Is Bihar on steroids, boosted by an excessive stimulus of dramatically higher public outlays than ever in the past? Like all stimulus, does it also bear the danger of slumping back when it is withdrawn? Is the widely acclaimed growth turnaround a durable and sustainable one? These are among the many issues, which are currently being debated.
But first the facts.
Bihar is the best turnaround story that the country has seen in recent decades. The Prime Minister has said many a time that India cannot prosper till Bihar is part of this prosperity. The latest Central Statistical Organisation data suggests that the average growth of the state’s GDP between 2004-05 and 2008-09 averages 11.03 per cent, making it the second-fastest growing state, just a touch below Gujarat and significantly higher than the country’s average growth of 8.45 per cent over the same period.
When I was the deputy chairman of the State Planning Board, while finalising Bihar’s 11th Five Year Plan approach, it was my hope and optimism that in the last years of the plan Bihar’s growth rate, persistently at around 4 per cent, could reach the national average. I was obviously wrong. The 11th Plan has two more years to go. Bihar has already averaged a growth rate of 3 per cent higher than the national average.
What is also significant is that the deconstruction of the aggregate growth rates suggests that the progress has been an all-round one.
Inter-sectoral growth rate suggests that on average the agricultural sector has grown at 7 per cent during this five-year period, well above the national average. The industrial sector growth rate during this period is more than 20 per cent, which seems to have contributed significantly to the double-digit growth story. Further, unlike the rest of the underdeveloped states, the growth in Bihar is not driven by the services sector alone, though the service sector has grown at an average of more than 10 per cent.
Within these sectors, there are some sub-sectors that have performed exceptionally well. The construction sector, for example, has grown at nearly 40 per cent during the last five years. The communication sector and the trade, hotels and restaurants sector have grown at more than 15 per cent, while the growth in the banking and insurance sector has been more than 10 per cent during this period. Few would have expected that a state deficient in energy and natural resources could see a major spurt in industry and ancillary sectors.
What are the factors that have contributed to this growth story? First and foremost, it is improved governance. It is most importantly the vastly improved law and order with greater commitment to enforcing the rule of law and guaranteeing the security of life and property. Statistics alone cannot capture the impact of an improved security environment on human psychology. If the future looks more predictable and optimistic, it triggers innumerable individual economic decisions. When aggregated, these micro atomistic decisions add to a large aggregate resulting in multiplier gainful activity.
Second, and not unrelated to the first, is the speedier construction of public projects like national and state highways, in no small measure due to a greater willingness of contractors and other stakeholders to overcome their fears and seek the profitability of such endeavours. Of course, the emphasis on improved infrastructure, in addition to central projects, by way of over 3,000 kms of state highways and over 9,000 kms of rural road network catalysed multiple economic activities. Similarly, the improved regulatory environment has given a massive impetus to housing construction and urbanisation in satellite and small towns. Not that these projects have all been in conformity with their tight targets. Pursuing their implementation creates growth multipliers.
Third, the emphasis on social sectors, particularly education and health, mitigates their past endemic neglect. Appointment of over 2 lakh primary teachers, reservation for women, encouragement to girls, increased emphasis on teaching outcomes and an increase in the number of institutes for higher and technical education have contributed to long-term development. This is equally true for the health sector with improved primary health centres, district hospitals and improvement in diagnostic facilities through public-private partnerships with better accountability.
Have the development challenges been successfully overcome? It would be naïve to believe that a mere five-year good performance has either solved Bihar’s problems or would automatically repeat itself in the coming years. Given the adverse land-man ratio, fully harnessing the agricultural sector and improving productivity needs implementation of innovative strategies, some of which are already in place.
Completing the road network is not merely a matter of adequacy of resources, but sustained efficiency in their implementation. Energy deficiency cripples efforts for agro-processing, improving the shelf life of agro-products through cold chains and attracting large private investors. Training programmes for teachers, doctors, police personnel, faculty members for higher echelons of education would compel the state to become a vast training laboratory.
So, what does the future have in store? What is crucial is sustained action at least for a decade to enable Bihar’s per capita income to approximate what would be the national average by then. It would crucially depend on its ability to attract private investments and forge public-private partnerships. It is well accepted that private investment is shy till infrastructure improves substantially and the improved business environment looks durable.
All these are contingent on political continuity. Elections in Bihar are less than a year away. Bihar would indeed be a test case of whether the development matrix influences electoral choice — cutting across the past divide of caste, community and class — and, more importantly, if cold statistics on development have made any real difference to the quality of life of average voters. Anti-incumbency has increasingly given way to voter preference based on a Development Report Card. Only time will tell whether this is equally true of Bihar.
NK Singh is a Rajya Sabha member and former Deputy Chairman, Bihar State Planning Commission. He is the author of the recently-published book Not By Reason Alone: The Politics of Change The views expressed by the author are personal