Bihar expects bonanza by Nitish-Modi coalition

Bihar Chief Minister Nitish Kumar while proving his majority in the Assembly, underlined an important development in the passing.

“I took this decision (to part ways with the Rashtriya Janata Dal  and the Congress) in the best interest of Bihar and its development. Now, there is the rule of National Democratic Alliance both at the Centre and the state. Bihar will touch new heights of development,” he said before the division of votes in the Bihar Assembly.

As Nitish joined hands with Prime Minister Narendra Modi, the political corridors in Patna were abuzz with speculations of the state being accorded special status. The state is hoping to get the full benefits of the special package worth Rs 1.25 lakh crore, which was announced by the PM during the 2015 Bihar Assembly polls. In addition, the Centre had also promised Rs 40,000 crore for the speedy completion of earlier schemes. It effectively raised the total package to Rs 1.65 lakh crore.

Until now, the state government had been accusing the Centre of delivering short of its promises. In fact, the state government had claimed only Rs 28,117.23 crore were made available in 30 schemes of the special package till FY17. “Of the Rs 1.25 lakh crore announced by the PM, schemes worth Rs 96,887.77 crore are yet to be implemented,” the then Planning and Development Minister Rajiv Ranjan alias Lallan Singh informed the state legislative council on March 15 this year.

According to government data, the state was made available only Rs 3,300 crore under Backward Region Grant Fund (BRGF) against the promised Rs 8,232 crore. The Centre had promised more than Rs 54,700 crore for construction of national highways and bridges in the state, but sanctioned only five projects at a cost of Rs 3,893 crore.

The state is in dire need of funds in the power sector, given its recent emphasis on rural electrification. The state was promised more than Rs 16,130 under the special package. It asked for setting up of new generation units in Bihar. But, as government records indicate, Bihar has been allocated only Rs 1,143 crore in the sector. The power ministry had also rejected Bihar’s demand for setting up two new power plants in the state.

The state’s finances took a massive hit last year due to implementation of prohibition. The state government had to forego an estimated Rs 5,000 crore in income due to its decision to ban alcohol. The state government tried to make up for it by raising taxes on several essential items and even attempted to tax samosas to raise money. Still, total revenue collection fell by more than Rs 1,000 crore.

This year, however, the state government is expecting a windfall through the goods and services tax (GST) and is estimated to earn Rs 32,000 crore through commercial taxes. However, given the burden of implementation of recommendations of the Seventh Pay Commission, most of the money will be utilised to run the government. The state government is now expecting support from the central government for implementing its development agenda.