Lalu plans to develop Bihar

Industry association refuses to bite the bait.

Two days ago, Railway Minister Lalu Prasad accompanied his wife and Bihar Chief Minister Rabri Devi to Raghopur Diara, her Assembly constituency.

In his speech there, he said: "What is past is past. Bihar will see rapid development in the coming years". This was interpreted by voters, as the first admission on Prasad's part that Bihar had suffered the economic""and administrative""neglect.

In fact, what Prasad was saying was that he had put the process in motion. Since the United Progressive Alliance government has come to power, he has taken two crucial steps to attempt to undo, at least partially, the massive neglect and under-governance of Bihar spanning nearly 13 of the 15 years the Rashtriya Janata Dal (RJD) government has been in power.

He has ordered that only central agencies will implement road projects in Bihar that fall under the Prime Minister's Golden Quadrilateral project. This will eliminate embarrassments like the murder of Satyendra Dube, which was a result of a contractor mafia that has all of Bihar in its grips.

He has also started negotiations to augment power availability in Bihar and has connected the state to the national grid at the cost of Rs 365 crore.

This Prasad is different from the one five years ago, who told Yadavs in Madhepura when they demanded that he build roads for them: "What will you do with roads? Do you have cars? If I build roads, the ones who will use them will be the savarna who can afford cars. So what is the point of building roads for you?"

Whatever be the meaning of "development" in Bihar, whether the concern is articulated or not, it lies in the centre of the election debate. Obviously, the industrial community in the state "" such as it is""would like someone to rescue them.

"When Bihar was bifurcated, the cause was political but the effect was economic. Prasad was mired in the fodder scam and was surrounded by forces inimical to him.

He calculated that if Jharkhand went away, the BJP would go away with it. But big industry also went away because of the bifurcation.

"What we have left in the state now are small and medium scale industries. And 80 per cent of them are sick or dying," said SK Mehrotra, president of the Bihar Industries Association.

It is a truism that no one wants to invest in Bihar. What worries Mehrotra is that in the absence of services like health and education, the state has lost Rs 10,000 crore in the last 15 years, the money that went away to education and health centers like Manipal, Nasik, Delhi, Mumbai and Pune.

Recognising that the state government is unlikely to get its act together soon, the association has taken on the role of the state government.

In a memorandum to the 12th Finance Commission, it has sought a special fund for economic activity in the flood-prone areas along the Indo-Nepal border, relaxation of the debt-equity ratio and fiscal relief in central taxes and duties (which it says, would mean a sacrifice of only Rs 158 crore, which is all Bihar contributes to central excise and duties).

The association is waiting, with embarrassing eagerness, for the Centre to implement the value-added tax (VAT). The association says the combination of special features of VAT for poor states (interest waiver on state debt, population-based resource allocation, and central compensation) will make Bihar a big gainer.

True, the move would affect traders more than industrialists, Mehrotra said. But it would mean higher tax collections and, therefore, the possibility of more investible revenue for the state government, he added.

The RJD government announced its last industrial policy in 2000. Six months ago, the heavy industry and the medium and small-scale industry and handloom departments were merged into one department under a single minister.

"And you talk of industrialization of Bihar?" asked Mehrotra without bitterness.