Bihar:Growth Story How?

Roads “as smooth as Hema Malini’s cheeks” was a promise that Lalu Yadav had once given to the peoplof Bihar. Ironically, it is his rival Nitish Kumar who seems to be delivering on that front. Despite three years of floods followed by a year of drought, ‘backward and benighted’ Bihar reports a miraculous figure: 11% GDP growth, second only to Gujarat. The state’s economy has never grown so fast so consistently as it has since 2004-2005. A few pointers on what’s going right in Bihar:

* Getting anywhere in Bihar has always been an exercise in endurance. But that’s changing. More than 6,800 km of roads have been relaid and 1,600 bridges and culverts constructed in the last four years. Journey time in India’s 12th largest state, sprawling over 94,163 sq km, has been cut by half today in many places. Now, most of the state’s 38 districts — from northernmost West Champaran to Kaimur on the western end — are a drive of six hours or less from Patna.

* Automobile sales in the state grew 45% in 2009, at a time when sales had dipped 20-25% in several other states during the economic slowdown. Is this buying spree an indication that a section of Biharis have more money to splurge than they did earlier? “A few people had money earlier too, but they didn’t flaunt it for fear of attracting extortionists and kidnappers,” says Ranjit Singh, director of a high-end Patna hotel. That fear may have evaporated now.


* Only 317 kidnappings for ransom were reported during the last four years as against 1,393 during the previous four. The kidnapping industry has clearly fallen on hard times. One indication of this is that doctors no longer refuse to go to patients’ homes on emergency calls. “Today you can see boards at clinics saying we go on calls,” says Dr Amulya Kumar Singh, who runs a nursing home in Patna.

* Most of Bihar’s infamous dons are behind bars. That includes Mohd Shahabuddin, the former RJD MP who had once gone live on TV, daring the state police chief to arrest him. Things are a little different now. A ruling JD(U) MLA, Sunil Pandey, attempted an encore of sorts in early 2006 when he brandished a revolver and talked murder on TV. But Pandey found himself behind bars within no time. Speedy trials have ensured a total of 38,824 convictions between 2006 and September 2009.The convicts included dons and their henchmen.

* Gun-toting strongmen are no longer a common sight on the streets of Bihar. Policemen patrol them now. And places like Siwan, where Shahabuddin once held sway, do not get deserted after dusk.

This improvement has shown results. Malls, shops and private educational institutions are coming up. So are mobile service providers and banking firms. It’s boom time for real estate with apartment buildings coming up all around. “That’s because even non-Biharis for a change want to have a foot in Bihar which has become a better place to live in,” says economist Shaibal Gupta of the Asian Development Research Institute. Adds Faizal Alam of Kalyanpur Cements, “Cement inflow to the state went up 18% to 51 lakh tonnes in 2008-09.” That’s an indicator of the construction boom.


Ironically, this economic growth has happened without any worthwhile contribution from the manufacturing sector. The state’s economy is growing because of a boom in agriculture and services sectors. “It’s government-induced growth,” admits Bihar Industries Association (BIA) president S P Sinha. According to former BIA president K P S Keshri, private investments in the manufacturing sector have been as little as Rs 1,500 crore during the last four years.

Many attribute the growth to the fact that the flow of Central funds to states has increased manifold in recent years. In the case of Bihar, it went up from Rs 37,341 crore during the five-year period 2000-2005 to Rs 55,459 crore during the next three years. But equally importantly, the funds are now getting better utilized than during the Lalu-Rabri regime when large chunks remained unspent. Also, adds Gupta, the state made concerted efforts to mobilise internal resources with its own revenue collection going up from Rs 2,919 crore in 2003-04 to Rs 5,256 crore in 2008-09.


The flip side is that much of this growth does not get reflected in social indicators which remain abysmal. But, as Gupta says, it would be unrealistic for anyone to “expect the moon” at this stage. “Right now the fundamentals are getting corrected and therefore you can find mostly infrastructural indicators of growth; one will have to wait for social indicators to become visible,” he says.

While contractors and realtors stand to gain, more than half the state’s 8.2 crore people — 1.25 crore families — still live below the poverty line. For these families to prosper, Bihar desperately needs huge investments and more growth. The State Investment Promotion Board, formed by the Nitish government, has received proposals worth Rs 96,000 crore. But most of them, especially the major ones, remain on paper as Central rules prove a stumbling block. For instance, thermal power plants cannot come up in Bihar because the Centre has so far refused to provide coal linkages to ensure regular supplies to any such new plant.

Also, Bihar has a lot of catching up to do with the rest of India. “There cannot be any comparison between Gujarat and Bihar, both of which reportedly grew by over 11%; since our base is low, even a small investment results in impressive growth in percentage,” Gupta points out. State officials admit that crucial sectors like health are still sick with meagre resources in comparison to other states.

From its bleak past, Bihar may be finally moving towards a brighter future, but the common Bihari is not patting himself just yet. Maybe he is still waiting for this high growth to translate into better food on his table and more money in his pocket.

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