follow the Tamil Nadu path or adopt an alternative amendment along the lines of the Central Ordinance with good prospects for Central approval.

What should be a pro-reforms government’s strategy in the face of disruptions in Parliament? Are non-legislative decisions an option that can deliver more than incremental results, especially for achieving double-digit growth rates?

A variety of avenues to reforms exist. First, with rare exceptions, parties would ultimately come together to pass legislation critical to national interest. Politics may reinforce the good intentions since Chief Ministers from Opposition parties must also want development-friendly reforms so as to win their elections. Second, in cases such as the GST [Goods & Services Tax], perceptions and interests of States differ, making consensus more difficult. But progress can still be made through compromises. Third, there are subjects such as land leasing and marketing of agricultural produce on which State Assemblies can pass legislation on their own. Fourth, subjects such as land acquisition and labour laws are on the Concurrent List, where the States can amend the laws as long as the Central government approves them. Finally, reforms to some important laws such as the Mahatma Gandhi National Rural Employment Guarantee Act are feasible through executive action.

How is the NITI Aayog developing as an organisation and moving away from the Planning Commission way of doing things? What changes are this bringing about on the ground?

At the outset, let me say the Planning Commission as we remember it was a 64-year-old organisation while we are barely seven months old. So we are still in our infancy and must go through our share of teething pain. This being said, within the short period of our existence, we have made considerable progress along multiple dimensions.

We are on the last lap of completing the draft of the mid-term appraisal of the 12th Plan. This is a large-scale exercise. We are at a similar stage in completing the drafts of two task forces, one on poverty elimination and the other on agricultural development. Three sub-groups of Chief Ministers on Centrally sponsored schemes, Swachch Bharat, and skill development would soon wind up their reports. An expert committee on innovation and entrepreneurship will shortly be submitting its report to guide our work on AIM and SETU [Atal innovation Mission and Self-employment Talent Utilisation]. Work on the National Energy Policy, electronics industry and harmonisation of regulatory policies across different infrastructure sectors is moving apace. We have launched a new website as also a very exciting web utility called Indian Energy Security Scenarios (IESS) 2047 Version 2.0.

A key initiative of Prime Minister Modi is cooperative, competitive federalism. Accordingly, we are working with the States both proactively and in response to requests from them. We have suggested to the States reforms such as repeal of myriad redundant state laws; streamlining laws and associated rules and regulations; modernising land leasing laws; and updating and digitising land records. We have also kicked off a major study aimed at assessing the ease of doing business in different States as perceived by enterprises.

We are also in the process of restructuring the institution. One aspect of this exercise has involved the movement of extra staff from the NITI Aayog to other parts of the government and is nearly complete. The other aspect, building the NITI Aayog into a think tank, is a more daunting task. It requires bringing new talent into the institution. Spotting and recruiting this talent within the existing rules and regulations of the government has its challenges.

Remember that we still have only two Members — an economist and a scientist — compared with eight in the Planning Commission at the time the Prime Minister announced its closure.

What is your view on the whether India should give up on insisting that rich countries should pay for climate change mitigation and instead share some of the burden? If it is ok to ask for reparations for past colonial crimes, surely paying for past carbon sins is also ok? What would be your advice for India’s stance in Paris?

Let me first mention our contribution to cutting carbon emissions: we heavily tax petrol, diesel and coal; we have successfully expanded our forest cover and continue to do so despite land shortage; we have invested heavily in public transportation; and we are committed to an ambitious renewable energy programme. Add to this the fact that our lifestyle is far less energy-intensive than most other countries.

The next point is that we have made these efforts notwithstanding the fact that we are a low fourth emitter in terms of total emissions. On the basis of 2012 data, our carbon emissions are just one-fifth of the largest emitter, China, and one-third of the second-largest emitter, the United States. In per-capita terms, our emissions are tiny and we do not even appear on the top one hundred list.

Coming to your main question, morally and intellectually, there is something very wrong with the argument that developed countries, which have been historically the largest emitters, should not only be exempt from having to pay for the past damage but also be rewarded for it by being allowed a larger share of the carbon space instead of having to share it equally with the rest of the humanity.

