Nitish-Tejashwi can give Bihar what it needs most — an economic overhaul

Yesterday, we discussed how the formidable emergence of the Yadavs, Kurmis and Koeris, under  the Nitish Kumar- and Tejashwi Yadav-led   Mahagathbandhan alliance,  is being viewed as a revolutionary change in Bihar. Another game-changer in the state can be Nitish Kumar’s move to national politics, leaving his deputy Tejashwi in charge of Bihar.

n the long run, only good governance in Bihar can politically sustain both Nitish and Tejashwi, and a sound performance on the economic front is the key for that.

Part I of this article: With unique caste dynamics in Bihar, it may be Dilli Chalo for Nitish

A meaningful agenda of economic transformation, however, is never at the centre of any major political and social realignment hitherto seen in Bihar. There is an opportunity for Nitish and Tejashwi to change that legacy and even make a clean break with their own past.

In the past, political forces of the toiling peasantry had come to power but they seldom addressed the key issue of eliminating middlemen in land relations through land reforms, which could have brought about a leap in agricultural investment, productivity, and modernisation, as the development of Bihar is mainly dependent on agricultural development.

Wealth creation

Of course, the new government has made a start by promising distribution of 3-5 decimals of land for the landless poor for house sites. Parties that ascended to power had a huge base among urban poor but they seldom paid attention to setting up new industries to generate wealth and jobs.

Over the past few decades, leaders of all hues in Bihar reduced development to building roads and bridges. Roads at best created one-time seasonal informal jobs for day-labourers and not regular quality employment like factory jobs. Bridges only enriched the contractor mafia and they didn’t help the poor cross the abyss of poverty. The Nitish-Tejashwi duo can change all that.

Odisha was once more backward than Bihar. But Kalahandhi is now history and Odisha is a happening place now. Just as the Nitish-Tejashwi government had started functioning, Naveen Patnaik was showcasing before industry leaders and ambassadors from 30 countries in a Make-in-Odisha meet how his state had emerged as an industrial hub in the country. Bihar has a lesson to learn from Patnaik and Odisha’s transformation.

Also read: Tejashwi issues code of conduct for RJD ministers; no new vehicles, promote namaste

In Tamil Nadu, the Dravidian party DMK captured power in the 1960s basing itself mainly on the bottom rungs of the society. But its main victory over the elite castes was not just electoral. In the next half a century, it demonstrated that it is second to none in sustaining the progress of the state along the industrial curve. With political will and determination, Nitish-Tejashwi can also demonstrate that their brand of social justice is not one without a hint of radical economic progress for the lower castes but one which can usher in a real economic revolution as well.

Industrialisation of Bihar is the key for that, as industrial backwardness is at the root of the state’s overall backwardness.Per Annual Survey of Industries (ASI) 2019-20 data, Bihar had 3,429 factories. In contrast, Tamil Nadu had over 10 times that at 38,837, while Gujarat had 28,479, Maharashtra 25,610, and Odisha 3,079 factories.

The total invested capital in the factory sector in Bihar was an unbelievable low of ₹1,154.63 crore as per ASI data. In contrast, the total investment in Gujarat factories was ₹9,61,567.60 crore, in Maharashtra ₹6,21,373.03 crore, in Tamil Nadu ₹4,46,748.27 crore, and in Odisha ₹14,618.19 crore.

Industrial investment in Gujarat is 832 times more than in Bihar. Despite Bihar having more  factories than Odisha, the investment in industry in the latter is 12 times more. But, as a late starter, Bihar has the advantage of access to the latest technology. In a relatively short time, it can open up the floodgates for investment into the state with proper attention to wooing it with solid infrastructure and political stability.

It is not that Bihar doesn’t have its stratum of the affluent. But the moneybags who have emerged from among landed gentry, commercial elite, the contractors, the corrupt bureaucrats, and even some well-to-do non-resident Biharis never dare to invest in industry. Since Nitish successfully showed in the past that his government can bring the crime rate down, creating a congenial atmosphere for industrialisation is not beyond them.

