How did Bihar become the loser state of India?

Bihar: 1,000 class 12th expelled for cheating in exam
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I am a Bihari

As a Bihari who grew up in Delhi, and now that I live in Mumbai, I have always been acutely aware of my identity. As far back as I can remember, I have experienced surprised reactions about my Bihari identity. At the very least my friends expected one of my parents to have been non-Bihari. But when they realized that both of my parents are Bihari and that I was born in Patna, their sense of bewilderment is hard to conceal. I am not sure why that is the case but am sure stereotypes are to be blamed.

Back at my school in Delhi, I remember having a discussion with a close friend who asked where I was from. When I told him I was Bihari, he thought I was kidding. He asked me where I was from again and also said that its not quite possible that I could be Bihari. I am not sure whether he expected Biharis to have a unique identifying feature. In the mid-90s walking around in an upscale Delhi shopping enclave, I overheard a shopkeeper shout at one his workers in Hindi, “What are you doing? Are you a damn Bihari?” By then I already knew that Bihari is used as a swear word in Delhi. Being one was certainly nothing to be proud of. Many Biharis I knew actually tried to hide their identity by not talking in the colloquial Bihari accent. Both in school and later attending college in the States, interacting with Indian friends, I would often hear the common, “Oh! So you are from Lalu’s land” referring to one of the Chief Ministers of Bihar who had become rather infamous for his personality and also a corruption scandal. During my first week in business school in New York, an Indian student remarked, “Wow, a Bihari has made it here.” When I moved back to India and started living in Mumbai much later in 2012, I heard some of the horror stories of Bihari migrant laborers being attacked during a politically motivated riot. I heard some popular political arguments about why Bihari migrants should go back to their state as they are a burden on the State’s resources much like the discourse around illegal Mexican immigrants in the US. I have also heard from people, jokingly, say in Hindi a poetic phrase which literally translates into “one Bihari, hundreds of diseases.”

At a dinner, a friend once jokingly said that in Bihar, “goats and sheep are tied outside houses.” More recently someone mentioned a story of an encounter with goats while travelling in a bus in Bihar. A friend in Chennai once mentioned that he only uses Bihari laborers at his construction site and another mentioned that Bihari house helps are really required in Mumbai for households to function well. Often in social settings, the mention of the State of Bihar brings up a discussion on corruption and casteism. I am not sure if there is evidence of higher instances of either in Bihar versus rest of India but regardless I am not here to debate it.

So needless to say, I am very interested in understanding why Bihar has become synonymous with backwardness in India.

As I was researching this topic, I chanced upon one of the most insightful papers written on this topic: “Bihar: What Went Wrong? And What Changed”by Arnab Mukherji and Anjan Mukherji, Working Paper, Sep 2012, National Institute of Public Finance & Policy. I have relied heavily on this paper and would encourage you to read it for yourself. http://www.nipfp.org.in/media/medialibrary/2013/04/WP_2012_107.pdf

The Bihari self-defense

First off, yes as Biharis we do realize we have inherited a problem. There is no denying that. However often in public forums Biharis resort to common arguments — perhaps just for argument sake or perhaps to not feel as ashamed about themselves as the societal expectation demands. But mostly because Biharis are very proud of their heritage and see the misfortune of modern history as only a blip in an otherwise golden record. These arguments often rely on references to historical or current famous people and places from Bihar. The list includes Aryabhatta (mathematicians and potentially inventor of zero), Ashoka and Chandragupta Maurya (pan-India rulers based in Patna), Chanakya (politician and diplomat), Gautam Buddha (Founder of Buddhism, attained wisdom in Bodh Gaya), Lord Mahavir (founder of Jainism), Guru Gobind Singh (10th Guru of Sikhs), Sher Shah Suri (Afghan decent ruler born in Bihar and builder of Grand Trunk Road), Dr. Rajendra Prasad (first President of India) and Jayaprakash Narayan (social activist and leader of a mass student movement). And it includes more recent public figures from Bihar such as Shatrughan Sinha (film actor and politician) and Yashwant Sinha (politician and famous for helping India survive near bankruptcy). Or the arguments point to Nalanda, one of the oldest universities in the world, or the fact that Bihar produces more civil servants than any other state, given the large number that get through the pan-India Union Public Service Commission (UPSC) exams. Indeed you will find many Biharis in bureaucracy.