Quite apart from the moral case, there is ample legal precedence within the United States domestic laws for compensation for the damage caused by past actions even when the connection between the actions and the damage was not known at the time the actions were taken, as illustrated by the United States Superfund Act of 1980. So, in my personal view, while we must make every possible contribution to the greening of the planet, especially when these contributions are also consistent with our national objectives, there is no reason to shy away from seeking greater carbon space to facilitate our growth and development or from seeking redress for the past damage in the form of finance for, say, adaptation, mitigation and access to patented green technologies.

(Arvind Panagariya is a Columbia economist and NITI Aayog Vice-Chairman, who is also one of Prime Minister Narendra Modi’s key advisers on policy matters).

Risky portents in Manipur

The crisis in Manipur stems from the demand to stop ‘outsiders’ from buying land in the State, in a context where the local population, predominantly the Meiteis, harbours fears of being marginalised. The valley constitutes only 10 per cent of the State’s geographical area and Meiteis constitute about 50 per cent of the population there. The long-standing demand has been to introduce a system similar to the Inner Line Permit (ILP) in other northeastern States, or some similar stipulation, to stop in-migration. But for this to be effective, the State needs to identify the ‘outsiders’ first. But that is a complex issue anywhere in the northeastern region as the borders are largely porous and the Government of India has not done enough to check the passage of people across them. One reason this was not done was to protect the state’s own interest: for a long time now, a section of the immigrants have been engaged to counter local insurgent groups. But as the demand for an ILP escalated, a cut-off year of 1951 was determined in the new Bills passed on Monday in order to identify outsiders. However, one of them, the Protection of Manipur People’s Bill, and two amendments, have been opposed by the tribal organisations, which claim control of the Manipur Hill districts. These are chiefly groups of Kukis, Mizos and Chins. They feel insecure as many of them who came to Manipur after 1951 or whose lineage may not meet the list of criteria set out in the Bills, could now be legally identified as ‘outsiders.’ Many of them also believe a rumour that the two amendments would be valid in the Manipur Hills districts, which is untrue.

The issues might not have escalated had the State government consulted the Hill Areas Committee before passing the Bills in order to clear any misunderstanding. Neither the organisation that had led the pro-ILP movement nor any of the tribal organisations was approached for any kind of dialogue. The pro-ILP movement was mostly confined to the Valley districts, while the people in the Hills isolated themselves, assuming and arguing that they were protected from outsiders under existing laws. As the tensions grew in the absence of dialogue, political groups added fuel to the fire to try and topple the Congress-led government and invite President’s Rule. Hence, it is not any genuine fear of becoming marginalised but realpolitik that is playing out in the hills of Manipur. But from any perspective, this is a dangerous portent for all the northeastern States. The Centre and the State need to come forward quickly to engage the people and figure out a solution to the crisis in order that it won’t go out of control.

The case against death penalty

The Law Commission of India has taken a historic step by declaring that the abolition of the death penalty must become a goal for India. It has recommended, for a start, the scrapping of the death penalty for all crimes except terrorism-related offences and those that amount to waging war against the state. The Commission’s report on the death penalty declares deterrence to be a myth, based on extensive research. It makes a clean break with the ‘rarest of the rare’ principle that was laid down inBachan Singh vs State of Punjab (1980): that judgment noted that the application of the death penalty would remain arbitrary and judge-centric and hence would be constitutionally unsustainable. It has attempted to raise the level of discourse on the death penalty by observing that opposition to it amounts to objecting to the taking of lives, and not to all punishment as a concept. Retributive justice is important, it notes, but it must not descend to the level of vengeance, as numerous Supreme Court decisions that refer to “the conscience of the people” seem to indicate. It has sought a return to the notions of restorative and reformative justice, and urged a change in tenor, in such a manner that victims are not made to think that the death penalty is the only, best or ultimate form of punishment. Most crucially, it has placed the death penalty in the context of India’s flawed criminal justice system, noting that even safeguards such as the right to appeal and mercy petitions do not provide foolproof protection from miscarriage of justice, given the uneven and error-prone application of relief.

