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What Ails Bihar Economy Even Now?

By D N Mishra

Feb. 9, 2008

Off late there has been news of some concerted efforts being made by the state administration led by Mr Nitish Kumar and ably supported by Mr. Sushil Kumar Modi to revive the state economically. To top it all, the central ministers from Bihar, specifically Mr Lalu Prasad Yadav, Mr Ram Vilas Paswan and also Dr Raghuvansh Prasad Singh, have also added their might to see state advance in the right direction. State has never been poised so well as it is now. JP has left behind a breed of strong leaders. Now state should benefit from the same.

As for the bureaucracy, it has also seen emergence of a few high caliber officials. Untimely departure of Dr Madan Mohan Jha has been particularly a set back for the state short of such bureaucrats. If we ignore the few of these officials, by and large, state administration is still bereft of visionary and thinking officials even now. Most of them are even incapable of implementing the plans laid out by the central planning commission. Expecting them to enunciate vision and building a commensurate plan would be asking too much from them. State is suffering because of inability of this lot of official to “Get Things Done”. This is the case when we have at the helm of state planning board a person reputed to accomplish even the impossible.

To highlight all that is wrong with the state administration, one should look at the presentation by the state industry department demanding a PCPIR region for the state at Barauni. So far it is so good. However, the same has not yet been followed up with a detailed plan / proposal so much so that Mr Paswan as guardian minister for the same had to highlight this in his recent speech. Chief Minister has one day demanded an Integrated Steel Plant from Mr Paswan. It would have been in fitness of things that state administration should forward a formal proposal for the same to the concerned ministry headed by Mr Paswan. However, nothing of this sort has happened or looks like happening. State Industry department would do well to focus on the plans of the central PSU’s and try and get their planned plant / factory located in the state by making a special case for the state.

Again I had been seeing a demand for developing economic corridor between Patna, Ranchi, Jamshedpur and Paradeep port with an accompanying expressway. This lays buried in the presentation supposed to be prepared for PM by the state industry department. However, I don’t see any follow up formal proposal to the Union Road and Surface Transport Ministry, or even an effort to involve the government of Jharkhand and Orissa in this. In fact, one would have liked the same to extend to even Nepal to rope in the Nepalese government as well. A proposal with such a strong list of stakeholders would be more likely to materialize than a stand alone proposal from the government of Bihar alone.

The most glaring omission is in the development of academic institutions and research institutions in the state. Barring a few feeble demands, state seems to have not forwarded any formal proposal for setting up institutes like IIM, IISER, IIIT, University of Excellence and an upgraded Central University. Not to talk about a center each of CSIR, DRDO, ISRO, CDAC, and DAE. All these are conspicuous by there absence in the state.

Further, this is also the position on other economically important institutions like National Institute Food Technology & Entrepreneurship Management, Footwear Design & Technology Institute, Indian Institute of Tourism and Travel Management, Indian Institute of Mass Communication, Indian Institute of Textile Management (Sardar Vallabh Institute of Textile Management) or for that matter even National Institute of Film Technology. True some one line demands have been made as buried in voluminous presentations. However, by no stretch of imagination these can be termed as formal proposal.

I wish somebody will impress upon Mr Lalu Prasad Yadav to set up a “Multi Institutional National Railway University” and Mr Raghuvansh Prasad for an “Indian Institute of Rural Management”.

Another pertinent example would be the Credit/ Deposit Ratio. Dy Chief Minister has off late been quite focused on the same. However, what we are missing out is providing avenues to bankers to pump in capital investment. State would be required to innovate. Develop projects/industrial infrastructure/ institutions through public private partnership as there are not sufficient numbers of economically capable entrepreneurs in the state to absorb increased infusion of the capital. Launch SPV for executing the projects and establish a clear revenue stream for servicing the borrowing from the banking sector. Resort to future receivable securitization to increase the banks comfort. This kind of strategy will have self disciplining impact on management of project. Unless state devises some structured financing mechanism which provides banks the required protection and comfort, they won’t be in any hurry to increase their exposure in the state which has long been infamous for financial imprudence.

Also Dy. CM will do well to establish an “Indian Institute of Financial Engineering, Management & Research (IIFEMR)” with the help of central government and other public sector entities (and also involving willing private sector entities) as a support institution for strengthening financial sector. State must also stake claim to locate “Pension Fund Regulatory Development Authority (PFRDA)” at Patna.

Since the 11th Five year plan lays emphasis on Education Sector by upping its allocation from 11% in 10th Five year plan to current level of 20% (on increased plan size this allocation increase is really huge), state should submit more formal proposals for meeting its economic need for academic institutions. Just raising feeble demand on and off will not take state anywhere. A concerted effort is required backed by strong and formal proposal for setting up each of these institutions. Eventually, state should aim at achieving one engineering college in each of the district and one central institution at each of the divisional headquarter at the minimum.

State should make a strong case for developing its basic infrastructure and institutional infrastructure thorough more direct central investment. It has been folly of the central governments policies and lack of insight on part of state administration which has created a situation of backlash against Bihar everywhere. It’s time that CM leads an all party delegation for special economic status for Bihar.

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