Sunday, March 09, 2008

Bihar takes first steps to take-off

4.4% is Bihar's growth in agriculture this year, the fastest in the country, reports a study by Punjab Agricultural University

• 265% is the rise in corporate tax collection in the Patna circle alone, according to Central Board of Direct Taxes (CBDT)

• Reliance, Tata and oil PSUs are in the queue to take over Bihar's state-owned sugar mills to develop alternate fuel

• $225 million is the loan sanctioned by World Bank to boost economic growth in Bihar

The foundation is slowly falling into place, and if it holds together into the next new year, the state that has long been held up as a mirror to what's wrong with the country will soon be ready for a dramatic makeover. In infrastructure, public health, tax revenue and most significantly, agriculture.

"Fifteen years into India's economic reforms, the country's poorest state Bihar, is finally gearing itself to catch up with rest of India. A slew of fiscal and legislative reforms implemented in the recent past stand testimony to this silent transformation taking place in a state that has, for long, been stereotyped as a failed state," says a recent study by World Bank.

From abolishing the Agricultural Product Marketing Control (APMC) Act and checking exploitation of farmers by traders to repealing the Urban Land Ceiling Act and opening a "hassle-free" road for real estate development. From keeping aside Rs 18,000 crore for developing roads to harnessing new avenues of growth like ethanol-based fuel.

The reasons for Bihar's changing face are many, say experts and officials. "Legislative backing to most of the reforms has also boosted investor confidence... Major international donor agencies are thus gearing up to contribute to the state's development," says the World Bank report.

But according to Deputy Chief Minister Sushil Modi, whose NDA government under Chief Minister Nitish Kumar took over last year, the first big step was the collective decision to delegate power from top down. "It is yielding huge results," says Modi.

The most tangible growth has been in the agriculture growth rate. According to the PAU study, this has hinged on vegetables and fruits, apart from traditional crops. This highlights the fact that Bihar's farmers are beginning to wake up to the commercial prospects in the sector.

Here, an unexpected boost has come from the Centre's green signal to promote new forms of bio-fuel, especially in blending sugar-generated ethanol and petrol. The result: Hindustan Petroleum, India Glycols and Birla Sugar have touched base with the government on taking over closed sugar mills on lease. "Bihar is sure to emerge as an ethanol hub," says Sugarcane Minister Nitish Mishra.

The other area that the government has zeroed in on is infrastructure. Consider this:

• Record 30% allocation of plan money for road construction

• Utilisation of Rs 8,647 crore on development works in 2006-07, 102 % of the annual expenditure target.

"We intend to spend Rs 18,000 crore in the next three years in the road sector. Massive work is already underway to construct and improve our national and state highways and our district and rural roads. Along with the Prime Minister's Gram Sadak Yojana, we have also launched or own road project called the Chief Minister's Gram Sadak Yojana," says Deputy Chairperson of the State Planning Board N K Singh, in the World Bank report.

Dy CM Modi says some administrative tweaking has also helped. "Earlier, a Superintendent Engineer had the power to sanction a project amounting to just Rs 20 lakh. That has been increased to Rs 1 crore, which has resulted in quick decisions," says Modi.

State expenditure, however, is most visible in the public health sector. From 39 patients in January 2006, the number of patients visiting Public Health Centres jumped to 4,524 per month in October 2007.

And, the drastic rise in corporate tax collection reflects the "deepening business activity" in the state, say Income Tax officials. "The figures certainly mean that economic activity has increased manifold. A sharp rise in tax collected at source too confirms that individuals are benefiting from the changing economic scenario," says a senior I-T official based in Patna.

In its report, the Bank also appreciates the government's decision to implement the Single Window Clearance Act and a State Investment Promotion Board (SIPB) to facilitate industrial investment.

Other international donor agencies too have come forward to chip in. Along with the World Bank, the Asian Development Bank (ADB) and the UK-based Department for International Development (DFID) are jointly working to support the development agenda.

"As we move forward, we are working closely with the ADB and DFID to define a joint framework for a coordinated approach to our assistance," says Dipak Dasgupta, World Bank's Lead Economist in New Delhi.

"Abolishing APMC has checked exploitation of traders. However, the land belonging to marketing boards will be best utilised when big companies like Reliance and ITC come to Bihar for contract

1 comment:

Sandhya said...

Is Bihar interested to bring new technologies to school to educate students?