Bihar is often called India’s “basket case” or “failed state”. In a ranking of all states, it comes out at the bottom, or very near the bottom in almost all social and economic development indicators.
Bihar’s record has a major effect on the national record in poverty alleviation and other indicators, as, with a population of 83 million, Bihar is the third largest state in the country. One-seventh of India’s below-the-poverty-line (BPL) people live in Bihar. Bihar however has great agro-climatic and geographical potential for development -- given the right political and economic environment. But will the state get such an environment?
Bihar’s backlog
Apart from the nature of politics and the state’s record of “inertia” (see Uttar Pradesh and Bihar: The burden of inertia ), the state has several problems, as the following facts show: Around 40% of the state’s population lives below the poverty line, almost double the national average of 26%.Per capita income in India has grown from Rs 8,760 in 1994 to Rs 13,332 in 2004, an increase of 52.2%. Per capita income in Bihar has grown from Rs 3,333 in 1994 to Rs 4,088 in 2004, an increase of just 22.6%. Bihar’s literacy level of 48% is way below the national average of 65%. Primary school enrolment is 52%, as against the national average of 77%; it is the only state where primary school enrolment fell in the 1990s.Only 10% of children in Bihar are fully immunised. The maternal mortality rate is 707 per 100,000 women, compared to the national rate of 404. Both Orissa and Uttar Pradesh are better off (Bihar’s infant and child mortality rates, however, show improvement and are better than Orissa and Uttar Pradesh). Spending on health, family, water supply and sanitation has come down in the last three years, from 6.5% to 5.49% of total public expenditure. In a memo submitted to the Planning Commission in 2004, Nitish Kumar, elected chief minister of Bihar in 2005, said that for Bihar to catch up with the rest of the country it needs a growth rate of 15% for the next 15 years! Overall, Bihar needs to: Improve its economic growth by encouraging investment. Strengthen its social service delivery systems.
To strengthen economic growth, Bihar needs to:
**Start serious agricultural reforms.
**Improve the investment climate by providing better physical infrastructure and tackling the law and order situation.
**Manage its fiscal resources better.
These issues are discussed briefly below.
Agriculture
Rural poverty in Bihar is 41.1%, considerably higher than urban poverty (24.7%). The backbone of the rural economy is agriculture. Eighty per cent of the state’s workforce is engaged in agriculture, which contributes 40% to the state’s GDP. Yet, in the early-1990s, agricultural growth actually fell by 2% per annum and has grown by less than 1% per annum since 1994-95 (World Bank). The state has fertile soil and a good climate that would support rich harvests, but land reforms are urgently required. A 2003 World Bank study pointed out that: 75% of the rural poor were landless or almost so, in 1999-2000.In 1998, 28% of the land was leased in. Tenants pay as much as half the gross output to the landlord, which is double what is normally paid elsewhere. Legal protection for tenants is weak since the tenancy system is informal. Apart from land records, Bihar needs improved water management; transport and marketing infrastructure need upgrading; and investment in agriculture has to go up. Generating productive, income-earning opportunities in agriculture is pivotal to reducing chronic poverty and stimulating growth in the economy.
Investment climate
A poor investment climate in the state has depressed development. While many Indian states have been aggressively wooing private investment, Bihar has lagged behind. The state’s share of major private sector projects being implemented in the 1990s in the country was lowest among major states. Bihar does not have a single externally aided project, though it is one of the poorest states in the country. One reason for the poor investment level is Bihar’s inhospitable investment climate marked by:
Poor infrastructure.
Bihar only has 77 km of road length per 100 sq km, worse than Orissa which has 169 km. Average teledensity in India is 9%, ie, nine out of every 100 homes has a telephone; in Bihar it is 2%, the lowest in the country. The state needs enormous public sector involvement in large and medium-scale water management systems for irrigation, urban water supply and sanitation. Small irrigation systems can be effectively managed by communities themselves, without bureaucratic interference. The law and order situation in the state has scared away investors and discouraged local enterprise. Business perceives a threat from Maoists and from the upper class Ranvir Sena that virtually controls parts of the state. Kidnappings of businessmen and students and extortion have put off even local businessmen. The perception of Bihar as the most lawless state in the country must be addressed if the state hopes to revive its investment climate.
Fiscal reform
Public investment is low due to fiscal constraints. The severe fiscal deficit is pushing up the debt level to among the highest of all Indian states. Bifurcation of the state in November 2000 resulted in the new state of Jharkhand getting most of the revenue-yielding industries and mineral resources, further impacting Bihar’s funding. A World Bank report outlines a fiscal reform strategy that includes developing a medium-term expenditure framework. This will help meet fiscal targets by rationalising low-priority expenditure, liquidating public enterprises, restructuring high cost debts, etc. Other reforms suggested are strengthening public expenditure management in areas such as budget-preparation and audit, and better utilisation of central funds in a way that meets Bihar’s requirements.