But the Commission has not gone far enough. By creating an artificial distinction between terror cases and others despite admitting that there is no penological justification for doing so, it has created an unfair hierarchy of crime and justice. It notes the death penalty is no deterrent for even a terrorist. Some of the most egregious instances of miscarriage of justice that it cites as an indictment of India’s criminal justice system relate to terrorism-related cases; the 2002 Akshardham temple attack case, for instance, in which the death penalty was imposed by the trial court and confirmed by the High Court, was based on what the Supreme Court later ruled was wholly fabricated evidence. The concerns such instances raise about the death penalty disproportionately affecting the poor and marginalised are more sharply in evidence in terrorism cases — 93.5 per cent of those on death row in terrorism cases are Dalits or those from the religious minorities. By holding itself back from recommending a total abolition, the Commission has put the ball in Parliament’s court. The government and the principal opposition are unlikely to support such an abolition at this point. It can only be hoped Parliament will complete the good work the Law Commission has begun.

The idea of KISS

In a fairy tale, a kiss turned a frog into a prince. Recently, I was fortunate enough to visit KISS (Kalinga Institute of Social Sciences) in Bhubaneswar. Most people have heard of KISS and Achyuta Samanta (the founder of KISS and KIIT — Kalinga Institute of Industrial Technology), or should have. While there is a KISS International School with some international students, the core is the regular KISS school and the associated KISS college for higher education. KISS was started in 1993 with 125 tribal students and some financial support from the ministry of tribal affairs. Today, there are 25,000 tribal students, from 62 poor tribal communities (13 primitive tribal groups). Most, though not all, are from Odisha. For these students, who are poor and first-generation learners, education is free, from kindergarten to postgraduation. Since schooling is residential, board, lodging and healthcare are also free. Compared to many schools, private as well as public, the KISS track record is rather good — gender ratio, retention rates, pass percentages, integration of vocational education, sports and extra-curricular activities. More specifically, the school has 19,057 students — 9,044 girls and 10,013 boys. The college has 5,994 students — 3,204 girls and 2,790 boys. 

As news about KISS spread in the deprived and disadvantaged catchment area (Odisha, Jharkhand and Chhattisgarh), there has been demand for enrolment in it. I was told there are around 50,000 applicants, even after filtering for poverty. But there is a reason for that cap of 25,000. This is primarily a private-cum-social initiative, with limited money received from governments, Union or state. When rice is provided by the Odisha government, it is at APL (above poverty line) and not BPL (below poverty line) rates. Most land (80 acres, 1.5 million square feet of built-up area) has been privately acquired, from villagers. The only exception seems to be some land given on a lease basis to KIIT (one of its wings), but not to KISS. This land was part of the Chandaka Industrial Estate. That never took off. There were sick industries and plots of unutilised land lying around. Hence, Odisha’s Industrial Infrastructure Development Corporation handed over some of this land to educational institutions, KIIT being one. Since there are no doles and handouts from outside, the KISS model works only if there is internal cross-subsidisation. And that happens to be with KIIT, which was set up in 1992 with Rs 5,000 in funding. But that expansion of the acronym — Kalinga Institute of Industrial Technology — is in the past. Since 2004, KIIT has been a university, having taken the deemed university route. KIIT University now has 11 different schools, spread over 400 acres and with 20,000 students. Note that all these courses, undergraduate and postgraduate, are “professional”. You won’t go to KIIT University and study the liberal arts. Other than the human resource development ministry, the University Grants Commission and the All India Council for Technical Education, assorted newspapers and magazines rate educational institutions. Let’s not get into that. 

For the same university, ranks can also vary across different schools. KIIT University isn’t at the very top. (It is certainly more difficult to attract good faculty to Bhubaneswar. Any good product from an educational institution is the result of faculty, learning from peers and tight entry criteria.) But it is rapidly moving towards the top, especially in the eastern region, and given its relative youth, its climb up the rankings is remarkable. Without KIIT, KISS cannot exist, and that has to do with the innovative way in which the latter is financed. Five per cent of KIIT’s turnover is mandatorily donated to KISS, like CSR funds. “Profits” from KIIT are ploughed into KISS. Every KIIT employee contributes 3 per cent of gross salary towards KISS. Any vendor or contractor that supplies KIIT has to mandatorily contribute 2 to 3 per cent of profits to KISS. Vocational products produced in KISS as outcomes of vocational training also fetch some money. (Students retain 50 per cent of profits from the sale of such products.) 

