Just a Rs 1.25 lakh cr package: Quite clearly, the hoodwinking of Bihar continues

Mohan Guruswamy The Prime Minister has announced an Rs 1.25 lakh crores package for Bihar. Just as he announced an Rs.100 lakh crores package for J&K on July 12. The first question one must ask is why just as much for J&K, the state with India’s lowest incidence of poverty than over India’s poorest and most backward state? Bihar has a population of over 103 million and J&K has a population of 12.5 million. Bihar is eight times as big as J&K and many times poorer. The per capita income of J&K is approximately Rs.58,000 while it is half that at Rs. 29,000 for Bihar. Where is the justice in this? Is the moral of this is that Bihar too needs to become insurgency ridden before the Central Government takes notice of it Quite clearly the hoodwinking of Bihar continues. If the central government were more even handed it would, even if it cannot give assistance at J&K levels, give it as per the national average. In which case we should be looking at a figure nearer Rs. 500,000 crores. This is not a new story. Bihar has been systematically exploited by denying it its rightful and deserved share of central funds from the First Plan. For instance, in that plan the total national outlay for irrigation was Rs.29, 106.30 lakhs. Of this Punjab got Rs.10, 952.10 lakhs or 37.62%. By contrast Bihar got only Rs.1,323.30 lakhs, which is only 4.54% of the irrigation outlay. This continues even now. In 2010 undivided Andhra Pradesh had a plan outlay of Rs. 30,000 crores while Bihar, a bigger state population wise and a much poorer one, had a plan outlay of just Rs.14, 000 crores. The question for Narendra Modi is whether he has any plan to pull up Bihar to the national average or will it be the way it is now? If Bihar doesn’t progress, India never will. That is the truth. You cannot leave a tenth of India far behind and move ahead. Bihar is now India’s millstone. That Bihar is India’s poorest and most backward state is undeniable. The facts speak for themselves. But what makes its situation truly unique is that Bihar is the only state in India where the incidence of poverty is uniformly at the highest level (46-70%) in all the sub-regions. The annual per capita income of Bihar of Rs. 27,202 is about 40% of the national average of about Rs.68000. Bihar is also the only Indian state where the majority of the population - 52.47% - is illiterate. [caption id=“attachment_2400456” align=“alignleft” width=“380”]  File picture of PM Modi meeting Bihar CM Nitish Kumar. AFP [/caption] As opposed to an All-India per capita developmental expenditure during the last three years of Rs.7935.00, Bihar’s is less than half at Rs.3633.00. While development expenditure depends on a bunch of factors including a state’s contribution to the national exchequer, no logic can explain away the per capita Tenth Plan size, which at Rs. 2533.80 is less than a third of that of states like Gujarat (Rs.9289.10), Karnataka (Rs.8260.00) and Punjab (Rs.7681.20). The 11th and 12th Plans perpetuate this trend. Simple but sound economic logic tells us that when a region is falling behind, not just behind but well behind, it calls for a greater degree of investment in its progress and development. It is analogous to giving a weak or sick child in the family better nutrition and greater attention. Only in the animal kingdom do we see survival of the fittest with the weak and infirm neglected, deprived and even killed. But instead of this we see that Bihar is being systematically denied, let alone the additional assistance its economic and social condition deserves, but also what is its rightful due. From the pitiful per capita investment in Bihar, it is obvious that the Central Government has been systematically starving Bihar out of funds. Quite obviously Bihar has also paid the price for being politically out of sync with the central government for long periods. It has now been so from 1992 to 2015. Even so, in terms of realizations Bihar did far better than most during the 11th Plan. It realized Rs.66000 crores or 109% while neighboring Chhattisgarh realize only 73% and the model state of Gujarat realized 96%. No wonder Bihar had a GDP growth of 22% compared to Gujarat’s 16%. Quite clearly states that are in political sync do much better in terms of central assistance. Lets take a look at how Andhra Pradesh, a state that has stayed largely in political sync with New Delhi, has fared in