Election Year Bonanza for Bihar: Poor Performance Rewarded Again

Bihar continues to be a laggard when compared to other states on almost all parameters.

I am a proud Bihari and have never shied away from flaunting my regional identity even in the face of hostile external environment.

I was, therefore, elated when interim recommendations of the 15th Finance Commission increased the share of allocation to Bihar from the central pool.

Bihar will get 4 percent more now from the central pool as its share has gone up from 9.66 percent to 10.06 percent.

States like Rajasthan and Maharashtra, too, will get more henceforth. However, Kerala and other southern states will have to contend with reduced allocation. The share of Uttar Pradesh, too, has seen a marginal dip.

I started reading the interim report with a sense of excitement. I was under the impression that Bihar has been rewarded for all round development in recent years. After all, Bihar under the leadership of Nitish Kumar is credited to have clocked record economic growth in recent years. The state has done some good work on building infrastructure, especially roads and power.

Why Bihar’s Quota Got Hiked

However, if my reading of the recommendations of the finance commission is correct, the state has been rewarded yet again for continuing to be backward.

There are three main criteria—population, area and income distance—to arrive at, what the finance commission says, the “horizontal” devolution of central pool of revenue.

The report says: “Income distance has been calculated using methodology similar to what was adopted by the FC-XIV. A three-year average (2015-16 to 2017-18) per capita comparable Gross State Domestic Product (GSDP) has been taken for all the States. Income distance has been computed by taking the distance from the State having the highest per capita GSDP. In this case, Goa has the highest per capita GSDP followed by Sikkim. Since they are very small and atypical States, to avoid distortions, the State with the third highest per capita GSDP—Haryana—has been taken as the benchmark to avoid distortions.”

Income distance has the maximum weightage of 45 percent. Population and area have been assigned weightage of 15 percent each by the 15th Finance Commission. The 14th Finance Commission had assigned 50 percent weightage to income distance, 17.5 percent to population and 15 percent to area.

Bihar’s Population Problem is a Real Problem

However, there is one major change this time. Instead of taking the 1971 census as benchmark for population levels of states, the current Finance Commission has used the 2011 census data. Several states had opposed the move, apprehending considerable loss to states which have done well in controlling rising population.

To such objections, the report says that “this Commission is of the view that fiscal equalisation being recommended by it is for the present needs of the States and this is best represented by the latest census data. Given the specific ToR (terms of reference) to use 2011 population data, there is no further choice for this Commission.”

In the 1970s and 1980s, Bihar’s decadal population growth was similar to the national average.

However, between 1991 and 2011, the state’s decadal growth was 7 percentage points higher than the national average. And in the following decade (2001-2011), Bihar’s decadal population growth was a whopping 8 percentage points more than the national average!

Is that one of the main reasons why Bihar’s share has gone up despite reduction in population’s weightage?

Bihar Being Rewarded for Poor Performance

What would have helped Bihar’s cause was continuous slip in the state’s per capita income vis-à-vis other states. To get a sense of how Bihar has performed on the per capita income growth, I went through the data available at the Reserve Bank of India website. As per the data, while Bihar’s per capita income was Rs. 33,000 less than that of Haryana in 2005-06, the gap widened to Rs. 1.17 lakh in 2016-17. Haryana was one of leading states then and has retained the same position to date. Bihar was a laggard then and continues to be so even today despite years of seemingly good economic growth.

There is no denying that our developmental goals will suffer a great deal if we don’t take care of the needs of underdeveloped regions. The allocation of resources should happen accordingly.

Setting regional imbalance right, therefore, has been one of the key objectives of all the governments since Independence. Despite this stated goal that should be pursued, isn’t it incumbent on laggard states also to earn reward following dramatic improvement on socio-economic indices?

Nitish Kumar ji, you have been the chief minister for nearly 15 years now. There is no denying that the state has witnessed a turnaround of sorts, at least on certain parameters, during your tenure. The state, however, continues to be a laggard when compared to other states on almost all parameters. Shouldn’t this be addressed urgently?

If Bihar had earned its enhanced allocation, my pride would have gone up manifold. For the time being though, the pain of being a laggard still hurts.

(Mayank Mishra is a senior journalist who writes on Indian economy and politics, and their intersection. He tweets at @Mayankprem. This is an opinion piece and the views expressed in this article are that of the writer’s own. The Quint neither endorses nor is responsible for the same.)