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Making Bihar’s economy Atma Nirbhar

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The pandemic has compelled the nation all over the world for a self-introspection. Economies around the world are re-aligning their trade partners and allies. Thanks to the Prime Minister’s remarkable and transformative leadership during the COVID-19 crisis that has made India rethink and re reform its economy and realign itself to the demands of the 21st-century world. India is on the brink of another major economic reform since 1991.

Prime Minister’s vision of making a 5 trillion dollar economy relies on making Maharashtra and Uttar Pradesh touching the 1 trillion dollar mark in the next 5 years. However, it should be noted the journey for an Atma Nirbhar India must go via eastern states like Bihar. The fruits of liberalization embarked on in the 1990s have yet to reach Bihar. Bihar of today is amongst the poorest state and lags in almost all human development indicators. For India to become a 5 trillion dollar economy, the size of Bihar’s economy must grow to 500 billion dollars in the next 5-7 years.

Atma Nirbhar Bihar was the campaign slogan of BJP in the 2020 Bihar Elections and helped Bhartiya Janta Party secured 74 seats in the last year’s elections. The verdict in BJP favor is clear that Bihar wants to progress. Bihar has once been part of BIMARU State need to grow at unprecedented rate.

Bihar is the land Of Chandra Gupta Maurya and Ashoka, Budha and Mahavira, Nalanda and Vikramshila and if India is the cradle of world civilization, Bihar is the cradle of Indian civilization and had been the birthplace of some of the greatest empires of the world. From astronomy, mathematics, science, medicine to spiritualism, Bihar had been at the forefront of Bharat in ancient times. The decades of misrule in modern times ruined the prestige of Bihar. The era of Lalu-Rabri made Bihar stateless and placed Bihar in the league of “BIMARU” states. The statelessness and lawlessness of The 1990s had turned Bihar into a chaotic state and the stain has stayed with Bihar till today.  

As India has emerged as a key International player in Covid-19 time and is redefining the need for Global Cooperation to make a multi-polar world, India’s growing International stature must be backed by inter-states economic equality, parity in development, aspirational states like Bihar must utilize the occasion to mark a remarkable shift towards and re-orient its position in India’s economic growth.

I have tried to cover the key sectors that need to be focussed by the new government.


Against the general perception, the annual expenditure budget is larger than that of Luxembourg and twice that of Sri Lanka. Bihar is not a cash-rich State, but yet the sustained efforts in the past 15 years have made a lot of difference. Bihar’s budget has increased eight times, only to touch Rs 2,11,761.49 crore in 2020-21 from Rs 23,885 crore in 2004-05. Bihar has quadrupled the gross state domestic product between 2005-06 FY to 2019-20. With an average of over 10 percent growth, Bihar’s growth has been higher than that of India. The fiscal deficit was 2.68 percent of GSDP, revenue surplus 1.34 percent of GSDP. Bihar is a revenue surplus state, thanks to its fiscal prudence. It has consistently been a revenue surplus state since 2004-05. The revenue surplus for Bihar was 1.34 percent of the GSDP in 2018-19. Bihar has consistently shown fiscal prudence in the last few years where deficits are within the stipulated thresholds has the bandwidth to go for higher spending.

However, the success of fiscal prudence lies more in the fact that central transfers and the grants for resources form the biggest chunks of its budget receipts. The receipts under Grants-in-aid and contributions from the Central Government wasRs 24,652 crores in 2018-19. The 15th Finance Commission has recommended increasing Bihar’s share in the total shareable resource pool has increased from 9.67 percent to 10.06 percent. The State must put in place a system of increasing revenues from its own sources, depending on central finances, and merely asking for the status of special status is not an attribute of a strong state. 

The pandemic has compelled the nation all over the world for a self-introspection. Economies around the world are re-aligning their trade partners and allies. Thanks to the Prime Minister’s remarkable and transformative leadership during the Covid19 crisis that has made India rethink and re reform its economy and realign itself to the demands of the 21st-century world. India is on the brink of another major economic reform since 1991. As India is re-orienting itself, to become Atma Nirbhar, Bihar must follow the path provided by the centre. The twin-engine government, one at the centre and other at state-led by Bharatiya Janta Party, Bihar would never have a better chance to reposition itself as a vibrant economy.