Improving delivery of social services
To lift large numbers of poor out of poverty, basic health and education systems must be strengthened. Social services have to be well targeted and responsive to the community’s needs. A policy framework must be developed that reflects the needs of beneficiaries, defines the responsibilities of service-providers and addresses delivery constraints. This would ensure that the available funds are correctly utilised -- as much as one-fifth of central assistance plans between 1997 and 2000 remained unutilised. It would also ensure better implementation of public programmes like the public distribution system. In 1999-2000, 89% of BPL families did not get ration benefits, while 46% of those who did get it were not qualified to do so. Devolving responsibilities to local government bodies that can plan and implement programmes with the participation of civil society goes some way in ensuring accountability. Though the District Primary Education Programme is not an unqualified success, its village education committees have made teachers accountable. It has also increased school enrolment by 10% and ensured that children stay in school longer. Education statistics show that poor families and those living in rural areas register the lowest rates of enrolment and the highest dropout rates. Generally, enrolment is at an older age. Figures for 2000-2001 show that 24% of primary school students transited to the upper primary level, 12% transited from the upper primary to secondary level, and 10% went from secondary to higher secondary. The figures were much lower for girls, and for rural as opposed to urban children. Health programmes in Bihar are in a shambles. The Comptroller and Auditor General (CAG) report for the year ended March 2004 says the state’s rural healthcare system is literally gasping for breath. Forty-nine per cent of health sub-centres, 41% of primary and auxiliary health centres and 5% of referral hospitals have no buildings of their own. Referral hospitals do not provide emergency services. There is a huge shortfall in health facilities. Health sub-centres are short by as much as 52%, primary health centres by 29%, and there is a staggering shortfall of 88% in referral hospitals. The CAG report blames this dismal state of affairs on “underspending” against budget provisions, resulting in lack of essential infrastructure. Bihar has a very poor record in immunisation. Improvement here should be a priority since it impacts most on the poor. Health services need to be prioritised and innovative methods of health delivery, such as those used by some civil society organisations, should be employed. In fact, private-public partnerships could work well in the social sector. One such model is the successful National Literacy Mission’s adult literacy programme in Muzaffarpur district. It involves the district administration, local communities, civil society organisations and thousands of volunteers. It has been recognised as a model to be emulated by the country. Bihar’s extensive network of women’s self-help groups is another avenue for collaboration. Using such resources to further effective service delivery also empowers local people. Administrative and governance reforms
Bihar’s poor performance has been attributed largely to poor governance in the past two decades. Caste factionalism is endemic in the state. Columnist and former Foreign Secretary N K Singh says that every activity is viewed in terms of caste or communal divide, and vote politics overshadows sensible economics. Administrative reforms are urgently required, especially in the system of recruitment and promotion. Reforms in decision-making, civil service staffing, and making government more accountable to the people are vital. Decision-making has to be decentralised if delivery of services is to improve. A properly structured administration will ensure delivery of services and ensure that central funds are properly utilised. Bihar failed to use the Rs 7,000 crore it got under the Pradhan Mantri Gram Sadak Yojana, and spent barely Rs 18 crore out of the Rs 250 crore it got for the Accelerated Irrigation Benefits Programme. It spent barely 5% of the Rs 10 crore allocated under the National Old Age Pension Scheme.
Some successful initiatives
In this generally gloomy scenario, there are instances of successful development efforts in Bihar. The Bihar State Cooperative Milk Producers Federation (COMFED) has been doing well. Bihar’s litchi export industry accounts for 70% of India’s production. The Pahilganj Participatory Water Management scheme is another success story. It entailed transferring irrigation management from the public sector to the farmers. Working together with the Water and Land Management Institute, farmers expanded irrigation facilities to 6,000 hectares from 4,000 hectares. The carrying capacity of canals was increased, crop yields also improved, and the system was better maintained.
Depleting human resources
While such success stories give reason for hope, they have to be viewed against the state’s large and continuous loss of human potential. Students from Bihar flock to other states to study and work. More Biharis sit for the UPSC (Union Public Services Commission) examination than anyone else. Migration is a survival strategy. Twenty-five per cent of households have absent male members, according to a study conducted by the Institute of Human Development, New Delhi, in six villages of Gopalganj, Madhubani and Purnea districts. Migration nearly doubled in the last two decades -- in 2000, 49% of families had a migrant, compared to 28% in 1983. Bihar can probably retain its workforce only if it undertakes the reforms outlined above.
Courtesy: www.empowerpoor.org
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