Opinion State of fits and starts

It is reasonable to assume that the state will provide the requisite land, local clearances and actively assist in project implementation.

The controversy on whether the package is mere “repackaging” is needless. It has been said, “don’t repackage your fear and try to sell it to me as indifference”.

Are those critical of the package fearful of its consequences but indifferent to its outcome? The issue of whether many of these investments were pre-approved or ongoing is misleading. It raises the broader question of what constitutes project approvals. The department of expenditure and Niti Aayog have outlined the sequence for public outlays. It includes the obvious ones of feasibility study, detailed project report, approval of the Public Investment Board and cabinet, and budgetary provision. Some road projects conceived earlier have failed to make progress. Several projects approved between 2007-10 were handicapped for multiple reasons like non-availability of land from the state government, and eluded financial closure.

The new approach seeks to address the endemic development deficit of Bihar. Scores of earlier committees have sought to capture the ingredients of backwardness. There is unanimity that on key development indices, Bihar is at the bottom compared to national averages. For the people of Bihar, terms like pre-approved, pre-conceived and post-approved have little value till they experience a new airport, use improved highways or bridges, benefit from improved skills, and secure meaningful employment.

The integrated package seeks to improve outcomes: First, growth in Bihar has languished for long. During an earlier NDA period, growth had picked up, but has slumped again. For a state where private investment remains shy, emphasis on public outlay is the accepted way forward. Private investment invariably piggy backs on improved social and physical infrastructure. According to a model developed for the 12th Plan, the capex multiplier for India is 2.45, while for transfer payments and revenue expenditure, it is 0.98 and 0.99, respectively. As most of the expenditure under the Bihar package is capital expenditure, its implementation will have a powerful multiplier effect for the state’s economy. This package has the potential to propel the state’s growth to double-digit levels. Bihar needs this for at least a decade to approximate national averages.

Second, given its young population, meaningful employment will be predicated on enhanced skills. This is central if migration in search of low value-added employment is to be arrested. The establishment of a mega skills university will have a positive multiplier effect. A new Central university at Vikramshila can also improve educational outcomes.

Third, improving connectivity would help integrate Bihar with the national mainstream. Proposals like a greenfield airport at Patna and the development of airports at Gaya and Raxaul will boost economic activity, encourage tourism, help in brand-building and further enhance employment potential. Fourth, national highway projects will improve per capita highway availability and enlarge the benefits of a growing common market.

Fifth, a digital Bihar could harness the demographic dividend of a young population and would have desirable educational and health outcomes. Sixth, agriculture productivity has plateaued even for an economy so critically dependent on it. The upgradation of the Rajendra Agriculture University, a new emphasis on fisheries, dairy and seed production will enhance productivity and improve farm incomes. New godowns could reduce the crippling wastage of foodgrain, fruit and vegetables. Seventh, the initiatives in the power sector will support meaningful economic activity and incentivise faster industrialisation. This, coupled with tax incentives designed to benefit the state, could be a catalyst for private investment.

Eighth, the downstream development in the petrochemical sector helps small and medium industries, as well as encourages value-added non-agro-based activity. Ninth, all these initiatives will help create new employment opportunities. Employment elasticities vary greatly. Construction has the highest elasticity (1.13), which is where all the capital and infrastructure expenditure of the package is expected to go. Finally, the tourism and service sectors have significant employment potential and the seven proposed tourist centres, coupled with enhanced skills, can be an important fillip for employment.
The Bihar growth story has for too long been one of fits and starts. The Bihar package is a determined push not to allow Bihar’s future to remain hostage to its somewhat unfortunate recent past.

The writer is a former MP and senior member, BJP