Ways to improve state finances

The government needs to go beyond the traditional and historical tourist destination sites like Bodhgaya, Rajgir, Nalanda, and Vaishali and develop new tourist hot spots.

This not only includes support from the government but also includes a behavioral change of citizens. Cataract operation in Virat Nagar to kidney transplant in Vellore is the occasional medical tourism a Bihari undergoes. While the State The government has planned as many as eight tourist circuits in the state — (i) Buddhist Circuit, (ii) Jain Circuit, (iii) Ramayan Circuit, (iv) Shiv Shakti Circuit, (v) Sufi Circuit, (vi) Sikh Circuit, (vii) Gandhi Circuit, and (viii) Eco Circuit. But this is on paper only.

Bihar is an undersold tourism spot and has the potential to be at par with any other Indian state. Situated on the Terai region of the Himalayas, it is home to two UNESCO world heritage sites, the birthplace of Mahavira and Guru Govind Singh. Being home to several Buddhist hotspots, Bihar in 2019 alone saw 10.9 lakh, foreign tourists. However, the visits have not been monetized and the government can do a lot to gain dollars from foreign visits. Marketing of GI tagged items at tourist destinations, dedicated tourist trains, cruise in Ganga, Dolphin Safari, sister-sister partnership with Varanasi to develop Manihari Ghat inline with that of Kasi, Waterways could be such potential initiatives.

Valmiki Nagar, often considered as a tourist’s delight offering Jungle Safari and various trekking adventures could be projected as the Kashmir of Bihar. Kabar Taal wetland in Begusarai has been declared the first Ramsar Site in the state has the potential to transform the local economy as well as has helped put the place on the international map. Gogabeel in Katihar too can be evolved into a major picnic site. 

Revoke alcohol ban
The state government’s decision to ban alcohol has its basis on the Gandhian Directive Principle of State Policy (DPSP). Article 47 of the constitution states, the State shall endeavor to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health. But the move has proved to be counterproductive for a resource scare state like Bihar. In Bihar’s liquor crackdown, the poorest have been hit the hardest, while the elites still have access to it is a classic example of symbolic socialism.

Delhi and Maharashtra have already shown the nation how to generate revenue during the crisis by charging a premium on Alcohol. Alcohol sales account for close to 14.1 percent of the Delhi government’s entire revenue projections for 2020-21. Bihar government has been losing Rs 4,000 crore annually because of the alcohol ban. Just for a comparison, this is half the amount of what the government lays to Police in Bihar. [INR. 7,492 was allocated to Police in 2018-19]. The Gandhian model of socialism can work well for richer states like Gujarat but does not suit the ground reality of Bihar.

Sectoral imbalance: Focus on manufacturing
As per the Economic Survey, the share of Primary, Secondary, and The tertiary sector in the GSVA was 21.3 percent, 19.7 percent, and 59.0 percent, respectively. The sectoral composition of the Bihar Economy has changed during 2011-12 to 2018-19. This is mainly due to shifting in the sectoral share from Primary to the Tertiary sector, while the share of Secondary sector has remained almost unchanged. Without having a solid secondary sector, the growth of the primary and tertiary would not be sustainable. Agriculture is a stagnant sector that has not seen much change in the last two decades.

The demand for the primary sector depends on the manufacturing needs of the state. After the bifurcation of Bihar in 2000, almost all industries went to Jharkhand and Bihar became just an agrarian state. Jharkhand is rich in mineral deposits and has been the home for manufacturing industries. On the other hand, Bihar has large swathes of alluvial soil, often replenished by floodwaters. The geography of the state can’t be changed and it is indeed on the disadvantaged side. However, to its advantage, Bihar enjoys a strategic geographic location. This angle has not been leveraged by the policymakers. Bihar shares an international border with Nepal. Bhutan and Bangladesh lie in its vicinity.  An 6-8 hr journey by road can land you in any of these nations. Bihar can become an export hub to these nations and also an important gateway to the North East and has proximity to the vast markets of Eastern and Northern India. The state is well connected to the rest of India and international markets through over 200,000 km of the road network, 6,700 km of the rail network, and two international airports.

Manufacturing has the potential of attracting higher investment, which in turn generates more employment, the government needs to focus on encouraging the manufacturing sector.