Also read: Nitish’s socio-economic plank could decimate BJP’s Hindutva pitch

Modernising agriculture  

Modernisation of agriculture is also a precondition for an industrial Bihar as it can both fuel investment and create a local market.

The per hectare yield of wheat – which accounts for 70 per cent of the kharif cultivation in Bihar – is very low at 2,843 kg  compared to 4,868 kg  in Punjab. This, despite 76 per cent of the cultivated area in Bihar getting some form of irrigation. The paddy yield per hectare in Punjab is 6,775 kg, while it is a pathetic low at 1,948 kg  in Bihar. The per hectare yield of sugarcane in Bihar is about 60 tonnes, whereas it is 80 tonnes and above in major sugar producing states like Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh.

Fertiliser consumption per hectare in Bihar at 201 kg  per hectare is much lower compared to 445 kg  in Punjab. Farmers pay more for this fertiliser as they can purchase it only in the black market.

Farmers in debt

Only 31.3 per cent of agricultural credit in Bihar is recovered by the lending institutions and the rest of the amount remains outstanding. Bihar farmers thus remain highly indebted. Out of around 104 lakh farmers in Bihar, only 28 lakh have received Kisan Credit Cards as of March 2020 as per PIB data. These cards alone can enable them to avail institutional lending at low interest while the rest depend on private moneylenders and pay higher rates of interest.

The average size of an agricultural holding in Bihar in 2016 as per the Tenth Agricultural Census was 0.25 hectare or 0.6 acres. In Bihar, out of 104.32 lakhs of land holdings, 86.46 lakh (82.9 per cent) are marginal farmers, 10.06 lakh (9.6 per cent) small farmers and only 7.81 lakh (7.5 per cent) farmers hold land above 2 hectare.

In such a scenario, modernisation of agriculture in Bihar means modernisation of small-scale farming. Increase in yield and incomes are possible only if farmers spend more on inputs like fertilisers which is possible only if they have more credit in hand. Likewise, mechanisation is possible only through shared use of machinery through small farmers’ cooperatives collectively owning machinery.

Also read: Bihar’s young leaders get ready for rigours of state politics

According to NABARD’s All-India Rural Financial Inclusion Survey 2016-17, the average monthly incomes of farming households in Bihar, Kerala and Punjab were ₹1,652, ₹6,284 and ₹12,481, respectively. With around 96 lakh farmers stuck with less than 1 acre of land, with the lowest productivity in India, Bihar agriculture has become a large cesspool of underemployment and gross under-utilisation of human labour. 

A way out of this morass is possible if half the workforce, or around 50 lakh people, are liberated from unproductive agriculture and find higher-income jobs in the sphere of non-agriculture. Industrialisation is a must for that. It can also solve the huge unemployment problem in Bihar.

Unemployment in Bihar

Unemployment in Bihar was double the figure for the whole of India in December 2021, according to CMIE monthly unemployment surveys. The level of unemployment was 7.91 per cent for India as a whole but it was 16 per cent for Bihar, more than double. No wonder, more than 1 crore people have trooped out of Bihar to find jobs elsewhere and remittances remain one of the main segments of the household incomes.

Female workforce participation in urban Bihar at 6.4 per cent remains the lowest in the country. The Nitish government should lay more emphasis on women’s employment to the extent of providing 33 per cent reservation in jobs.

Abject poverty  

The incidence of poverty in Bihar in 2011-12 was 33.7 per cent, i.e., one-third of the population remained poor. But that was based on the highly controversial Tendulkar poverty line of per capita per day expenditure of ₹14.9 for rural areas and ₹9.3 in urban areas fixed in 2004. What kind of life would that be if one were to survive on ₹19.30 per day, even if it is adjusted to inflation and becomes double now in current prices? In Delhi,  a glass of tea now costs ₹8. Can someone get one square meal in a decent joint in Chandigarh today even for ₹40? Can an individual survive on one pav bhaji and a cup of tea a day in Mumbai?

The Modi government never bothered to update the poverty line by ordering fresh consumption expenditure surveys. By using the income and expenditure figures of the NSSO Periodic Labour Force Survey of 2020-21 as a proxy, the pro-saffron economists Bibek Debroy et al have shown that incidence of poverty in Bihar has come down from 33.7 per cent in 2011-12 to 25.5 per cent in 2020-21.

