The economic backwardness of Bihar remains an enigma. Historians recall the great heights of culture, development and the territorial sweep of the erstwhile Maurya and Gupta period, who ruled from Patliputra, the present day capital of Bihar. Those engaged in the reconstruction of Nalanda University recognise the intellectual and educational pre-eminence of that University located in this State from the 3rd century to the 12th century AD. 
 
Lately, however, many have described Bihar as quicksand which draws you in with inevitability. Bihar suggests awkward complexities which have no easy answer. It is true that Bihar remains a land of riches inhabited mostly by poor people. Biharis may be rich but Bihar is poor. Biharis, who migrate out of the city, excel in the profession they persue. But, back home it makes no dent on the backwardness of the State. The large Gangetic plain with its fertile soil, abundant water resources available from a multitude of rivers that flow through the region and the potential of the hardworking people of the state are of no avail.

Soon after Independence, during the 1950s, the administration of Bihar was assessed as one of the best in the country by Paul Appleby. But owing to its prolonged poor governance and stratified social order, the State, now, has come to be referred as the ‘prosperous poor’. For last few decades, the State was mentioned in two topics of discussion - politics and poverty. Not, the ‘poverty of politics’, rather the politics with poverty. In recent years, subjects relating to the development challenges of Bihar had been acrimoniously debated. Bihar was increasingly considered a ‘Basket Case’, with no prospect of a better future. Recently, there have been concerted efforts to improve the overall climate of development in the State. This has aroused a sense of optimism and ushered a glimmer of hope among Biharis.

Moreover, it is imperative to understand why things have come to such an impasse in Bihar? History can gives us some pointers. Several interrelated issues -- poor agricultural growth, deindustrialization during the colonial period, high population growth and migration – have lead to its long-term decline. These were coupled by poor governance, neglect by the Central Government, unreliable infrastructure, low energy availability and poor agricultural yields over a long period. The result: it has crippled the State, its economy, its society and human development.

Trends in GDP Growth
The table below shows the pattern of Bihar and India’s long-term growth. There are two distinct growth periods for India and Bihar
- Phase I from 1950 to 1980
- Phase II from 1980 to 2005

For India, Phase I is characterised by slow growth in both absolute and per capita terms when compared with growth in Phase II. India grew at an average pace of only 3.6 percent per annum in absolute terms and 1.2 percent in per capita terms in Phase I. However, growth accelerated to 6.0 percent in absolute terms and 4.0 percent in per capita terms in Phase II.

In case of Bihar, the State grew at an average of around 3 per cent in Phase I, but economic growth worsened in Phase II vis-ŕ-vis the national average. Within these two broad phases there are some interesting variations. A look at the table below would indicate how the trend in Bihar has been since the 1950s in comparison to the national average.

Trend of economic growth in India and Bihar (percent per annum)

The author, NK Singh is a Member of Rajya Sabha, Government of India.
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The gist 
To sum up, there are five factors leading to endemic economic backwardness of Bihar:

1. In the post-independence period, the policy of freight equalisation did not enable Bihar to derive the advantage of its rich mineral resources as well as a large growing market. This policy which remained effective from 1952 to 1993 had serious repercussions in neutralising Bihar’s comparative factor advantage.

2. Notwithstanding Bihar’s considerable clout in the Central Government, central investments, (except by Public Sector Undertakings in what is now Jharkhand), there was little investment North of the Ganges or in the drought-prone areas in the South of Bihar.

3. The failure to break away from the past in implementing tenurial land reform changes resulted in excessive social stratification which prevented both vertical and horizontal mobility. Excessive preoccupation with caste and even communal factors dominated political discourse. Successive Governments were not held accountable on indices of improvement in life quality and other developmental indicators either in the overall growth achievement or performance of Index of Human Resource Development.

 4. The failure to transit from a feudal-based economy to a market-oriented economy emphasised value systems which did not facilitate rapid economic development. This coupled with poor quality of infrastructure, social indicators and governance quality did not enable the State to attract meaningful private investment even in areas of its comparative factor advantage. Poor governance also resulted in decline of education and health.

