Sugar and spice

News of two integrated sugar complexes coming to Bihar is just the kind of sweetening the laggard state needed. Here is a state, let us not forget, that witnessed zero growth in the first half of the nineties, and averaged 3.8 per cent since then. This implied a growth rate of barely 1 per cent in per capita terms — in a period when India was witnessing 3.7 per cent per capita growth.

The crucial factor that has pushed Bihar out of the frame has been the lack of any significant investment. Deterioration in public finances and rising deficits had led to lower public investment. Not surprisingly, the singularly unpromising investment climate kept private and foreign investment away from the state. The freight equalisation policy did not help matters. It saw investment shift to other parts of the country, even when Bihar as an undivided state accounted for a large share of the country’s mineral resources. Sugar mills, or no sugar mills, the Nitish Kumar government has little reason to be complacent. Law and order in Bihar continues to prove elusive. The biggest obstacle to more investment coming to the state is the widespread perception that life and property in Bihar are not safe here. If kidnappings and murders were common occurrences under the Lalu-Rabri dispensation, they remain a concern under Nitish Kumar rule.

Investments in Bihar had clearly suffered because it did not have a proactive policy to attract private investment. An effective single window State Investment Promotion Board may help — as it seems to have done in the latest sugar mills deal. Then there is the issue of poor infrastructure. With nearly 70 per cent of inhabited areas not connected by motorable roads, Bihar remains among the worst connected states in India. Bihar has also missed out on the great Indian telecom revolution — and only 2 per cent of its households have telephones. To attract the investment needed to pull up its growth rate to national averages, its chief minister needs to address these gaps urgently.