Finally, there is the channel of pure charitable donations. These multiple methods are enough to sustain KISS, and it works far better than public subsidies through financing, or even direct public provisioning (think of government schools, colleges and universities). Why not replicate KISS elsewhere? For the record, KISS does plan to set up branches in all 30 of Odisha’s districts, in 10 states and 10 countries (with two branches in Bangladesh). Since 2013, there has been a KISS school in Delhi (Najafgarh), with 1,200 students, as a joint venture between KISS and the National Capital Territory government. A KISS school is about to start in Ranchi. But all these will perforce deviate from the original Bhubaneswar model of using KIIT to cross-subsidise KISS. It isn’t that easy to replicate KIIT everywhere, and that is the intent, either. Therefore, the other KISS initiatives will have to be supported by state (or other) governments, for land, building infrastructure and running expenses. 

None of those requirements is significant compared to the huge sums of money governments spend on education, with limited gains. Nevertheless, the original Bhubaneswar idea appeals much more. Someone had the foresight to say: I don’t want to go to the government with a begging bowl. Let me see what I can do, individually and collectively. Let me be the change agent, instead of perpetually asking governments to do something. I don’t expect governments to establish temples to Lakshmi and Saraswati. That’s why KISS is precious. 

Strategies for Boosting Biotech Industry, Stem Cell Research, Genome Engineering, Computational Biology and Drug Discovery were Outlined at a Strategy meet on Biotechnology

Strategies for Boosting Biotech Industry, Stem Cell Research, Genome Engineering, Computational Biology and Drug Discovery were Outlined at a Strategy meet on Biotechnology

The Department of Biotechnology, Ministry of Science & Technology, Government of India is completing 30 years and will be celebrating its 30^th Foundation Day in February 2016. It was felt appropriate at this point to assess and analyze in consultation with all Stake-holders the 4P’s- Progress, Promises, Problems and Plans for Future. In this connection a Strategy Meet was organized by Department of Biotechnology (DBT) on 31^stAugust, 2015 at NCR Biotech Science Cluster, Faridabad. The Minister Science & Technology and Earth Sciences, Dr. Harsh Vardhan presided over the meeting. The meeting was attended by the Directors and Senior Faculty of DBT aided Autonomous Institute’s, Senior Experts across the Country and Senior Members of the Civil Society. Secretary and all Officers of DBT were present.

In his Opening Address, Secretary, DBT gave an overview and detailed assessment of the impact over the years and highlighted how DBT has contributed significantly through its efforts towards:

Supporting Key Missions

Spear heading cutting edge research

Building Institutional and Human Resource Capacity

Forging Industry Academic partnership

Leveraging international strength through collaborations and

Guiding policy thinking and analysis

The Minister Science & Technology and Earth Sciences, Dr. Harsh Vardhan in his Inaugural Address highlighted the importance of Biotechnology Sector to contribute to the society. He said that it would be important to develop a new sense of urgency and work towards preparing an Action Plan and address key strategies for the future to deliver perceptible and measurable impact to the benefit of society.

The Minister also stated that the Biotechnology Sector which has an important role and cuts across all other sectors, takes forward its strategy in partnership with other S&T Ministry / Departments and State Governments.

He appreciated the good work that DBT is doing in taking forward Biotechnology Research in the country and stressed the necessity to fix 3 to 4 focus areas with achievable targets in the next 2 to 3 years.  The Hon’ble Minister added that malnutrition could be one of the key focus areas elaborating that whereas there has been much research on nutrition, the research needed to be translated to yield benefits for people.

In response to questions from management and social sector experts on perceptible and measurable strategies of DBT over the next couple of years, Secretary DBT underlined the following:

Biotech will see at least a 20 % increase in new companies, 20% more biotech incubators, 20% more social-sector partnerships, and 20% more Med-tech devices each year over the next three years

Results from stem-cell research will see impact on Sickle-cell anemia and Thalassemia treatments in three years

Work on maternal health, pre-term birth and stunted growth will result in significant improvement in nutrition and anemia treatment - programs for women within 2-3 years

India will establish a substantial presence in genome engineering and computational biology in coming three (3) years.

