There are a number of obvious problems with the report. It mixes up input and output variables, double counts some variables, and gives very dissimilar variables equal weight. Moreover, while the preface refers to ‘a complex set of historical, cultural, and sociological factors’ that influence development, the report pays lip service to discussing them. It does not even refer readers to sources that might support its case. Unsurprisingly, the report has been criticised for its opaque reasoning. And while the existing arrangements for federal distribution are not perfect, any proposed changes will still require a careful analysis, unadulterated by political considerations like the ruling party’s need to win allies in the swing state of Bihar ahead of the 2014 general election. It is no coincidence that Bihar was the only state to have been represented in the Committee.

There are three additional issues that are worth noting. First, there is a real question to the data’s accuracy. The use of outcome variables to measure underdevelopment and linking the amount of federal transfers to the extent of underdevelopment add to the existing incentives to manipulate data. The Committee seems to presume the availability of good quality data when it notes, for instance, that ‘since the index is based on publicly available data, there is no element of discretion in the allocations’. But political considerations linked to perceptions of underdevelopment can severely distort official statistics. For instance, in 2001 the population of the state of Nagaland was overestimated by as much as 25 per cent because the backward regions of the state inflated their population to get higher seat allocation in the legislature. Interestingly, even though the results of the 2001 census have been rejected by Nagaland’s state government, the Committee still uses the 2001 census data for Nagaland to calculate base year estimates for certain sub-indices.

Second, the Committee seems to have overlooked the relationship between conflict, geography and underdevelopment. The word ‘conflict’, in fact, does not occur even once in the report and the word ‘insurgency’ occurs only twice in the context of states affected by Maoist insurgencies. This is surprising because 8 of the 11 existing Special Category States (SCS) that receive preferential federal transfers have been affected by (non-Maoist) insurgencies which have significantly impaired their ‘institutions and absorptive capacity’. So, when the Committee argues that ‘ideally, most resources should be transferred to regions that are both needy and have the capacity to invest the resources well’, one wonders why conflict was overlooked as a factor that constrains investment capacity. The report does make reference to ‘the relatively small North-Eastern states, which are politically very sensitive’. But it fails to reflect on the causes and the developmental consequences of this ‘sensitivity’. It also ignores the fact that all existing SCS are located in ecologically fragile zones with high levels of biodiversity, where the normal model of development used in the rest of the country cannot be applied.

Finally, the Committee did not consult a number of key stakeholders such as central government departments and commissions, the state governments of the existing SCS, independent experts and the public. The much maligned, time-consuming parliamentary process at least perfunctorily engages with all stakeholders. By contrast, the Committee simply adopted the majority view and did not bother to respond to the genuine and straightforward objections raised by one of its own members. In other words, the Committee was not interested in properly examining the problem at hand. It seems to have been driven by extraneous goals and timelines.

Ultimately, an opportunity for comprehensive review of federal redistribution has been sacrificed at the altar of political expediency and social scientists have unfortunately played the part of the priest. The key lesson of this sorry episode is that an ‘expert-driven’ government is not necessarily any better than a government held to ransom by an ill-informed or badly divided legislature because on the one hand a small group of experts may not necessarily be better equipped to solve the knowledge problem facing legislators and, on the other, they may be more susceptible to moral hazard.

Vikas Kumar is Assistant Professor of Economics at Azim Premji University, Bangalore.