5. The political parties in the State failed to secure meaningful arrangements with Nepal for better harnessing its river and hydro electric potential. The Kosi and Gandak embankment, the result of international treaty with Nepal, did bring significant relief to a large population in North Bihar from the vulnerabilities of floods but could not convert these transitional arrangements to permanent solutions. These temporary structures have long outlived their expected life span, and in any case they were designed to be transitional arrangement to be followed by taming these rivers upstream to harness the irrigation and hydel potential. These remained unimplemented. Durable infrastructure wasn’t created to withstand the destruction due to periodic floods and other vulnerabilities.

The author, NK Singh is a Member of Rajya Sabha, Government of India.
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During the last four years, the initiatives taken by the Nitish Kumar Government have concentrated on six factors.
- Improved Governance
- Macro Management
- Human Resources Development
- Emphasis on factor endowments
- Enactment of key legislations to improve climate for private investments.
- Improvement of Infrastructure. 

The future of Bihar would depend on five key variables.
1. To what extent fiscal federalism works in a manner which is in line with the spirit of the constitution? This concerns four components. 

 The compensatory additional central investment in a State considering that in the near future private investment will remain shy.

 To what extent will the State be enabled to take fuller advantage of Central investments already made, namely a higher percentage of allocation from Central power projects? The present agreements are discriminatory and unequal. These agreements do not enable the State to secure a fair percentage of the energy produced in the State. 

 Permitting the development of downstream industries from existing Central investment, say from the Barauni refinery as well as other investments which may be in the offing.

 A degree of fairness in access to raw material inputs like coal for new power generating companies necessary to meet the energy deficiency in the State.

2. The State has to succeed in harnessing its rich water potential through the optimum utilisation of resources and adoption of new technology. It’ll prove their comparative factor advantage in agriculture. The extent to which agricultural productivity can be enhanced by diversified agriculture practices, creating and implementing an enabling policy framework.   
 
There is also a broader issue of mitigation and adaptation to Global Warming and Climate Change. Does it make sense for planners in India to pursue,  say water intensive cultivation in other parts of India which are water deficient than say North Bihar, where water is abundant?  What special assistance can be given for enabling Bihar to become the food granary of India? 

In Punjab water aquifers have fallen significantly and rice production may become increasingly more expensive. This is an opportunity for Bihar to enhance both the production and productivity of its agriculture even as further research and development is needed to develop strains and cropping patterns which better factor the consequences of global warming.

3. To what extent can its very young population be harnessed and vocational skills imparted to create the “Missing Middle”. This entails increasing urbanization very significantly through many more satellite towns and skill inculcation programme which can provide gainful employment activities outside agriculture sector, even while agriculture can gain advantages of externalities in scale instead of an exclusive reliance on agricultural produces. 
 
4. To what extent can Bihar leverage its political power to create an enabling international framework on sharing our river basins, particularly with Nepal for generating irrigation and hydel potential to optimise the resources of this region.

5. The issue of whether Bihar can rewrite its history, and foster new green shoots of investments, employment and diversification in its activity patterns? 
All these, of course require continued good governance and stable policy framework and institutions which can incentivise private investment.

The author, NK Singh is a Member of Rajya Sabha, Government of India.
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Is there a future for Bihar?
I remain optimist because given continued good governance; its demographic advantage, and improving agricultural productivity can make Bihar the granary of India and also an educational hub.

The State is now getting its act together. Continuity and stability of good governance will enable a speedy transit from feudal to a market-based economy. Improved prospects for the future kindles hope and while breaking down social stratification will enable leap frogging the typology of growth to more rapidly developing economies.

The restoration of Bihar’s lost glory will demonstrate the success of strategic initiatives and technology can do to one of the most backward and densely populated regions in India. Unless backward States become growth drivers, India would find it difficult to grow at 9 per cent. In some ways the future of India is linked with the future of Bihar. Bihar has demonstrated that it would not allow its future to become a hostage of the past and to shape the future in consonance with its rich historical, cultural and economic leadership.

The author, NK Singh is a Member of Rajya Sabha, Government of India.