IIt is election season in Bihar. While the opposition often speaks about the lack of development and industrialization in the state in its campaigns, the ruling National Democratic Alliance argues that a change of government will bring back the ‘jungle raj’ of the last decade. What makes Bihar one of the most underdeveloped states of India? Is being landlocked a reason for its underdevelopment, as some argue? R Nagaraj And Manindra Nath Thakur Discuss the question in a conversation moderated by Saptaparno GhoshEdited excerpts:
It is often argued that Bihar is disadvantaged because it is a landlocked state. Punjab and Telangana are also landlocked and are doing relatively well. So how is being landlocked a hindrance for Bihar?
R Nagaraj: If you look at the success of Telangana, especially Hyderabad, it is mostly because of the tertiary sector; This has nothing to do with geography. If a state has an educated workforce and good infrastructure, being landlocked will not be a problem. Punjab also has a developed network of railways and roads, and FCI (Food Corporation of India) warehouses across the country to help export crops.
Manindra Nath Thakur: Let’s look at the major exports of Bihar: Makhana, Litchi and Maize. It has become difficult for Bihar to transport these goods from Patna to West Bengal or any port. Along with the vegetables exported by Bihar, these too are going to spoil. Furthermore, road transport incurs significant costs; Time and distance are important factors in agricultural exports. One way Bihar is attempting to resolve this issue is by starting projects along the banks of the Ganga. Therefore, it is not that the concerns of being landlocked are not genuine, but they cannot be considered a major reason for the economic backwardness of the state.
Pro. Nagaraj talked about the tertiary sector; You talked about agricultural exports. Bihar has been assessed as an agricultural economy. What should be its imperative going forward: industrialization or agriculture?
Manindra Nath Thakur: In the last 10 years, the Chief Minister has tried to woo industrialists. However, industrialists have often raised concerns about access to ports, citing the need to spend more on transportation. Having said that, I think that in this modern capitalist system, no society can think of surviving only with agricultural products. While Bihar should leverage its potential in terms of agricultural production and processing, it should eventually transition to industry. There is no future without it.
R Nagaraj: Before we think about high-technology and/or manufacturing industries, we must consider where the comparative advantage lies. Four-fifths of Bihar’s labor force is in agriculture. But despite Bihar having fertile land and irrigation facilities, agricultural productivity is below the national average. Why is agriculture not gaining momentum? This is the big question.
In the 1970s or 80s, a committee formed under SR Sen, an agricultural economist, was exploring how to take the Green Revolution to the Indo-Gangetic Belt. It came up with plans for massive state investment in infrastructure and electrification to ensure that states had abundant water for the cultivation of wheat and rice. Surprisingly, the Green Revolution spread to the Malwa region of Madhya Pradesh instead of the Indus-Ganga belt. We have to understand what went wrong.
I think it will be in both the interest of Bihar and the national interest to start farming of basic wheat, rice and sugarcane. In this way the burden on Western India will be reduced; It can save more water and move towards value added crops.
Manindra Nath Thakur: On the agriculture front, I do not think Bihar should repeat the mistake that Punjab made during the Green Revolution, which led to water crisis. Although Bihar has abundant water, if it is used excessively it may have to face the same consequences as Punjab. Furthermore, increased agricultural production is linked to heavy use of fertilizers and pesticides, leading to health crises. Therefore, I do not support shifting agriculture to eastern India. Agriculture is not profitable anywhere in the world unless it is heavily supported by the state.
R Nagaraj: Madhya Pradesh was also seen as a backward state. It does not have the same water resources as Bihar, yet the Green Revolution spread there. The prosperity in Malwa region is amazing. So, I am skeptical of the idea that there is no potential in agriculture.
So according to you, what are the factors that contributed to the underdevelopment of Bihar?
Manindra Nath Thakur: Apart from what I have said, there is also a perception that the Center is not interested in the development of Bihar. The state, I believe, is stable in its transition from feudalism to capitalism. One reason for this is the internal colonization of the state. Earlier, Bihar used to supply raw materials, but due to policies like freight equalization, it suffered huge losses and despite having the advantage of availability of raw materials, industries did not develop locally. Bihar ultimately lost revenue and its natural advantage. Now, with the supply of workers from Bihar, no one is interested in developing the state.
R Nagaraj: One commodity where freight rates were equalized and which benefited Eastern India was cement. Steel did not get that much benefit. The transportation cost of cement is heavy compared to steel, so the freight equalization policy helped Eastern India.
Moreover, there is no element of capitalist conspiracy in why Biharis are leaving Bihar. In fact, when investment in agriculture was made in Bihar, migration to Punjab declined. It is clear that if people have more options at home, they will not go out.
The literature often suggests that there is a ‘socialist hangover’ in Bihar, and entrepreneurship does not draw confidence.
R Nagaraj: Socialist ideology in Bihar is often associated with caste politics and caste in general – basically, the distribution of limited resources among different castes. If the focus shifts to productive investment, it will be great for Bihar. Policy should focus on how to increase production rather than redistributing limited resources in a more equitable way or in a way that helps people remain in power.
Manindra Nath Thakur: Bihar has never really followed the socialist model. It also failed to understand the logic behind India’s shift towards capitalism. Bihar is currently in huge losses. For any structural change, there must be a solid commitment to reinvestment by the central government. Unless this is done, there will be no change in capital. Regarding migration, if there are good working conditions and good income, no Bihari would want to migrate. The amount of investment required to help Bihar come out of this ‘frozen transition’ phase has not been made. It can be linked to general social politics. One argument, as made by Shaibal Gupta, relates to the lack of a distinct Bihari identity. Or as Prashant Kishore says, the concept of Bihari identity,
Will special status provide any help to Bihar?
R Nagaraj: I’m not sure this will help. The big question is whether it will be used productively or not. There is lack of state capacity to use it in Bihar. At the same time, if you give the same money to Andhra Pradesh or Tamil Nadu, they will grab it and make better use of it.
Being one of the poorest states, Bihar gets a considerable amount of resources from the Finance Commission in view of its backwardness and to bring more parity among the states. Money lapses when they are not used. Many of these grants are performance-based – meaning the state must increase its share of resources to reach the full amount. This does not happen often in Bihar.
Manindra Nath Thakur: If good amount is invested then there will definitely be profit. However, no change will come until we ensure that the money we reinvest is not appropriated by a small number of people – the elite, politicians and contractors. If money is invested properly it leads to capital formation. But it also requires a kind of social revolution that raises public awareness that these funds are not free gifts, but more like loans. People must understand that to repay that investment we need to rebuild and strengthen our society.
Regarding state capacity – many funding packages include a clause requiring the state to contribute a portion of the investment. Now, let’s say you give me ₹100 and say I add something to it to use that amount. I can’t do that because I don’t have money. In a way it’s like forcing me not to use money. Special status could be helpful – it could remove these conditions and allow us to access support without being hindered by limited state capacity.
R. Nagaraj, economist and retired professor from Indira Gandhi Institute of Development Research, Mumbai; Manindra Nath Thakur, Professor, Center for Political Studies, JNU, Delhi
