Mohan Guruswamy
November 24, 2005

The defeat of the Lalu Prasad Yadav led alliance in Bihar was a bit of a surprise to me but nevertheless not a big one. The extent of the NDA's electoral victory however came as a big surprise to me. The spin masters are touting it as a vote for development and change, but electoral defeats and victories are seldom these. We know that only a small number actually vote for sound and rational reasons. Most people vote according to habit and for very narrow and immediate reasons. If this were not so, our politicians would not be so pre-occupied with the calculus of caste, particularly in the Hindi hinterland.

On the face of it, it would seem that the traditional Muslim-Yadav coalition largely remained intact for the RJD alliance still polled about a third of the votes cast. I would however leave the analysis of who and why to others, and I am sure there will be plenty of that. Such analysis is also of little productive use for it will serve to only deepen existing antagonisms between castes and communities. One can be sure that with the Yadavs and Muslims getting sidelined for now, Bihar will see a lot more of that. This will only add to the new governments burdens. So quite clearly the Nitish Kumar governments first and most immediate task is to address the inevitable feeling of alienation among the Yadavs and Muslims and co-opt them into the task of rebuilding Bihar.

Fending off the demands and predilections of his BJP partner, soon to be without LK Advani's relatively benign and enlightened leadership and with a more assertive RSS leadership calling the shots, will almost be a full time and most demanding job. But it can be done if Nitish Kumar is firm with them from the very beginning and insists that the mandate was for his leadership (and development), and not for building temples and settling old scores. Only then can Nitish Kumar get down to rebuilding Bihar. This ofcourse is easier said than done.

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 real per capita income of Bihar of Rs. 3650 is about a third of the national average of Rs.11, 625. Bihar is also the only Indian state where the majority of the population - 52.47% - is illiterate.

But Bihar has its bright spots also. Its infant mortality rate is 62 per 1000, which is below the national average of 66 per 1000. But what is interesting is that it is better than not just states like UP (83) and Orissa (91), but better than even states like AP and Haryana (both 66). Even in terms of life expectancy, the average Bihari male lives a year longer (63.6 yrs.) than the average Indian male (62.4 yrs) and the state's performance in increasing life spans has been better than most during the past three years. Bihar has 7.04 mn. hectares under agriculture and its yield of 1679 kgs. per hectare, while less than the national average of 1739 kgs. per hectare is better than that of six other states, which include some big agricultural states like Karnataka and Maharashtra. Despite this, in overall socio-economic terms, Bihar is quite clearly in a terrible shape.

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).

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. The last one was for a dozen years from 1992 to 2004. For the last one year Bihar had a government in New Delhi that was supposed to be favorably disposed to the regime in Patna. Now it is out of sync again.

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 (2000 to 2005), Bihar fared poorly receiving only Rs. 10833.00 crores while AP got Rs. 15542.00 crores. Bihar has also been neglected as far as net loans from the center are concerned. It received just Rs.2849.60 as against Rs.6902.20 received by AP from 2000-02. It's only in terms of per capita share of central taxes do we see Bihar getting its due. This gross neglect by the central government is reflected in the low per capita central assistance (additional assistance, grants and net loans from the center) received by Bihar in 2001. While AP received Rs.625.60 per capita, Bihar got a paltry Rs.276.70.

The results of the 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. 48,216.66 crores for the 10th Five Year Plan instead of the Rs.21,000.00 crores it has been allocated. This trend was established in the very first five-year plan and the cumulative shortfall now would be in excess of Rs. 80,000.00 crores. That's a huge handicap now to surmount. Then it would have got Rs. 44,830 crores as credit from banks instead of the Rs. 5635.76 crores it actually got, if it were to get the benefit of the prevalent national credit/deposit ratio.

Similarly Bihar received a pittance from the financial institutions, a mere Rs.551.60 per capita, as opposed to the national average of Rs.4828.80 per capita. This could presumably be explained away by the fact that Bihar now witnesses hardly any industrial activity. But no excuses can be made for the low investment by NABARD. On a cumulative per capita basis (2000 to 2002) Bihar received just Rs.119.00 from NABARD as against Rs.164.80 by AP and Rs.306.30 by Punjab. It can be nobody's argument that there is no farming in Bihar. If the financial institutions were to invest in Bihar at the national per capita average, the state would have got Rs.40, 020.51 crores as investment instead of just Rs.4571.59 crores that it actually received.

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.

Nitish Kumar's task then becomes clear. He must get much more money from the Centre. Even Lalu Prasad did not succeed in it despite the UPA being woefully dependent on the RJD for existence. Take the case of Assam, the state that sends Dr. Manmohan Singh to the Rajya Sabha. Last year it received additional grants and assistance from the Centre amounting to over Rs.15700 crores, up by over Rs. 7000 crores from the previous year. Bihar on the other hand actually got Rs. 10700 crores, up by just Rs.600 crores from the previous year, despite the Prime Minister announcing a “special plan” for Bihar. Thus, Bihar's per capita development expenditure last year was just Rs. 1211 when it is Rs. 2650 for the country as a whole. To even make a dent on the abysmal state that Bihar is now in, Bihar will need at least twice what it gets from the Centre, as of yesterday. To get this for Bihar Nitish Kumar needs to overcome the huge handicap of being politically out of sync with New Delhi. To do this would require him to, politically speaking, run with the hare and hunt with the hound? Will the BJP let him do this?

To make a strong case for itself the new government will first have to convince the nation that it is not business as usual in Bihar. The first priority will have to be the reform of public administration. The bureaucracy must be insulated from political interference, which even in the Nitish Kumar dispensation would mean constant interference by criminals and for criminals. The main instrument that is wielded to turn the bureaucracy into a compliant tool is by transfers and postings. This must be taken out of the hands of the politicians. The strong nexus that has developed between the subordinate bureaucracy and elected politicians must be broken.

To do this Nitish Kumar must immediately establish a Board of Administration consisting of five or six of Bihar's best and senior-most bureaucrats to oversee the functioning of all districts, departments and agencies. The Board must review departmental and individual performances down to the district level. The power to post and transfer officials must be vested exclusively with this Board. The Chairman of the Board should be an officer of the rank of Chief Secretary and the members of the Board must be assured of a full tenure of two or three years. Most Indian states had Board's of Revenue that largely performed this function, but the politicians found these Boards were getting in their way and dispensed with them. By having such a Board in place Nitish Kumar will be able to insulate himself from the immense and daily pressures that make good governance impossible in Bihar. If the new Chief Minister cannot resist the temptation to keep the transfer industry thriving and under his control then little will change in Bihar.

In 1952 the well-known American public administration scholar, Dr.Paul Henson Appleby of the University of California, and the Indian Institute of Public Administration presented Prime Minister Jawaharlal Nehru with a detailed report evaluating public administration in the various states. The Appleby study concluded that Bihar was the best-administered state in India. In the past fifty years Bihar has slid all the way to the bottom. The only way to go now is up, but that will call great reserves of political commitment, will and ability. Does Nitish Kumar have enough of these? We will soon find out.

Reports by CPA related to Bihar: