Is chief minister Nitish Kumar’s ‘Bihar model of development’ more efficacious than Narendra Modi’s ‘Gujarat model’? Or, is it the other way round?
For some time, this issue has been a subject of discussion among the TV chatterati and a point of contention between Kumar’s party, the JD (U) and Modi’s BJP.
Now, the associated chambers of commerce and industry of India (ASSOCHAM) has come out with a new study report that promises to provide fresh fodder for the 9 pm TV debates on this subject.
The report, released Sunday, says Bihar is fast catching up with Gujarat in terms of fresh investment in the crucial sectors like power. This is despite its “huge disadvantage of the past baggage of laggard development”.
It also says Bihar is growing at a faster speed than Gujarat on different growth parameters although its base numbers – whether relating to investment or per capita income, remains much lower than those of the western state.
“Bihar logged in a compounded average growth rate (CAGR) of 20% in public investment between March 2003 and March 2013, while this was 14.1% per cent in the case of Gujarat”, says the report.
“Likewise, the CAGR of private investment in the same period was 104.5% in Bihar as compared to 31.9% in Gujarat,” according to the ASSOCHAM study.
However, the study also clarifies the outstanding investment in Gujarat, at Rs 13,74,244 crore, was more than four times that of Rs 3,11,527 crore in Bihar, thanks to Gujarat being a ‘forward’ state and Bihar’s ‘Bimaru’ legacy.
The report says it is the public investment which is ushering in the growth trajectory in Bihar, where the BJP is the junior partner to its NDA ally, the JD (U), in the coalition that rules Bihar.
By contrast, in the BJP-ruled Gujarat, it is the private sector that has taken the lead in making it among the most industrialised state in the country.
The share of public investment in Bihar, as in March 2013, was 50.3% while it was 27% in Gujarat. Again, the share of private sector in Gujarat was 72.3% while it was 49.7% in Bihar.
Gujarat’s per capita investment has grown from Rs 31,890 in March 2003 to Rs 2,27,586 in March 2013. By comparison, Bihar’s per capita investment has grown to Rs 30,011 in March 2013, still lower than where Gujarat was 10 years ago, but marks a big jump from just Rs 3,074 in March 2003.
But Bihar’s catch up act is shown by the fact its CAGR per capita grew by 25.6 % in the last decade, as against 23.9% in Gujarat.
While Gujarat is almost self-sufficient in electricity, the report says, over 70 % of Bihar’s total investment now goes to electricity.
Reacting to the ASSOCHAM findings, economist DM Diwakar, director of Patna think-tank AN Sinha institute of social studies, said Bihar needed to up its private sector investment to expedite the pace of its development.
“This will happen only after the public sector infrastructure crosses the threshold limit, the critical minimum point, from which it is unlikely to decline”, he told HT Monday.
Diwakar said Bihar also needed more positive steps to improve the investment climate to attract private investment. “For instance, it needs to tap hydel power to reduce its dependence on thermal power, which has coal linkage issues”, he explained.