Rakesh Iyer rakesh.rnbdj at gmail.com
Sat Mar 20 21:50:02 IST 2010

Dear Malik

Since you mentioned Bihar, I was devoting my time for the past one hour to
find about Bihar, and so here is Bihar's story. My views are also mentioned
with it. The references mentioned can be seen, and they are the work of
those who study the budgets properly.

The story of Bihar’s growth:

1)      According to the figures released by the CSO (Central Statistical
Organization), the average growth rate for Bihar was 11.03% for the period
2004-05 to 2008-09. This includes one year of Lalu-Rabri rule and 3 ½ years
of Nitish Kumar rule.

However, if we were to go by the Economic Survey report tabled in the Bihar
Assembly by Sushil Kumar Modi, the average growth rate of Bihar for the same
period as mentioned above was 7.34%.

This is astonishing considering that both figures have the same source.
Obviously, either there is miscommunication or fudging of figures, and since
the Bihar govt. has not said anything on this difference in the figures, I
would assume the latter to be the case.

By the way, India’s average growth rate was 7.9% for the period 2004-05 to
2008-09. Hope that can give an idea as to how Bihar is performing.

2)      The growth rate of Bihar was 5.87% for the last four years (2001-02
to 2004-05) of RJD rule. For the period from 1992-93 to 2003-04, it was
4.89%. Under Nitish Kumar rule, the figures are 6.35% (2006-09). Is this
enough to say that there is a turnaround in Bihar economy? (A difference of
about 0.5% in growth rates for four years of Lalu-Rabri and Nitish Kumar

3)    The next question is about this: what constitutes this growth which is
talked about?

The primary sector (mainly agriculture and related activities) have grown at
less than 1% for the entire period. This is a shame considering that a large
proportion of Bihar’s population is dependent on agriculture (81% of the
entire workforce) and it contributes to about 42% of the state GDP, as
compared to say India (where the corresponding figures are 60% of the entire
workforce and 18% of India’s GDP).

The growth in the tertiary sector (services sector) is less (at 6.9%)  than
the national average as stated in one of the references. While I don’t have
data for the entire period, it was 9.2% in 2007-08 and 9.6% for 2006-07 for
India. And I don’t think the services sector would have got a huge shock
which changed that trend, as they don’t also depend on rain or other factors
unlike say the primary sector.

Then certainly the growth must come from the secondary sector, and yes, it
does. The question then comes: where from? Construction. The growth rate for
the secondary sector was 12.9%. And on further disaggregation, most of this
growth rate is found in construction. Construction sector has grown by 41%
for the stated period under Nitish rule only (exclude 2004-05 from the
stated period)

4)    Let’s now discuss the relative importance of the sectors first. The
agrarian sector has actually grown by – 0.77% (minus 0.77% or negative
growth rate) under Nitish Kumar rule. And agriculture has grown by -0.87%
(or minus 0.87%) under his rule. And this agriculture along with allied
activities is supposed to support 80% of the workforce. When agriculture is
on a decline, it’s obvious that the incomes due to agriculture would also be
on a decline.

Is this a success or a failure? You decide.

On the other hand, the construction sector  has grown by huge value
primarily due to investments made in public infrastructure as well as
booming construction drive going on in the cities of Bihar. The first is
primarily due to the financial assistance given by the ADB (Asian
Development Bank for state road programs) and the programmes run by the
Central Govt (like NHDP, National Highway Development Programme). The second
is being seen across all Tier-I(major) and Tier-II cities (mostly state
capitals and emerging important cities), and in that sense, the Bihar govt.
can’t take credit for it.

What is a major shame though is that the allocations for constructing
national highways was four times that being spent for making rural roads,
even though rural connectivity in Bihar is one of the worst across the
entire country. And even on this money, about 62% came from the PMGSY
(Pradhan Mantri Gram Sadak Yojana, a central-govt assistance) while the rest
came from funds of the state govt.

How can the state govt. claim the achievements to be its’ own then?

The only change here is that since the law and order situation has improved
to the extent that extortions are not the norm but the exception, this boom
of construction is taking place.

5)   The next achievement which Nitish Kumar may want to talk about is the
idea about education and health. On this front, the govt. can be easily

The claim that under his rule, SC and ST students’ enrolment in schools has
increased has already been alleged by the local media to be a farce as the
figures are being claimed to having been fudged to lift more food under the
mid-day meal programme. The only ‘real’ activity going on is said to be
construction of schools, another offshoot of the construction sector.

Leaving the above allegation aside for a moment, (as it may or may not be
true), since the health programme is run on Central money and medicines, the
Bihar govt. can’t claim the achievement as only its’ own, but a joint one.

6)    The Bihar govt. then makes a claim which can be only termed as
‘dubious’. On one hand, it claims that the income in agricultural sector has
fallen by about 4,000 crores and on the other hand, another document termed
‘Road Map for Agriculture’ released by the same govt. claims that there is
no data on income which farmers receive for their produce in the state. Then
how was this assessment made, is anybody’s guess.

7)   The Bihar govt., had in one of its first acts, repealed the APMC Act
(Agricultural Produce Marketing Committee Act), in the name of protecting
the farmers from scrupulous traders who manipulate prices thereby affecting
farmers and consumers both. The result was disastrous. Under this act,
prices were decided for commodities and the intention was to ensure better
and timely payment of farm produce. Now thanks to dismantling of these
committees which were supposed to fix prices, Bihar is enjoying a high rate
of inflation, and with the policies at the Centre also contributing to the
same, Bihar people can turn to religion and God to salvage their hopes.






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