Freight equalization hit Bihar growth, says Prez

Published on Mar 24, 2017 07:38 PM IST

This is for the first time that a serving President, also a former finance minister, has admitted in public that the freight equalisation policy impaired the growth of mineral rich eastern states

President Pranab Mukherjee at the inaugural session of international conference in Patna on Friday.(Santosh Kumar / HT Photo)
President Pranab Mukherjee at the inaugural session of international conference in Patna on Friday.(Santosh Kumar / HT Photo)
Hindustan Times, Patna | By

President Pranab Mukherjee, here Friday, appeared to endorse the long standing contention of Bihar and some other states that the policy of freight equalization had played a big part in inhibiting the development of India’s eastern region.

Alluding to a speech by Bihar chief minister Nitish Kumar, as a member of the Lok Sabha in the 1990s, Mukherjee said, Kumar seemed to have made a valid point when he stated that Bihar and other eastern states had lost their competitive advantage because of that policy.

Kumar was sharing the dais at the time with the President. Also present were Bihar governor Ram Nath Kovind, deputy chief minister Tejashwi Prasad Yadav, education minister Ashok Choudhary and economist Meghnad Desai. Rajya Sabha ex-member NK Singh was in the chair.

Under the freight equalization policy, 1952, the Centre subsidized the transportation of minerals to a factory set up anywhere in the country. The policy hurt the economic prospects of mineral-rich states like undivided Bihar, its successor state Jharkhand, created in 2000, West Bengal, Madhya Pradesh (including present-day Chhattisgarh) and Odisha.

The policy weakened the incentives for private capital to establish production facilities in these states. As a result of the policy, businesses preferred setting up industrial locations closer to the coastal trade hubs and markets in other parts of the country.

“So, despite having mineral resources and fertile land, Bihar, and now Jharkhand, too, could not make the desired progress”, the President said, in his inaugural address at an international conference on, ‘Bihar and Jharkhand: Shared history to shared vision’.

The five-day conference has been organized by the Asian Development Research Institute (ADRI), a social research body based in Patna.

Mukherjee also described as bane of Bihar (and West Bengal), the legacy of the 1793 Permanent Settlement, which gave landlords perpetual and hereditary rights over land, so long as they paid fixed revenue to the British. The settlement was blamed for oppression of peasants.

The President revealed the affectionate side of his personality when he recalled how he had first met deputy CM Tejashwi, who was by his side, during his tenure as deputy chairman of the planning commission (1991-96).

“He and his brother (Tej Pratap Yadav, now health minister) had come with their father Lalu Prasad, CM of Bihar (to discuss the state’s Plan size). As we discussed (matters of the state), the two (kids) were busy outside, eating chocolate”, Mukherjee recalled, a smile creasing his face.

Lauding ADRI for its contribution to development oriented research, the President hoped the deliberations during the conference would help find ways of helping Bihar and Jharkhand realize their full development potential.

Mukherjee also called for exploring human development as an alternative development strategy and for prioritizing emphasis on education. “Both, the state and non-state actors – especially the civil society, have a role to play in economic transformation of the region”, he said.

Governor Kovind expressed hope the conference would help find answers to development issues concerning Bihar and Jharkhand.

NK Singh, who was in the chair, urged the President to ‘direct’ the Centre to give more attention to the two states, the need for which had been stated in Mukherjee’s address to a joint sitting of the two houses of parliament on January 31.

At the outset, ADRI member-secretary Shaibal Gupta welcomed the guest. ADRI director PP Ghosh read a citation in the memory of former ADRI president Arvind N Das. Lord Meghnad Desai proposed a vote of thanks.

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    Rai Atul Krishna has been writing, editing and anchoring news reports and features for Hindustan Times on a wide variety of subjects for the past 30 years. He has also mentored many of his colleagues during this period.

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