Also read: Nitish Kumar ‘strong’ PM candidate for 2024, says Tejashwi Yadav

Even as they pat themselves on the back for this achievement, they inadvertently admit that one-fourth of the Bihar population is still poor. That too abysmally poor as per an outdated poverty line. If we use the new World Bank criteria of $2 per day as the new poverty line, then the majority of the Bihar population will be poor. Such a scenario calls for very drastic remedies. So a major historic burden is on the shoulders of Nitish and Tejashwi.

Some ray of hope 

It is not that Bihar has no positive developmental achievement to its credit and has only a dark and bleak record in every respect in the past. Take Jal Jeevan Mission, the scheme to provide drinking water. Around 90 per cent of the households in Bihar have been covered by this scheme and the state is closer to achieving the mission of ‘Har Ghar jal’, supplying potable tap water to every household. 

This is no mean feat because the coverage in UP, Jharkhand, Rajasthan, and Chhattisgarh is less than 25 per cent.

Likewise, the performance on rural roads too has been impressive. Between 2004 and 2020, 2,59,507 km  of pucca roads were laid in the Bihar countryside.

With such success stories, Nitish-Tejashwi can now turn their attention to pending problem areas like education and health as well.

Large  education needs

Bihar is among the states with the largest school systems, with nearly 20 million students in classes 1 to 8. According to Sarva Siksha Abhiyan data, the state government has opened 21,000 new schools since 2007. This is grossly inadequate. Not only more new schools are needed, Bihar also needs some 575,324 more classrooms for its existing 70,238 schools. There are just  276,325 classrooms available across the state.

Though Bihar currently has 349,871 teachers, it needs at least 200,000 more. Of the total teachers in place, 195,237 don’t have “minimum professional qualifications”. In July 2022, Nitish launched a programme to build 1,000 new schools a year. Now the new government should increase it fivefold.

Bihar has shown it can do it

On the brighter side, similar to the Jal Jeevan Mission, the Swachh Bharat Mission constructed latrines in 1,21,26,567 households in Bihar, the Saubaghya Yojana gave power connections to all households in the state, Ujjwala Yogana provided gas stoves to 16.13 lakh poor women, and the vaccination drive has been successful in Bihar with 88 per cent coverage.

Though the funds came from the Centre, the state government executed this. But, under the Ayushman Bharat scheme, which offers health cover upto ₹5 lakh for the poor, the number of beneficiaries did not touch the figure of even 10,000 per month in Bihar in the 11 months from March 2020 to January 2021. Such a poor record even during the peak pandemic period is really inexplicable. The new government should move toward universal health insurance coverage of the poor.

The Centre resorted to some manipulations in central schemes. For instance, for every poor household that was awarded a free house under PM Awas Yojana, at least nine were only given wait-list tokens. And, they are still waiting for the house but the programme has been effectively wound up without declaring it in so many words.

Likewise, Jan Dhan Yojana was helpful to poor women only once, as cash-support money was credited to their accounts during the pandemic but now 80 per cent of the accounts are lying idle. They are not operative, causing only paperwork burden to the bank employees. The state government should raise its voice against such callousness and demand from the Centre some continued cash support to women as farmers are getting at present.

The Garib Kalyan Yojana offering free foodgrains to the poor will wind up shortly. This, in a scenario when the food prices in the market are soaring and PDS meets only a fraction of the food needs. The advantage the people derive on wheat or rice from the PDS system is lost in the market when they are to shell out a huge price for edible oils or dal or chicken-mutton.

No passing the buck

The new coalition in Bihar cannot rest content with passing the blame on Modi. They will have to demonstrate that a state government can also do something effective to control price rise by expanding PDS items. They can offer oil, dal and LPG cylinder at subsidised prices.

More importantly, they should come up with a very radical agenda for industrialisation of the state and implement it with full zeal. Otherwise, this coalition would fall short of the heightened expectations of people and the BJP will be waiting in the wings to stage a comeback in the next polls.

(The author is a senior journalist based in Allahabad)