Mapping of the biodiversity of our islands and the coral reefs will be completed next year from which drug discovery centres will have access to novel compounds in two years

Major international collaborations will be established this year and the next following high-level exchanges with Japan (Stem-cells), France (Marine Biology) Canada (Stem cells), Netherlands (Vaccines), UK (Agri-plant), Netherlands (vaccines), US (Energy, Vaccines)

The Hon’ble Minister Science & Technology highlighted that while the overall strategy of the DBT was clear, each institution and each unit of DBT should have measurable targets over the next couple of years.

The DBT aided Autonomous Institutions have contributed significantly to the specific domain areas of expertise and concerted efforts has been made to take basic research through translation to product development.

From the analysis it was noted that a number of technologies, products and patents have been generated and DBT has worked towards promoting Industry Innovation Research.

Biotechnology Industry Research Assistance Council (BIRAC), which is a Public Sector of DBT focusses on promoting the innovation ecosystem and today a large number Startups and young Innovators have benefited from the support provided. A number of products and technologies have been delivered.

In the presentations made by the Directors of DBT Autonomous Institutions and other experts a broad overview of various thematic areas was presented highlighting specifically where we stand vis-à-vis the global scenario, the challenges faced and future action plan.

At the end of the meeting after detailed deliberations, a clear road map for the future was prepared. The targeted mission is to “Accelerate the pace of growth of Biotechnology Sector to achieve a target of $110 billion by 2025”.

It was agreed to focus on:

Building a skilled workforce and leadership.

Encouraging basic and discovery research and connecting this to our society.

Nurturing innovation, translation and entrepreneurship to transform our society.

Ensuring a transparent and globally best regulatory environment.

Building and fostering partnerships both at National and International level.

It was also agreed that for effective implementation of these strategic decisions it is important that we create a matrix of the measurements of process as well as outcome.

Key Missions are also being formulated to address major National Challenges on Healthcare, Energy, Food Security and Human Resource.

Coping with regional disparitie

Eleven states in India have 'special category' status. This extra-Constitutional status, introduced for the first time in 1969, was granted by the National Development Council, composed of the prime minister, Union ministers, chief ministers and members of the erstwhile Planning Commission. These 11 have hilly and difficult terrain, lowpopulation density, a sizeable share of the population as tribals, strategic location along the borders, economic and infrastructural backwardness, and a non-viable nature of state finances.

Bihar does not satisfy all the criteria. Yet, Chief MinisterNitish Kumar has been demanding the status for a while. The story is similar to "reservation", introduced constitutionally, initially for 10 years, and only forScheduled Tribes (ST) and Scheduled Castes (SC). The demand for the extension of special category status to other states is similar to the demands for the extension of reservation to groups other than SC and ST.

Special category states enjoy a number of benefits such as excise and income tax concessions, an earmarked 30 per cent of the normal central Plan assistance and 90 per cent of such assistance as grants (compared to only 30 per cent for other states). Given that 11 per cent of normal central plan assistance was allocated to Bihar during the Eleventh Plan according to the Gadgil-Mukherjee formula, it is difficult to see how Bihar can be declared to be special category without augmenting the earmarked 30 per cent of normal central Plan assistance.

At a public rally in Arrah on August 18, Prime Minister Narendra Modi announced a Rs 1.25-lakh-crore special package for Bihar for building infrastructure. Bihar badly needs such infrastructure as roads, railways, airport, refinery and power plants. Bihar Vidhan Sabha elections are due before year-end, and the opposition ascribes electoral motives behind the announcement. Leaving the politics aside, it brings the question of regional disparities in India into sharp relief.

In terms of regional disparities, India in a way is a mini-Asia, but with less accentuated differences. In Asia, in 2012, according to the Asian Development Bank (ADB), smaller countries such as Singapore, Hong Kong, Brunei Darussalam, South Korea and Taiwan had per capita gross national income between $21,620 and $54,040. These high-flyers had per capita income more than 20-50 times that of the Asian countries at the bottom of the ladder. At the bottom were Afghanistan, Nepal, Cambodia, Tajikistan and Bangladesh with per capita income between $690 and $1,010. Furthermore, economic performance of conflict-affected countries, such as Afghanistan, was poor. Though Chhattisgarh, Jharkhand and Manipur, for example, are not Afghanistan, the law and order problems in these states nevertheless appear to be taking its toll on economic performance.

