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Some time back, Bihar Chief Minister Nitish Kumar challenged the 'Narendra Modi model of development' and hailed the 'Bihar model' as the real one. In an interview with Avantika Bhuyan, Shaibal Gupta, member-secretary of the Patna-based Asian Development Research Institute, explains how different the two models are and the roadmap for future growth in Bihar
How different are the two models, keeping in mind the economic evolution of both the regions?
It is difficult to call development in Gujarat the 'Narendra Modi Model' as spectacular economic growth cannot be attributed to an individual. Unlike other states, Gujarat has had a proper social construct and a succession of leaders for long that created its growth trajectory. Modi is not the initiator of this growth model. The economic growth in the state can best be called the 'Gujarat Model'. In contrast, Nitish Kumar is a standalone example in Bihar who has pursued a development agenda for the first time. Unlike Modi, Kumar has had to travel a long way. The resurrection of the state can legitimately be called 'Nitish Kumar Model'. The economic evolution of Gujarat and Bihar indicates the duality of India's post-independence development strategy. 'Gujarat Model' tells the story of a dedicated industrial development, banking on the 'freight equalisation' policy in coal, cement and steel. The same policy meant devastation for Bihar in particular and eastern states in general.
It is said that the growth is because of a low baseline. So what is the Bihar model of growth?
In the initial years, a low base might have contributed to the high growth. But once the growth process is found to be high and stable over a medium term, it establishes the strength of the growth process. In the Tenth Plan (2002-07), the Gross State Domestic Product growth was 5.7 per cent which increased to 11.95 per cent in the Eleventh Plan (2007-12). The Bihar model is construction-centric around roads and bridges. There has been a massive effort to regenerate the social sectors, especially health and education. The growth has been consolidated by bringing the subaltern into the centrestage of governance, by 'positive discrimination' in the Panchayati Raj institutions. Bihar was at the bottom in terms of all social indicators. But now, literacy rate has increased by 16.8 percentage points and female literacy by 20 percentage points.
Private sector jobs have drawn a blank in the state. Is growth beyond a certain threshold possible without that?
Private investment is necessary. But it will only follow after significant public investment and building of infrastructure. Even if big ticket private investments remain elusive, small scale investments are already visible. The 29.28 per cent growth in the investment in micro, small and medium enterprises sector is a significant development. With power problems likely to be banished by 2015, private investment will flow into the state substantially. This will lead to a change in employment.
What are the challenges that Kumar faces and what's his vision for the future ?
In most states, the vestiges of feudalism were banished after Independence. Even though the lower centre of feudal power has been broken to a great extent, it remains a tangible factor in some parts of Bihar. Governance and public investment have always been limited here. Land relations and land records are still not in a good shape. Many civil and criminal cases are related to the land records. Bihar has to bridge the massive governance and development deficit. Bihar will need continuous massive investment in the foreseeable future. Apart from the Finance Commission transfer, the Bihar Government will have to improve its tax/GDP ratio. In case it improves, from the ratio of 5 to the national average of 8, there will be substantial improvement in the internal resources of the state. The 'Special Category Status 'will further improve public and private investment in Bihar. In case of centrally-sponsored schemes, states will have to bear only 10 per cent of the cost as the balance is borne by the central government. Above that, 30 per cent of the Plan Expenditure of the central budget goes to Special Category states. Another advantage is that in case the outlay is not spent, it will be carried forward to the next year. The possibility of private investment will also increase, with tax breaks on direct and indirect taxes, namely, income tax, corporate tax, excise and custom duties.
