Economic Highlights

New Delhi, 28 April 2012

Financial Blues

IS BIHAR STORY WORTH A LOOK?

By Shivaji Sarkar

Finance Minister Pranab Mukherjee is undoubtedly overburdened. Other than the S&P appraisal going down for India, he has West Bengal Chief Minister Mamata Banerjee breathing down his neck seeking moratorium on debt repayment. Will other States follow suit? Can he take some help from the Bihar story?

As of now, Bihar is a mixed bag of success. Its annual State budget has broken away from the past. It has presented a surplus of Rs 7088 crore – some say it is due to enormous economic and financial planning, others describe it as a failure to utilise funds. It is almost ten per cent of the total budgetary figure of Rs 78686.82 crore.

The State also claims one of the fastest growth rates. It has an average rate of 11.36 per cent. This year it has reached 14.8 per cent – almost 15 per cent. Per capita income has increased to Rs 16,119 from Rs 10,055. Despite it being far less than the national average, it is stated to be commendable for a State which had an average income of less than Rs 4,000 a year before the change of regime in 2005.

When Mukherjee struggles to manage his deficit, the State has set a new parameter. And, it is more striking as the neighbouring West Bengal seeks Central dole with its finances sinking. However, there is a tricky difference. Mukherjee has to feed the States. He gives to Bihar Rs 33,126 crore as its share in taxes and Rs 16,083 crore as Central Plan assistance. So a whopping Rs 49,209 crore comes from the Centre and the State raises a mere Rs 29,677 crore. The State earns only Rs 15,695 crore from taxes.

The State also foresees the danger of Central contribution falling by about Rs 2,000 crore by next year as Central finances may reach a critical stage riding on a slow industrial and manufacturing growth and falling investments. The State has made this provision in the Budget. It is also prepared for a deficit of Rs 7569.43 crore – almost equal to its surplus figure. What is correct - the surplus or deficit?

It has naturally led the State budget into a tricky territory. Would Chief Minister Nitish and Deputy Chief Minister Sushil Kumar Modi be able to keep Bihar shining with its falling revenue? This may not be good news for Bihar. It is raising tax rates and tariff on many services, including power. Cars and some other commodities are set to become more expensive as taxes have been increased to raise its revenue.

The State has too many critics. They are critical of Nitish Kumar and Modi, who hold the finance portfolio. The two who are changing the face of Bihar are criticised for “losing opportunities, mismanaging issues related to education, not doing enough to lure investments and many more”.  

Nitish is also criticised for success going to his head and trying to manage the media for favourable coverage. He is said to have entered into an uncalled for fight on the issue of Central University being located at Patna. He has reportedly created enough problems seeking its removal to Motihari. Having not succeeded, he is packing it up to Gaya now.

It is not good news for a State that has higher education in shambles. The well off do not send their children to State universities. They go to Delhi and Bangalore.

The State government has also entered into another tricky area in nominating Vice Chancellors for 10 universities. Since neither the Patna University Act nor the Bihar University Act provide for having search committees for selecting VCs, a UGC stipulation, the Governor and Chancellor Devendra Kunwar rejected the list sent by the State government.

It is also not correct that the State government has done enormously well on all fronts. It has run on rough patches on many issues. Roads have started smoothening up. The State capital, locals say, has cleaner looks – though to a newcomer it does not look so clean.

Industries are packing up to neighbouring Jharkhand as many services, including power has become expensive. Clearance for new industries has remained a complex issue leading the deputy CM to announce once again a one-window scheme.

School enrolment has increased three times – from 3 lakh to 12 lakh. That is where its problems also have begun. School enrolments are not all real. Many children have multiple enrolments. This is where Nitish has possibly not succeeded. His schemes offering bicycles, uniforms and mid-day meal for increasing enrolment has landed him in trouble.

The chief minister’s image-boosting steps have unfolded a new kind of scam. People get their children admitted to different schools, changing their names, to usurp the goodies he is offering. Many houses now have two to four bicycles – gift from the school – for sending one child to school. Some children have collected more than one uniform. Some of the state’s bureaucracy is feeding mid-day meals to “more” children than they are present in schools.

A chief minister who has initiated unique anti-corruption move of confiscating property of the corrupt bureaucrats is in a piquant situation. Can he invoke those provisions against the parents as well? He is already in trouble for acting tough against class ten students as large scale copying was found to be common. In UP, the BJP government has lost election once for trying to stop copying. Nitish is treading on a difficult path.

Bihar has a complex society. The voters are complicated. They may vote for change but they would not like to be deprived what they themselves might have acquired through not so honest means. They win both the heads and tails. The Chief Minister has to lose both – he cannot annoy his voter even if they cheat on him. It is a political compulsion.

Nitish and Modi has to take serious steps to take Bihar out of its morass. Sometimes they function in a feudal manner. There is perceptive change – starting from a zero under last RJD chief minister Lalu Prasad Yadav – small effort looks large. Lalu still remains their saviour. That may not be for long.

The duo has to go beyond seeking publicity. Bihar wants the real change, see its dreams fulfilled. They have to strive more than mere holding Global Bihar Development meet in Patna. Shelling out money to NGOs operated by retired or serving bureaucrats for managing publicity may prove counter-productive as Bihar has not added many jobs as yet and the rural employment guarantee scheme (MREGA) is enmeshed in not very clean efforts.

The people of the State and the nation look towards Bihar for a transformation of the country. One only expects Nitish has broader outlook and can win over his ego to give the State the required direction. ---INFA

(Copyright, India News and Feature Alliance)