In India, among all the states or Union territories, smaller ones like Goa, Delhi, Sikkim, Chandigarh and Puducherry are at the top, with per capita net state domestic product (NSDP) at factor cost at current prices between Rs 1,43,677 and Rs 2,24,138 in 2013-14, more than 1.9 times the all-India per capita net domestic product (NDP) of Rs 75,420. In the same year, Bihar, Uttar Pradesh, Manipur, Assam and Jharkhand, at the bottom of the ladder, had per capita NSDP between Rs 31,199 and Rs 46,131, less than 61 per cent of the all-India NDP.

Of course, disparities across countries can be expected to be more than across regions within a country. Within a country, generally, with free mobility across regions, people can be expected to migrate from poorer to richer areas and reduce disparities in the process. Furthermore, countries in a continent may emulate each other's policies to some extent, but unlike states within a country, do not operate under the same central policy regime. Yet, there are lessons to be learnt from the regional disparities across countries in Asia.

Since 1973, ADB has been focusing on its relatively backward member countries with the Asian Development Fund (ADF). To the poorest of ADB member countries, to "bridge the development gap", the ADF provides grants, as well as loans for 32 years with a grace period of eight years and interest of 1 per cent and 1.5 per cent during the grace and amortisation period, respectively. ADF-recipient status in Asia and special category status in India appear to be somewhat similar.

Prima facie, there is no overwhelming evidence that grant of the special category status has delivered accelerated development in these 11 states. Similarly, the relatively poorer ADF countries are growing slower than the rest in Asia and falling further behind the non-ADF countries. Seven economies - China, India, Indonesia, Japan, Republic of Korea, Thailand and Malaysia - continue to lead Asia's march to prosperity.

There are three lessons from the ADF that appear relevant for addressing regional disparities in India. First, law and order and conflict resolution constitute priority number one for growth. The extremely low project success rate in Afghanistan has been a frustrating experience for development practitioners. Peace-building and state-building are preconditions for better development outcomes. Little can be expected in a state where the government is unable to perform its basic functions effectively.

Second, interventions for promoting regional integration often provide very high returns. A case in point is the Greater Mekong Subregion (GMS) Cooperation Program. Increasing connectivity through physical infrastructure and the transforming of transport corridors into economic corridors across borders; and improving competitiveness through efficient facilitation of cross-border movement of people and goods and the integration of markets, production processes, and value chains provide rich returns for poor countries. Lao PDR and Cambodia in GMS are good examples. It appears that often moving people to jobs in a planned way is easier than moving jobs to people.

Third, successful implementation requires the local authority's buy-in into policies and ownership of projects. Throwing money without a home-grown conviction about the need, for example, for a road, school or hospital, does not deliver the appropriate outcomes. There is need to help the relatively backward states or countries, but only in the appropriate way.

Coping with regional disparitie

Eleven states in India have 'special category' status. This extra-Constitutional status, introduced for the first time in 1969, was granted by the National Development Council, composed of the prime minister, Union ministers, chief ministers and members of the erstwhile Planning Commission. These 11 have hilly and difficult terrain, lowpopulation density, a sizeable share of the population as tribals, strategic location along the borders, economic and infrastructural backwardness, and a non-viable nature of state finances.

Bihar does not satisfy all the criteria. Yet, Chief MinisterNitish Kumar has been demanding the status for a while. The story is similar to "reservation", introduced constitutionally, initially for 10 years, and only forScheduled Tribes (ST) and Scheduled Castes (SC). The demand for the extension of special category status to other states is similar to the demands for the extension of reservation to groups other than SC and ST.

Special category states enjoy a number of benefits such as excise and income tax concessions, an earmarked 30 per cent of the normal central Plan assistance and 90 per cent of such assistance as grants (compared to only 30 per cent for other states). Given that 11 per cent of normal central plan assistance was allocated to Bihar during the Eleventh Plan according to the Gadgil-Mukherjee formula, it is difficult to see how Bihar can be declared to be special category without augmenting the earmarked 30 per cent of normal central Plan assistance.

