Whichever party or combination forms the next government in Bihar in the next few days has to avoid some intractable mistakes being made across the country over the last three decades. Joe Biden, in his victory speech, spoke about leading not just with the example of their power, but by the power of their example. Where does Bihar stand on that parameter?
All parties are competing to roll out more and more freebies to a majority of the population — often undeserved and without a sunset. There are scant plans for long-term capital formation and employment generation. What began in the 1980s as a small measure to help the old, the poor and the infirm, has degenerated into a race to empty the treasury by doling out more and more cash into households and even offering utensils, colour TVs and gold for daughters’ weddings in some states. The focus on educating her, improving her employability and empowering her, is absent. Farm loan waivers and unemployment allowances are becoming the norm. What is the example being set?What is the power being wielded?
The next government must look at the state of the economy and its own administrative capability before committing to any major long-term populist (but unproductive) expenditure. While the last two decades in India have seen buoyancy in government receipts, the ability to splurge for the new government in Bihar is going to be seriously constrained during the next few years, mainly due to COVID-related economic shocks. Lift the hood and the statistics are stark: Bihar’s per capita net state domestic product in 2019-20 was just Rs 46,664, against the national average of Rs 1,34,226: A mere 34.7 per cent. In spite of higher yearly growth in the last 10 years, this ratio has moved only by 0.4 per cent (from 34.3 per cent to 34.7 per cent) during this period. We had a low base to start from, which makes for attractive percentages, but when it comes to even catching up with the rest of the country, it is inconceivable how many decades it would take.
While agricultural production has shown encouraging improvement, Bihar does not manufacture anything of consequence. Poverty continues to be high and unemployment much above the national average. The manufacturing sector’s contribution to Bihar’s economy is just 8.7 per cent of the national average. Data for 2017-18 shows that a mere 1.5 per cent of the nation’s factories are registered in Bihar; the needle on fixed capital formation has remained static on 0.6 per cent for over a decade. FDI in the state in 2019-20 was a mere 0.01 per cent of the national average, and Bihar’s rank in ease of doing business was 26 in 2019. Entrepreneurship seems to be systematically discouraged in the state. Bihar is the only major state in the country from where not a single company was trading on the BSE or NSE in 2017. Private equity or venture fund investments in the state are nearly nil.
Bihar continues to be the Gangotri supplying unskilled labour to the rest of India. It is a sad refrain that still rings true — a Bihari must leave Bihar to make it. Highly educated and accomplished Biharis are making significant contributions in different parts of the world in IT, finance, medicine and engineering. A young person, Amanullah, recently started a small initiative of creating an alumni group of the once prestigious Patna Science College. Hundreds of Biharis from across the world offered to help out. The next government needs to create conditions to tap this resource to initiate a reverse brain-drain.
But a look at the manifestos in this election paints a disappointing picture. The BJP has promised to create conditions for 19 lakh jobs — 4 lakh directly in government — and provide free COVID vaccines for all. The RJD has promised 10 lakh direct jobs in the government, loan waiver for farmers and unemployment allowance to the youth. The Congress and JD(U) have promised unemployment allowance and farm loan waiver. The LJP has promised to construct a Sita temple, among other things. Is that the best we can do for the people of Bihar? Temples, loan waivers and unemployment benefits? Is this the future Biharis are clamouring for?
Besides the obvious worry (who pays for this), a key concern is the state’s capacity to even execute these promises. While lakhs of jobs in the government have been promised, the fact is that for decades, no major recruitment has taken place in the state without controversies around nepotism, mismanagement and corruption. It is not uncommon for candidates waiting for results to be announced even three or four years after their recruitment tests. Officials of the agencies conducting recruitment have landed in jails and endless litigation has taken years to resolve — often reaching the Supreme Court.
Our exaggerated faith in DBT is getting exposed in scandals in schemes like distribution of scholarships and mid-day meals. The new government will have to internalise that while technology can be a great enabler, it can only go thus far. For a state once proud of its administrative machinery, today the population faces harassment, lack of accountability and sensitivity. The core tenets of command, supervision and grievance redressal appear to have broken down. Higher levels of administrative supervision and accountability at all levels have to be ensured before any big ticket expenditure programmes are launched.
The next government must tackle head-on the reluctance amongst all the political parties to grapple with fundamental issues of economic stagnation, lack of employment opportunities, absence of private investment and administrative decline. The solutions will require deep structural changes, often difficult and unpopular.
It will not bring immediate results and will require support from all sections of society. The confrontational social and political sentiments generated during the election will have to make way for an effort to build consensus for an economic revival. My call to the next government is to work towards transforming the administrative machinery into being responsive, sensitive and people oriented. Its task is to create an environment for private investment, improve productivity and value addition in agriculture, education, healthcare and industry. It has to lead by example. It is incumbent upon it to do so.
This article first appeared in the print edition on November 10, 2020 under the title ‘Government Bihar needs’. The writer is former chairperson of SEBI
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