Treating Bihar Like a Colony?

Successive Union governments have denied Bihar its legitimate share of public investment, loans and grants

A crowded Patna Junction railway platform as hundreds board trains to reach home ahead of Diwali and Chhath Pooja, October 2022
A crowded Patna Junction railway platform as hundreds board trains to reach home ahead of Diwali and Chhath Pooja, October 2022

Mohan Guruswamy

Over 50 per cent of Bihar is multi-dimensionally poor. Who is responsible for this?

That Bihar is India’s poorest and most backward state is undeniable. The facts speak for themselves. But what makes its situation truly unique is that Bihar is the only state in India where the incidence of poverty is uniformly at the highest level (46-70 per cent) in all the sub-regions. The annual real per capita income of Bihar of `3,650 is about a third of the national average of `11,625. Bihar is also the only Indian state where the majority of the population—52.47 per cent—is illiterate.

But Bihar has its bright spots also. Its infant mortality rate is 62 per 1,000, which is below the national average of 66 per 1,000. But what is interesting is that it is better than not just states like UP (83) and Odisha (91), but better than even states like Andhra Pradesh and Haryana (both 66).

Even in terms of life expectancy, the average Bihari male lives a year longer (63.6 years) than the average Indian male (62.4 years) and the state’s performance in increasing life spans has been better than most during the past three years.

Bihar has 7.04 million hectare under agriculture and its yield of 1,679 kg per hectare—while less than the national average of 1,739 kg per hectare—is better than that of six other states, which include some big agricultural states like Karnataka and Maharashtra.

Despite this, in overall socio-economic terms, Bihar is quite clearly in a terrible shape.

As opposed to an All-India per capita developmental expenditure during the last three years of `7,935, Bihar’s is less than half at `3,633. While development expenditure depends on a bunch of factors including a state’s contribution to the national exchequer, no logic can explain away the per capita Tenth Plan size, which at `2,533.80 is less than a third of that of states like Gujarat (`9,289.10), Karnataka (` 8,260) and Punjab (`7,681.20).

Simple but sound economic logic tells us that when a region is falling behind—not just behind but well behind—it calls for a greater degree of investment in its progress and development. It is analogous to giving a weak or sick child in the family better nutrition and greater attention. Only in the animal kingdom do we see survival of the fittest with the weak and infirm neglected, deprived and even killed.

But instead of this we see that Bihar is being systematically denied, let alone the additional assistance that its economic and social condition deserves, but also what is its rightful due.

From the pitiful per capita investment in Bihar, it is obvious that the central government has been systematically starving Bihar out of funds. Quite obviously, Bihar has also paid the price for being politically out of sync with the central government for long periods. States that are in political sync do much better in terms of central assistance.

Let us take a look at how Andhra Pradesh, a state that has stayed largely in political sync with New Delhi, has fared in the past few years. In terms of grants from the central government (2000 to 2005), Bihar fared poorly receiving only Rs. 10,833 crore while AP got `15,542 crore. Bihar has also been neglected as far as net loans from the Centre are concerned. It received just `2849.60 crore as against `6902.20 crore received by AP from 2000-02.

It’s only in terms of per capita share of central taxes do we see Bihar getting its due. This gross neglect by the central government is reflected in the low per capita central assistance (additional assistance, grants and net loans from the Centre) received by Bihar in 2001. While AP received `625.60 per capita, Bihar got a paltry `276.70.

The results of the economic strangulation of Bihar can be seen in the abysmally low investments possible in the state government’s four major development thrusts.

Bihar’s per capita spending on Roads is `44.60, which is just 38 per cent of the national average, which is `117.80. Similarly for irrigation and flood control, Bihar spends just `104.40 on a per capita basis as opposed to the national average of `199.20.

Now the question of how much did Bihar ‘forego’? If Bihar got just the All-India per capita average, it would have got `48,216.66 crore for the 10th Five Year Plan instead of the `21,000.00 crore it has been allocated.

This trend was established in the very First Five-year Plan and the cumulative shortfall now would be in excess of `80,000 crore. That’s a huge handicap now to surmount. Then it would have got `44,830 crore as credit from banks instead of the `5,635.76 crore it actually got, if it were to get the benefit of the prevalent national credit/deposit ratio.

Similarly, Bihar received a pittance from the financial institutions, a mere `551.60 per capita, as opposed to the national average of `4828.80 per capita. This could presumably be explained away by the fact that Bihar now witnesses hardly any industrial activity.

But no excuses can be made for the low investment by NABARD. On a cumulative per capita basis (2000 to 2002) Bihar received just `119.00 from NABARD as against `164.80 by AP and `306.30 by Punjab. It can be nobody’s argument that there is no farming in Bihar.

If the financial institutions were to invest in Bihar at the national per capita average, the state would have got `40,020.51 crore as investment instead of just `4571.59 crore that it actually received.

Quite clearly Bihar is not only being denied its due share, but there is a flight of capital from Bihar, India’s poorest and most backward state. This is a cruel paradox indeed. The cycle then becomes vicious.

This capital finances economic activity in other regions, leading to a higher cycle of taxation and consequent injection of greater central government assistance there. If one used harsher language one can even say that Bihar is being systematically exploited, and destroyed by denying it its rightful share of central funds.

To even make a dent on the abysmal state that Bihar is now in, the state will need at least twice what it gets from the Centre, as of yesterday. But will they get it? Not till the people of Bihar wake up and forcefully claim from the Union what it has been denied for 75 years.

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