The Gadgil-Mukharjee Formula, which was applied first in the Fourth Plan, has underwent many changes since its inception. The present version, known as National Development Council (NDC) revised Gadgil-Mukherjee Formula 1991, works in two stages:
Special Category States get 30% of total assistance from the Planning Commission; Plan size and past plan expenditure are some of the criteria which are followed to distribute money to these States
General Category States get the remaining 70% share; Gadgil-Mukharjee formula has devised a methodology under which population of General Category States get 60% weightage, per capita income 25% weightage and fiscal performance get 7.5% weghtage
Under this formula, 90% ofNormal Central Assistance to Special Category States comes as grants, and only 10% of assistance has to be repaid
For General Category States, the ratio between grants and loans is 30:70