At a public rally in Arrah on August 18, Prime Minister Narendra Modi announced a Rs 1.25-lakh-crore special package for Bihar for building infrastructure. Bihar badly needs such infrastructure as roads, railways, airport, refinery and power plants. Bihar Vidhan Sabha elections are due before year-end, and the opposition ascribes electoral motives behind the announcement. Leaving the politics aside, it brings the question of regional disparities in India into sharp relief.

In terms of regional disparities, India in a way is a mini-Asia, but with less accentuated differences. In Asia, in 2012, according to the Asian Development Bank (ADB), smaller countries such as Singapore, Hong Kong, Brunei Darussalam, South Korea and Taiwan had per capita gross national income between $21,620 and $54,040. These high-flyers had per capita income more than 20-50 times that of the Asian countries at the bottom of the ladder. At the bottom were Afghanistan, Nepal, Cambodia, Tajikistan and Bangladesh with per capita income between $690 and $1,010. Furthermore, economic performance of conflict-affected countries, such as Afghanistan, was poor. Though Chhattisgarh, Jharkhand and Manipur, for example, are not Afghanistan, the law and order problems in these states nevertheless appear to be taking its toll on economic performance.

In India, among all the states or Union territories, smaller ones like Goa, Delhi, Sikkim, Chandigarh and Puducherry are at the top, with per capita net state domestic product (NSDP) at factor cost at current prices between Rs 1,43,677 and Rs 2,24,138 in 2013-14, more than 1.9 times the all-India per capita net domestic product (NDP) of Rs 75,420. In the same year, Bihar, Uttar Pradesh, Manipur, Assam and Jharkhand, at the bottom of the ladder, had per capita NSDP between Rs 31,199 and Rs 46,131, less than 61 per cent of the all-India NDP.

Of course, disparities across countries can be expected to be more than across regions within a country. Within a country, generally, with free mobility across regions, people can be expected to migrate from poorer to richer areas and reduce disparities in the process. Furthermore, countries in a continent may emulate each other's policies to some extent, but unlike states within a country, do not operate under the same central policy regime. Yet, there are lessons to be learnt from the regional disparities across countries in Asia.

Since 1973, ADB has been focusing on its relatively backward member countries with the Asian Development Fund (ADF). To the poorest of ADB member countries, to "bridge the development gap", the ADF provides grants, as well as loans for 32 years with a grace period of eight years and interest of 1 per cent and 1.5 per cent during the grace and amortisation period, respectively. ADF-recipient status in Asia and special category status in India appear to be somewhat similar.

Prima facie, there is no overwhelming evidence that grant of the special category status has delivered accelerated development in these 11 states. Similarly, the relatively poorer ADF countries are growing slower than the rest in Asia and falling further behind the non-ADF countries. Seven economies - China, India, Indonesia, Japan, Republic of Korea, Thailand and Malaysia - continue to lead Asia's march to prosperity.

There are three lessons from the ADF that appear relevant for addressing regional disparities in India. First, law and order and conflict resolution constitute priority number one for growth. The extremely low project success rate in Afghanistan has been a frustrating experience for development practitioners. Peace-building and state-building are preconditions for better development outcomes. Little can be expected in a state where the government is unable to perform its basic functions effectively.

Second, interventions for promoting regional integration often provide very high returns. A case in point is the Greater Mekong Subregion (GMS) Cooperation Program. Increasing connectivity through physical infrastructure and the transforming of transport corridors into economic corridors across borders; and improving competitiveness through efficient facilitation of cross-border movement of people and goods and the integration of markets, production processes, and value chains provide rich returns for poor countries. Lao PDR and Cambodia in GMS are good examples. It appears that often moving people to jobs in a planned way is easier than moving jobs to people.

Third, successful implementation requires the local authority's buy-in into policies and ownership of projects. Throwing money without a home-grown conviction about the need, for example, for a road, school or hospital, does not deliver the appropriate outcomes. There is need to help the relatively backward states or countries, but only in the appropriate way.