COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Bihar: mineral-rich economy spawns poverty and underdevelopment

For a state which nourishes its hunger and destitution more than anything else, Bihar presents a sorry spectacle of its resource-rich economy languishing in an unending trap of poverty and underdevelopment.

Although the cheek-by-jowl existence of the state's poverty amidst plenty has ceased to baffle the economists, yet a new, scholarly book has a certain myth to debunk: the much-maligned Bihar's population does not constitute a slothful workforce.

Instead, it is the state's near stagnant economy, coupled with the relentless plundering of its wealth by the Centre and blatant biases of all-India financial bodies in providing institutional finance which have impoverished Bihar and pauperised nearly half of its populace.

Of every thousand people in Bihar, about 270 go without food every day. In other words, 40 per cent of its population lives below the poverty line with a per capita income half of the national average, says the book, Bihar Economy Through The Plans.

A central weakness of the Bihar economy lies in its poor agricultural base, which produces neither enough food for its spiralling population nor enough raw materials for its industry, says the book, authored by K N Prasad, former vice-chancellor of Patna University and a former member of the state Planning Board.

An assessment of the natural resources in Bihar in 1951 brought out that the economy, if it were fully developed, could sustain without strain the growing population in the state.

However, a Reserve Bank of India report in 1984 on agricultural productivity in eastern India noted that despite large potential (fertile soil, good rainfall, plenty of surface and groundwater resources and suitable agro-climatic conditions for growing a variety of crops), the progress made by Bihar in agriculture was not satisfactory. With population growing at a higher rate than food production, the state continues to grapple with a growing deficit in food supply.

The Bihar population grew at the rate of 2.35 per cent per annum during 1981-91, which implied a yearly accretion of 1.82 million people to the existing population. Every ten years Bihar adds one Haryana, population-wise, to itself, says the book.

According to the Food Administration Organisation norms, Bihar's additional requirement per year of food is 273,000 tonnes, of cloth 20.03 million metres, of houses 313,000 lakh in number and of 389,000 jobs.

Failure to meet these needs in full implies increasing pressure on the existing assets and hence their diminishing productivity as well as that of their operations.

Ironically, the technological innovations which had transformed agriculture in the north-western region of the country had not made any significant headway in Bihar. During 1965-85, per agricultural worker, expenditure on agriculture, irrigation and rural electrification was the lowest (Rs 1,645) in all-India.

Another basic weakness of the state's economy, according to the author, is the inadequacy of social and economic investment depriving the infrastructure of a dynamic growth process. The figures of plan expenditure in Bihar show that investments in irrigation and power have steadily risen, whereas those in transport and communications have continuously fallen.

Transport has a crucial role in economic development in a state like Bihar where the Ganga acts as a barrier between the northern and southern parts. The poor economic development of north Bihar (having high potential for agricultural and agro-industrial development) can be ascribed to the conspicuous absence of direct road links between south and north Bihar.

However, the construction of two bridges on the Ganga has since considerably surmounted the age-old barrier.

The woes of Bihar economy are compounded by an unabashed plundering of its resources by the Centre which has turned the state into what the author describes as a classic model of internal colony. Much of its wealth is drained out of its borders in different forms almost every day.

The Centre can help a state in three ways -- allocation of central assistance, location of central projects and adjustments in the policies of national financial institutions. In all these respects, Bihar has been at the receiving end.

Elaborating, the book points out that in 1951, Bihar claimed 43.3 per cent of mineral production in the country by weight and 30.6 per cent by value, besides providing almost half of the total employment in mining in India. But the state's share in total royalty paid by the Centre on its minerals comes to a skimpy 14 per cent.

Bihar has been crying hoarse for fixation of the royalty rates on minerals on the basis of the value of their output and not the weight of the output as was the case before nationalisation, says the book.

Even one per cent increase in the royalty rate on coal means a revenue of Rs 4 billion to the state. However, under the law, minerals are the Centre's property. New Delhi has the copyright as it is the producer as well as the seller.

In publicly denouncing the Centre for its step-motherly treatment to Bihar, Karpoori Thakur, Jagannath Mishra and Laloo Yadav were exceptions -- Yadav being the most vocal of the trio, argues the book.

With the Centre showing biases against Bihar in setting up its projects, the Bihar economy remained palpably dual, paradoxical and unintegrated in respect of the peaks of modern enterprises, the deep depressions of tradition-bound enterprises, the underdevelopment of medium- and small-scale industries as well as the tardy development of consumer goods.

Further, in the industries of Bihar, fixed capital investment was mostly from outside the state, with the result that profit was drained away from the state without being ploughed back into the further advance of the units. Unfinished and semi-finished products of mining and industry went to the other parts of the country to return in the form of finished products with higher values added. All in all, Bihar has been a living example of an internal colony.

Bihar's economy is also vulnerable because it has been starved of funds by the all-india financial bodies. In 1992, per capita cumulative assistance disbursed by the non-banking financial institutions was Rs 226 in Bihar (lowest), as against the all-india average of Rs 982, while per capita advance by scheduled banks in 1993 was Rs 478 in Bihar and Rs 1891 in all-India.

Much of Bihar's economic malaise is buttressed by a traditional oppressive social structure, says the author. Owing to historical reasons, such as the existence of a landlord class (450,000 zamindars in 1959), a healthy middle class could not develop.

The inequalities of the system resulted in conspicuous consumption rather than accumulation of capital. Attachment to land acted as a disincentive to industrial expansion and entrepreneurial growth.

The cultural tradition of Bihar favours accumulation of unproductive investment (gold, silver, money hoards, land acquisition), creation of religious monuments and trusts. Marriages and rituals connected with deaths and sacred thread ceremony soak a good deal of the proceeds of the farms and factories.

Casteism and corruption are the universal co-phenomena of India but in their degree and intensity, Bihar is number one in them. They are the greatest drags on the state's progress. There was a time when mangoes and fishes grew at the exponential rate in Bihar. In recent years their places have been taken over by casteism and corruption, followed on close heels by raien baseras (night shelters) and sulabh shauchalayas (public toilets).

Equally tragic is the state of education which is in a shambles. Except for stability of the term of appointment of a vice chancellor, education in Bihar has decayed at all levels because the malady has been over-doctored by quacks, bemoans the author.

Far from being the powerhouse of Indian economy, Bihar, which draws its civilisational moorings from the rich alluvial soil of Indo-Gangetic basin, continues to be a sordid tale of wasted opportunities and unrealised potential.

UNI