Bihar becoming Jaapan - well eventually!

Bihar's remarkable recovery

On the move

Bihar has blossomed under Nitish Kumar. But his reforms need deeper roots

Jan 28th 2010 | PATNA | From The Economist print edition

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ON A rural road in Araria, a poor district in the Indian state of Bihar, a roadblock impedes traffic. Not so long ago, that might have heralded extortion, carjacking or kidnapping, of which there were over 400 recorded cases in the state as recently as 2004. But Bihar has turned a corner. This hold-up is the work of children, not bandits. They lower a bamboo pole over passing cars in the hope of collecting a few rupees for a festival celebrating Saraswati, the Hindu goddess of learning.
This fertile land where the Buddha found enlightenment under the Bodhi tree was latterly overgrown by a “Jungle Raj” of corruption, crime and caste vengeance. With over 90m people, the state held a morbid fascination for the rest of India, which lapped up blood-curdling tales of violence and larceny. “The perception was that once you landed at the airport you would be faced with gunfire,” says Vineet Vinayak, the senior policeman in Patna. Bihar was a place the rest of the country avoided visiting, and dreaded becoming.
Now it is a place they are celebrating. Nitish Kumar, who became chief minister in 2005, has uprooted the Jungle Raj, restoring law and order: there were only 66 kidnappings in 2008. Over the four fiscal years ending on March 31st 2009, the state’s output grew at an annualised pace of 10.5%, faster than the national average (see chart). Small and agricultural, Bihar’s economy is notoriously fickle. It grew spectacularly for a few years in the mid-1990s too. But this spurt looks more sustainable and it has to be. Even at this rate of expansion, Bihar would need 18 years to match the income per person enjoyed by Maharashtra today.

The economic pickup is visible in the state capital, Patna, where people no longer fear to drive nice cars on the new flyover, or further afield. In the village of Tetri, which hosts the thatched huts of refugees from floods in 2008, ten mobile-phone companies compete for custom, offering calls at one paisa ($0.0002) per second.
Thanks to increased funds from the central government, Bihar’s spending on planned development priorities was 160 billion rupees ($3.5 billion) in the most recent fiscal year, compared with just 12 billion in the year to March 31st 2002. The government set about road building on a “war footing”, says Anup Mukerji, the head of Bihar’s civil service. It used to take ten hours to drive from Araria to Patna, a distance of about 350km (220 miles). Now it takes seven. The route is still strewn with wrecks—in one spot a Tata lorry lies on its side, like a beached whale—but it used to be much worse. Along one 20km stretch, recalls Mr Mukerji, the road had disappeared, forcing him to drive through fields.
Mr Mukerji oversees this progress from his office in Patna’s spotless old collectorate building, which has outsourced its upkeep to a company called All Services Under 1 Roof. He holds monthly video conferences with programme officers in every district. But even teleconferencing cannot close the gap between Patna, where the administration has palpably improved, and the outlying districts, where the government’s social programmes and public services work fitfully, if at all.
Behind the collectorate building in one outlying district, men urinate beside five rusting four-by-fours. “I can show you so many papers on NREGA,” the district development officer says, referring to the National Rural Employment Guarantee Act, which entitles every rural household to 100 days of minimum-wage work on demand. He buzzes for a flunky, who spares his boss the indignity of picking up the pink ring binders piled on the floor.
But the paperwork is piling up in the district offices faster than jobs are being provided in the villages. In Jamua village in the district of Araria, an NGO called Jan Jagaran Abhiyan found that 1,710 job cards had been issued, which should entitle villagers to over 17m rupees in wages, if they had worked the full 100 days allowed. But the village had claimed less than 5% of the amount available. Of that, 43% was pilfered, by reporting ghost workers and forging bills for materials. The mystery is perhaps not the 43% that was embezzled, but the millions in central-government funds that were left on the table by a local administrative machinery too apathetic even to steal with much conviction.
According to Sushil Modi, Bihar’s deputy chief minister, the biggest problem for all the poorer states is “the crisis of implementation”. “Even if we have the money,” he asks, “how to spend that money?” Mr Kumar cannot solve this from Patna. He must instead breathe life into the panchayats, the elected village councils supposedly accountable for local schemes. But in Bihar, the councils have been through only one electoral cycle. The panchayats remain beholden to the old elites.
Bihar’s turnaround has won it national attention. But it has so far rested on vigorous programmes, such as road-building and immunisation, rather than new institutions. And the growth is driven by public investment, not private. At the Bihar Industries Association (BIA) in Patna, businessmen complain about the lack of credit and electricity, in a state that consumes just 12% of the per person national average.
Political uncertainty is also a constraint. Mr Kumar must fight for re-election this year. Despite a resounding endorsement for his party in the national election last May, his coalition fared less well in more recent by-elections. According to K.P. Jhunjhunwala, former president of the BIA, investors are waiting in the wings for the second innings of Nitish Kumar.