Bihar’s current state of affairs

For context, Bihar, with 104 Mn people according to the 2011 census, is the third most populous state in the country after UP and Maharashtra. Had it been a country, it would have been Italy and France put together. By area, it ranks 13th with 94,000 sq. km. It accounts for 3% of India’s land mass but 9% of its population. As a result Bihar’s population density of 1,106 people is almost 3x that of India on average. Almost 90% of Bihar’s population is rural versus the 70% national average. Most residents are poor farmers. And many have migrated out of the state in search of food and shelter.

Across most statistics one can measure, it lags behind India averages. For comparison sake, I have chosen Punjab, another land-locked state of India not bordering or harboring a metropolis:

 

Compared to Punjab, the contrast could not be starker. Bihar’s per-capita is a third, literacy rate behind by 14 percentage points, tele-density half, infant mortality double and poverty rate four times. The only sliver of hope is that during the 80s and 90s Bihar diverged fast from India, but post 2000s there has been greater convergence, i.e. it is returning back to mean.

Permanent settlement established the historical roots of inequity

Any understanding of the sad state of affairs in Bihar would require us to examine when did it start to get bad. The short answer is that Bihar was already lagging behind rest of India pre-independence. The difference got exacerbated in the 90s especially, with liberalization, as many of the other states grew much faster in leaps and bounds while Bihar continued to languish.

One of the most powerful and interesting pieces of data Mukherkji and Mukherji provide in their paper is the following:

Per-capita Government expenditure (Rs.) of tax revenue by province in 1927–28.

As one can see, under the British Government, Bengal was the poorest funded province. If one goes further back, when Bihar and Orissa were still part of Bengal province, they were the most funds deprived region of the worst funded province of British India. Part of the reason this was the case is because “Zamindari” system along with the “permanent settlement” policy were implemented by the British in Eastern parts of India. Under this system, the tax revenue collected from agrarian landlords was fixed regardless of the fields’ output for the year. It protected the Government from vagaries of agriculture and weather but at the same dis-incentivized any investment to develop these lands or improve productivity. In Madras and later in Bombay provinces, the British colonial masters implemented the Ryotwari system, in which the tax collection was directly linked to the agricultural output.

The Zamindari (land-owner class based) system in Bihar also sowed the seeds for deep-rooted caste- based hatred and politics in the many years to come. Zamindars of Bihar with taxes fixed, went on an acquisition spree to horde land as all additional yield was upside. At the same time there was no need to increase productivity. The growing influence of the Zamindars in Bihar, parallels greater distress for the land-less peasants often of lower castes toiling the fields.

The British left but they left behind their anglicized native warlords

Even though post-independence, Bihar was one of the first states to abolish the Zamindari system, it never quite got implemented with full zest in the first decade, due to the hand-in-glove zamindari and bureaucracy systems.

Moreover the inequity in Union Government funding of states — both formulaic and discretionary continued for decades. Bihar was already behind, when the race started in 1947 and it would remain so until today.

Bad became worse

Between 1947 and 1980s Bihar continued to be behind most Indian states. In 1981 it was at 60% of the national per-capita but by 1999 it had slid to become 35%.

Gap between Bihar’s literacy and India’s literacy rates

As shown above, what in 1950s was a small difference in literacy rates between Bihar and India — widened 4x over the next 5 decades. So the question then becomes what happened in these post-independence decades leading up to 2000?

Politics might hold the answer

Given below is the list of Chief Ministers of Bihar starting with the first post-independence:

Perhaps the most striking parts of the list are that:

a) It is very long — Bihar had 40 change of hands in just 70 years. On average Chief Ministers of Bihar had a tenure of 1.5 years. In fact many stayed in office for just a few months.

b) There were 8 instances of President’s Rule in Bihar but this is not as significant given that Punjab had the same number (for vastly different reasons).

Bihar has had 23 different Chief Ministers in its 70 years history. Punjab has had only 14.

There are only 6 Chief Ministers of Bihar who stayed in office for more than 4 years (even if on a disjoint basis) — Sri Krishna Sinha (Singh), Jagannath Mishra, KB Sahay, Lalu Prasad Yadav, Rabri Devi and Nitish Kumar. Therefore they must hold the key to or at least have been witness to most of what happened to Bihar.