The share of the agricultural sector in the state’s GSDP declined from 35.8 percent in 2000-01 to 19.7 percent in 2017-18 due to the increase in share of Tertiary Sector.

However, its continued importance lies in the fact that more than 75 percent of the population is engaged in agricultural operations. Since the bifurcation of the state in 2000, the bulk of the mineral resources are currently in the state of Jharkhand. Agriculture supports the livelihoods of 80 percent of the population. Besides generating employment, it also provides raw material to industries, augments the food supply, and assists in poverty alleviation. As per the Economic Survey, the contribution of the agricultural sector to the State’s GSVA stands around 20 percent in 2017-18. The share of the crop sector in total GSVA was 10.64 percent during 2018-19.

Despite the constraints of finite land resources, fragmented land holdings, and erratic rainfall, the production performance of crop and horticulture has been encouraging, registering a compound annual growth rate of 6.2% much higher than that of India’s. The new farm’s Acts of the Parliament may provide impetus to small and marginal farmers. Therefore, a vibrant agricultural system forms a crucial part of the development strategy of overall economic growth in Bihar. Achieving high and sustained growth in the agricultural sector is crucial to creating both on-farm and off-farm employment opportunities and doubling the income of the farmers by 2022.

Income Augmentation: Going beyond Agriculture
Export should drive the production of agriculture and horticulture products and not just mere consumption. Following sectors/areas can be crucial for Bihar Progress :

1.     Fisheries, Livestock and Animal Husbandry

Bihar being a river-rich state, rivers like Ganga, Kosi, Mahanadi, Gandak, Bagmati, Son, etc coupled with the abundance of high rainfall in the northern region make it a perfect place for in-land fishing. Bihar has an abundance. Bihar has the potential to export fishes not just to Indian states but also to neighboring countries like Nepal & Bhutan.  As a result, there is abundant fishing potential in Bihar.  The fisheries industry heavily contributes to the Gross Domestic Product of India.  The right execution of central government and state government schemes will play an important role in making the fisheries sector Atma-Nirbhar.

Along with agriculture, livestock farming, dairy, fisheries activities are an integral part of Bihar. . These activities improved the food system and helped in saving livestock. Due to climate and topography, the animal husbandry, dairy, and fisheries sector can play a major socio-economic role in Bihar’s growth.

It can contribute significantly to the empowerment of women, increasing their income and role in society and doubling Farmers income.  It has become a boon for small and marginal farmers, especially in rainfed areas of India.

State government must launch an Animal Husbandry Startup related Challenge to attract entrepreneurs in the state.  Appreciating innovations coming from villages to expand dairy, fisheries ensuring quantitative and qualitative improvement in livestock, production system and capacity building of all stakeholders, Central Sector Plan on Blue Revolution, Integrated Animal credit card schemes by development and fisheries management (CSS). Today Bihar youths are getting hit in big cities in search of jobs, while their local resources and economic potential remain un-utilized. There is still a lot of potential for new experiments in this field. If the youngsters want to start a business, then they can start fish farming and animal dairy. The loan is also being provided from Pradhan Mantri Mudra Yojana to do this work. For the eradication of poverty, the livestock and fisheries sector should not be just a vehicle. Rather, it should emerge as a platform to gain a livelihood. Looking at cattle, pigs or poultry may not seem glamorous, but earning good money is certainly an attractive proposition.

2.     Food processing:

Bihar is one of the largest producers of crops. maize, Makhana, Banana, wheat, rice. However, the production is largely limited for self-sustenance leaving limited scope for farmer’s growth and income opportunity.  The state has to re-invent its potential. The Food Processing Industry can play a key role in realizing the Agriculture potential in the state. PM SAMPADA scheme must be effectively implemented at the production hub of these crops. 

Potential Processed Food : 

Banana: Bihar’s Hajipur is famous for “Chineeya Kela”  Katihar, Purnia, Bhagalpur are famous for “Hari-chhal Kela” . Food Processing industries can be encouraged at these places to make banana chips, cloth, eco-friendly plates made up of banana leaves. This will not only augment the income local population but also open new avenues for employment.

