Bihar suffers as reforms are abandoned halfway

In Patna, power is not a problem. But in areas like Kishanganj, people get power for 4 hours during the day. It is hard to travel more than 50 km outside Patna without encountering roads that are so pot-hole riddled that travel time is doubled.

Kidnapping rather than dacoity is the preferred crime because the state government's penalties for kidnapping are far lower than for dacoity, a British relic that anti-socials in Bihar are leveraging to their advantage, says an IAS officer in the state government.

So what does reforms mean for Bihar and what has Lalu Prasad projected it to mean. It is a puzzle to "outsiders""" why, when the gains of reforms can be so huge and the effort to introduce them involves so little pain, the Rashtriya Janata Dal (RJD) government in its 15-year existence has done so little to reform and administer the state.

The answer to the puzzle is that quite a lot has been done. But its gains have neither been projected, nor felt because the reforms were abandoned halfway.

The state has revised sales tax rates for certain commodities. The entry tax, entertainment tax, road tax for all types of vehicles and an increase in tax for vehicles entering the state temporarily have already been introduced or revised.

The state has provided for advance deduction of tax from bills of contractors, abolition of sales tax as an incentive to new industrial units, collection of stamp duty through tax meters, computerisation of sales tax offices and the establishment of joint check-posts to recover the commercial tax with the transport department.

The government has begun downsizing of departments and a review of big departments has begun. The state government has banned ad hoc, daily wage and muster roll staff.

The Bihar treasury has been computerised and serious audit of expenditure in the education, health, roads, power and social security sectors has begun.

Although no political party has mentioned this in its manifesto, an elaborate note submitted to the 12th Finance Commission, signed by all parties, promises more reforms.

It recognises that Bihar needs a per capita income growth rate of 8 per cent and above over the next 15 years and the state domestic produce (SDP) should grow at 10 per cent to achieve the 10 per cent growth rate for India, if "Vision 2020" of President APJ Abdul Kalam is to be realised.

Between 1993-94 and 1998-99, (united) Bihar's SDP had grown at barely 4.2 per cent. The per capita income of Bihar in 2000-01 was Rs 3,707 against a national average of Rs 10,254.

To set this right, all political parties agree in the memorandum that the government will do its best to reduce the revenue deficit. In Bihar's case, the share of revenue deficit to revenue receipts has been gradually coming down""minus 22.92 per cent in 2001-02 to minus 12.63 per cent in 2002-03.

The fact is that Bihar has lost both talent and time in the past 15 years. In the first years of Lalu Prasad's chief ministership, a conference of Bihari non-resident Indians (NRIs) was organised that took six months of sustained work by the state government and the Bihar Industries Association.

Lalu went to the US, the UK and Singapore to seek investment. In fact, Bihar was one of the first states to realise that NRIs could be leveraged, much before the idea of the Pravasi Bharatiya concept occurred to the Centre.

In Patna, Lalu launched a sustained programme for the removal of encroachment on the government land and achieved a lot, despite resistance from entrenched interests. But it was all over in 1995 when the fodder scam broke out.

Bureaucrats and businessmen alike confess that the appointment of Rabri Devi as chief minister came as a massive and total shock. Then, after she assumed office, she had to be taught how to write, and gradually be schooled in the working of the government.

A bureaucrat confessed that in the initial years, he used to always have handy, red and blue tipped pencils, for the chief minister's convenience, because she needed to recognise the colours before signing on files.

Bihar's bifurcation was the second setback that derailed any tentative move for economic reforms. What has happened between 1995 and 2005 has been piecemeal, bureaucracy-driven changes in rules procedures and systems.

The retreat of the state from the market has neither been an issue, nor has it been debated.Obviously things cannot go on like this. The fact is, debates in Bihar are not about the performance of the government or the role of the state in the economy.

They are about social and economic equity and self-respect. On this front, Lalu has scored massively. And that is the secret of his success.