the past few years. In terms of grants from the Central Government in 2012-13 Bihar received Rs.5088 crores or 5.42% of the total to all states and UT’s. By comparison AP got Rs. 15542.00 crores. The results of the persistent economic strangulation of Bihar can be seen in the abysmally low investments possible in the state government’s four major development thrusts. Bihar’s per capita spending on Roads is Rs.44.60, which is just 38% of the national average, which is Rs.117.80. Similarly for Irrigation and Flood Control Bihar spends just Rs.104.40 on a per capita basis as opposed to the national average of Rs.199.20. Now the question of how much did Bihar “forego”? If Bihar got just the All-India per capita average, it would have got Rs. 48,217 crores for the 10th Five Year Plan instead of the Rs.21, 000.00 crores it was allocated. This trend was established in the very first five-year plan and the cumulative shortfall now would be in excess of Rs. 10,00,000.00 crores. That’s a huge handicap now to surmount. But our unfazed PM announces a package of just Rs.125,000 crores with his characteristic invective laden hyperbole. Lets disaggregate it and see what it actually has in it for Bihar? The PM’s latest Rs.1.25 lakh crores package for Bihar includes Rs.54713 crores for highway, Rs.21476 for petroleum and gas, and Rs.2700 crores for airports. The highways will be passing through Bihar, as there is no other way you can link Calcutta to Delhi, or North India to Eastern India. It is part of a national plan. To say this is part of the Bihar plan is a bit spurious. Now if Bihar had the industries and economy for it, the highways would make economic sense to it. Bihari’s might get some floor feeder labor jobs out of the highway construction, which will be by outside companies. The only immediate economic benefit otherwise for Bihar will come out of selling tea and samosa’s to passing vehicles. The PM’s announced PNG plan is even more shaky. It was first announced in 2013 by the UPA government. Under this, GAIL is constructing the 2,050 km. Haldia – Jagdishpur pipeline from transmission and distribution of natural gas, of which about 621 km. will pass through 14 districts of Bihar. The mainline of the Haldia Jagdishpur will cover 04 districts of Bihar such as Kaimur, Rohtas, Aurangabad, Gaya and 10 districts for the spur lines. GAIL will explore the possibility of city gas distribution in major towns of Bihar along this pipeline route. Nothing definite here about supplying gas within Bihar. Otherwise it too is a pass through. The airport plan is even more spurious. Over half the new airports in the country are not being used. Who will fly into Sitamarhi or Darbhanga? The money to be spent in Bihar, on Biharis and for Biharis, is about Rs.38,000 crores. Compare this with what Modi has said he would be giving J&K? This Bihar “allocation” is just part of the current Five Year Plan. Nothing new here. The rest is all typical Modi hype and jadugiri. If he was sincere Modi would have addressed the flight of capital taking place even now from Bihar. Bihar would have got over Rs.100, 000 crores as credit from banks instead of the Rs. 6000 crores it actually got, if it were to get the benefit of the prevalent national credit/deposit ratio. Bihar has a C/D ratio of 29 while those of Haryana, AP and TN are 102, 110 and 116 respectively. Bihar’s C/D ratio is the lowest in India. Quite clearly Bihar is not only being denied its due share, but there is a flight of capital from Bihar, India’s poorest and most backward state. This is a cruel paradox indeed. The cycle then becomes vicious. This capital finances economic activity in other regions, leading to a higher cycle of taxation and consequent injection of greater central government assistance there. If one used harsher language one can even say that Bihar is being systematically exploited, and destroyed by denying it its rightful share of central funds. If Prime Minister Narendra Modi even had a clue about what Bihar needs or was even serious of pulling Bihar from the deep hole it is in now, he would have announced a package of Rs.500, 000 crores at least, instead of the Rs.125, 000 crores he announced. If there is a problem with Nitish Kumar’s DNA, then there is a problem with Narendra Modi’s DNA also. He just cannot come to terms with reality and do the right thing. The writer is the Chairman and founder of Centre for Policy Alternatives, an independent think tank in New Delhi.