As several people have noted,the Nitish Kumar sweep in Bihar underlines the cause of development. How has Bihar performed in the last four years,say from 2006 to 2010? This is not a simple question to answer.
The standard macroeconomic yardstick for evaluating a States performance is GSDP (gross State domestic product) and its growth. However,to state the obvious,GSDP is not the same as a States gross national income. The latter includes net factor payments and can be important for a State where there is large-scale migration. Having said that,between 2006 and 2010,the all-India real rate of GSDP growth was 8.2%. Compared to that,Bihars 12.9% is nothing short of remarkable.
Only Puducherry surpasses this and only Delhi and Chhattisgarh approach something close to 12%. More importantly,when there are cyclical fluctuations,a country or a States GSDP growth often dips. Not only has the trend growth rate increased in Bihar,fluctuations have become less. Volatility in growth is typically due to variations in agricultural performance. And this amplitude has become less in Bihar because growth has been driven by service sectors like construction,trade and transport. t is these,rather than industry or agriculture,that have driven Bihars growth.
This brings one to a second question. What will be the developmental expectations now? The success of the Nitish Kumar first term is attributable to improved law and order,reduced corruption,better administrative delivery,more social sector expenditure (education,health) and more construction of roads and bridges. These are laudable achievements. However,the subsequent expectations will be more difficult to deliver on,since they concern electricity,water (drinking and irrigation) and reforming subsistence-level and low-productivity agriculture.
The last-named also requires reform of land markets. These are also more contentious issues,especially reform of land markets. This is especially the case when there are a large number of small land-holders and others who earn a living from agriculture (without titles to land),as contrasted with areas in traditional Green Revolution segments,where land consolidation had taken place.
These arent problems specific to Bihar,since much of eastern India has the same kind of problem. To the extent that Bihar has now demonstrated rates of growth that eastern India can hope to achieve,and reforms have also been vindicated by election results,Bihar can conceivably deliver a template on these issues too. One should perhaps start with electricity and water.