Makhana: Darbhanga, Katihar, Madhubani, Purnia are imporatant centres for Makhana Production. Right kind of climatic condition and topography makes this place an ideal bearing place for Makhahana. Makhana is a cash crop and if effectively marketed, this could become an important export oriented crop. Makhana has a long Shelf-Life and has key health benefits that make this crop the right choice to be used in daily use.  

Medicinal Plant: Jal Jeevan Hariyali Abhiyan can be re-designed to promote the growth of Medicinal plants such as Aswagnadha, Giloi , Musli , Amla. This will not only increase the forest and tree cover in Bihar but also create an opportunity for the local population for agroforestry economic development. 

3. Marketing GI Tags: Katarni Rice, Zardalu Aam, Maghai Paan, Sahi litchi should be leveraged.GI tagged handicrafts like Sikki Grass Work of Bihar too can be an export material. Madhubani Paintings have recently made inroads to Canada and Japan.

To attract new ideas and young minds and startups, challenges can be designed by the government for promoting the e-commerce startups who only make these products global but also provide employment opportunities in the state. 

4. Production of Biofuel and Ethanol: Ethanol can be produced from maize and sugarcane waste, Bihar has huge potential for driving India’s ethanol supply. Making ethanol from sugarcane will not only promote sugarcane industries in the state but also help India reduce import bills. Ethanol alone has the potential of being a Rs 2 lakh crore-industry in the country and Bihar can grasp a big chunk out of it. 

Female Labour Participation

While Bihar takes pride in being the 1st state to provide 50 percent reservation to women in the Panchayati Raj institutions, the workforce participation rate for females in Bihar is abysmally low at 3.9% in rural Bihar and 6.1 percent in the urban. Given the size of 2.69 crores of the female population in the age group of 15 years and above, only 4.1% were engaged in any kind of gainful economic activities in Bihar. An overwhelming majority of the employable population in Bihar has been out of work mainly because of social stigma, lack of awareness, safety, struggle with entrenched patriarchy it is necessary for the State Government to draw alternative strategies to harness the available human resources in the state which can lead to higher levels of social and economic development.

The idea of a “mini capital” in Semanchal

I would like to make a case for two capitals in the state. BJP’s 2020 success story can be attributed to its unprecedented performance in 3rd the phase of elections in the Semanchal region. The choice of picking Shri Tarkishore Prasad from Katihar was indeed a thank you message to the voters.  The Seemanchal region is amongst the most backward in the country, has a 47% Muslim population, and accounts for 24 assembly seats.

The backwardness in the Semanchal can not overcome unless the power center in the state moves from Patna to the east. The attributes of a good capital are its closeness to the river, a major point of connection, and a notable ancient past. Purnia lying on the Bank of Kosi [Katihar to be precise], a major junction for connectivity with the North East, an airport (under development), the historic association from Mahabharata to Mughals makes it an idle fit. Though lagging in the human development indicators, the place might need support from the centre and state government but is one of few ways to bring the region to the mainstream.

While the idea is not mooted in the power circles of Delhi or even Patna, the idea is worth a discussion. Even an informal status of ‘mini capital’ if not a winter capital can help improve the socio-economic development of the region.

Way forward

Bihar was the main source of attraction of education, from Huan Xang to Tsing had made their visit to Nalanda for scholarly works, Bihar must introspect itself as to why it ended up becoming labor exported to the rest of the country. Bihar has the highest percentage of the young population in India has immense potential that India has yet to exploit. When India intends to project itself as the manufacturing hub of the world and recasting its image as the vaccine provider to the world, Bihar must also utilize this crisis and make it an opportunity to reposition itself as a New Bihar.

This New Bihar should be an anti-dote for the decades of misrule in post-independent Bihar. This New Bihar must shed its notorious tag of Babbu culture and BIMARU state and must be based on a foundation of progress, social and economic equality. Bihar had given the world its first republic in the form of Vaishali, Bihar of today can’t afford to remain in the backstay.  To transform Bihar from a Hobbesian state to a rule-based Kautilyan State, the state must make quantum of jumps, incremental jumps would not do justice to the state’s potential.

About Author: Ashok Kumar Choudhary is a retired banker who has wide experience in handling rural banking, agriculture and rural credit. He is also a Trade Unionist and has held a leadership position in Bharatiya Mazdoor Sangh, trade wing of RSS.

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