It might be worthwhile to study the background of the following Chief Ministers of Bihar:

The very first Chief Minister of Bihar, Sri Krishna Sinha (Singh) was regarded as an architect of Modern Bihar. He was a close friend of his contemporaries, Jawaharlal Nehru and Rajendra Prasad. He led the abolition of the Zamindari system and worked for the upliftment of Dalits. He was born in an upper caste Bhumiar (land owner) family, studied at Patna College and practiced law before meeting Mahatma Gandhi in Benares. In 1921 he joined the Non-Cooperation movement and abandoned his law practice.

Sri Krishna Sinha (Singh) also pushed for industrialization of the state and during his tenure, the Barauni Oil Refinery, HEC plant at Hatia and the Bokara Steel Plant along with other projects were setup.

Freight equalization policy hit at Bihar’s competitive advantage

While Colonial India’s permanent settlement policy took away Bihar’s agricultural productivity, independent India’s freight equalization policy destroyed Bihar’s industrial ambitions. Freight equalization was a policy adopted by the Government of India in 1952 to ensure that essential commodities were available at the same price across the country regardless of transportation (freight) costs. The goal was to allow all states irrespective of access to natural resources, an equal chance to industrialize. Obviously this meant that manufacturers setup industries in coastal states with ports to be able to ship their final produce easily. Being near the minerals of Bihar was no longer necessary as there was no cost advantage in being close to the raw materials. The freight equalization took care of it.

President Pranab Mukherjee, who had earlier served as a Finance Minister of India in a rare admission recently said that the Union Government’s freight equalization policy caused backwardness of Bihar: “So, despite having mineral resources and fertile land, Bihar, and now Jharkhand, too, could not make the desired progress.” Of course President Mukherjee was not the Finance Minister at the time of the policy coming into force. Former finance ministers of those days, CD Deshmukh, RK Shanmukham Chetty and TT Krishnamachari might have had a better understanding of why the Union of India decided to benefit coastal states at the expense of land-locked “BiMaRU” states (BiMaRu is a polite acronym for Bihar, Madhya Pradesh, Rajasthan and UP — which have traditionally lagged behind and means diseased).

The lost decades

70s and 80s went by without much progress for Bihar given the lack of attractiveness of setting up shop there. Jagannath Mishra had three terms during these two decades however most of his times in office were short-lived and interspersed with President’s Rule and rival politics. Jagannath Mishra had been a lecturer and professor of economics before joining Bihar politics and perhaps was well placed to help spur the economy. Even though Bihar saw bursts of high growth in these two decades it continued to lag behind. It just wasn’t ready for the opportunity liberalization of the 90s would give it.

All this while, Bihar had the worst record for getting benefits from the Center. Even though the central help to Bihar exceeded that offered to many other states, it was now not enough to close the gap because Bihar’s own tax base was very low.

Let’s ensure under-performance

Mukherji & Mukherji in their paper refer to an interesting case study of ‘designed’ governance failure from Boston, in which James Michael Curly, four-time mayor of the city, deliberately used public re-distribution to favor his constituents while using inflammatory rhetoric towards the rich forcing them to leave the city. This led to significant economic stagnation in Boston but helped the Mayor consolidate his support base. Bihar’s history in the 90s under the rule of Chief Minister Lalu Yadav is of consistent under-investment into the state’s infrastructure. Whether this was by design or an accident, would be tough to judge. However due to the under-investment and lack of spend on the State’s bureaucracy and resources, the social problems of Bihar got exacerbated. Crime grew without check, corruption went through the roof and from being economically backward it transitioned to being dangerous.

Take away the resources

While the undivided State of Bihar heavily invested in the Southern portions of the state and industrialized it, the creation of Jharkhand in November 2000 to separate out the tribal areas of South Bihar took away much of the minerals base of the state and left it empty handed. The partition of Bihar left the remaining portion of Bihar with a much smaller tax base.

Yet there is still hope

Since 2000, mostly under the leadership of current Chief Minister, Nitish Kumar, Bihar has experienced some progress on socio-economic fronts. In some years it has also achieved the distinction of being the fastest growing state although with a low base, small numbers turn into large percentages.

The people of Bihar remain as optimistic as ever. They will proudly remind you that Ashoka did rule India from Patna after all.

( The article was originally published in Medium. The author is a former investment banker and currently works as a strategy professional in the telecom industry. The views and ideas expressed are personal.)

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