Contemporary Bihar, in terms of levels of output, has been one of the smallest among all the major states in India. Not only in terms of economic output, but also in
terms of almost each and every indicator of relevance, the Human Development Index, access to infrastructure, healthcare, education, law and order, the gap
between Bihar and India’s achievements have been so large that from the mid-1980s, many have institutionalized Bihar’s status as a `basket-case’ with little expectation of growth through much of the latter half of the 20th Century. Of course, slower growth does not mean complete stagnation. Nor does it imply a lack of structural change. Some of that change was consistent with the rest of the Indian economy and in this overview we document these trends. In our overview, we partition the period 1980-2010 into three separate time periods: 1980-2000, 2000-2005, and post-2005. The basis of this classification is analytical rather than statistical. Each of these gives periods in time when numbers can be compared with each other,but it is not clear if they can be compared across these periods in an obvious way.
The first period captures Bihar’s pre-bifurcation economy. This represents a period when the structure of the economy, its endowments, and its politics was markedly different from the Bihar in existence after November of 2000. The districtsthat constitute Bihar and Jharkhand today have always been socially and economically different; thus, for example, while Jharkhand’s population is largely tribal with limited caste identity, caste has historically been the basis for polarization
and exclusion in Bihar (Sharma 1976). In addition, with a substantial portion of its land on the Chota Nagpur Plateau, Jharkhand is rich in mineral deposits and has
been the home for manufacturing activities. On the other hand, districts constituting Bihar have large swathes of alluvial soil, often replenished by flood waters, which are particularly suitable for agriculture.
The period 2000-2005 captures Bihar’s immediate post-bifurcation economy. Social dynamics, political demands for separation, and political expediency, on the part of Rashtriya Janta Dal (RJD) in Bihar, and the National Democratic Alliance (NDA) government at the national level, provided the Jharkhandi movement an opportunity in the 1990s that it had not found in decades (Rorabacher 2008). While the economy of the bifurcated Bihar could no longer be compared with that of the 1980-2000 Bihar, RJD continued in power and this provided a period of political and policy continuity with the past that was important.
The third period is the period after the 2005 elections in Bihar when Nitish Kumar, and his political party Janata Dal (United) (JD (U)), came to power together with the Bharatiya Janta Party (BJP). This period saw major changes in policy, administrative, and overall governance changes as well as rapid economic growth. This period marks a clear break from the past, in both a statistical and qualitative sense. While many of the structural changes seen in the past continue, and the relative position of Bihar amongst other states remains as is, there is distinct increase in economic growth.
Writer: Arnab Mukhreji* and Aruna Mukhreji**
*:Assistant Professor, Center for Public Policy, Indian Institute of Management Bangalore
**:Jawaharlal Nehru National Fellow, National Institute of Public Finance and Policy, New Delhi, and Country Director, IGC India-Bihar Program.