Economists doubt Bihar’s tall claims

February 29th, 2008 - 10:47 am ICT by admin  

By Imran Khan
Patna, Feb 29 (IANS) The Bihar government’s tall claims of economic achievements have drawn flak from many economists in the state who questioned the very rationale of the state’s Economic Survey for 2006-07. According to the survey, released by Deputy Chief Minister Sushil Kumar Modi Feb 22, the state’s Gross Domestic Product (GDP) growth rate is 16 percent, almost double the national average growth rate.

Modi, who also holds the finance portfolio, claimed that Bihar - one of the country’s most economically backward states - had striven for “unprecedented economic growth” for the first time in the post-independence era.

However, the government’s claims seem not to have gone down well with economists. “It is absurd, unrealistic and extremely doubtful,” Naval Kishore Choudhary, a professor in Patna University, told IANS regarding the state government’s claims.

Another economist, Bhagwan Prasad Singh, said that it was difficult to digest the government’s arguments about economic growth.

“It is far from the truth and reality; how can we accept that Bihar’s GDP growth is twice the figure of the national average. It’s not feasible,” Singh, the head of economics department at Patna University, said.

According to Choudhary, the government should review the Economic Survey. “It is high time the state came out with the truth of actual growth rate,” he said.

Much to the embarrassment of the Nitish Kumar government, the economists pointed out that the state’s claims came at a time when Bihar, an agrarian state, recorded a drastic fall of 26.04 percent in its food grain output.

Power generation is almost negligible in the state and industrial growth hardly touches 5.5 percent when the national rate is 20.1 percent.

The economists said the survey, an official document of the state government, was prepared by a Patna-based non-governmental organisation (NGO).

Singh said Bihar economy was basically an agriculture-based economy. Last year the state had faced a bad flood and before that a severe drought. There has been perceptible decline in agriculture output.

Given this reality, this growth seems to be a miracle. “Bihar’s industrial contribution in growth rate is not very encouraging. Then how can Bihar’s growth rate record 16 percent and surpass the growth rate of developed states like Gujarat, which records 10 percent,” Singh asked.

The government officials refused to comment on the rising criticism against the claims of the survey. While contacted by IANS, they said that it was they don’t want anything to say on the claims made by the chief minister and deputy chief minister.

According to the Economic Survey, “While rice production has fallen by 24.4 percent in comparison to the previous year, production of wheat has fallen by about 19 percent. It is maize which has suffered the most significant fall, with its production falling by almost 47 percent over the previous year.”

The sugarcane production has also fallen by over seven percent and there was 7.9 percent decline in acreage.

The credit-deposit (CD) ratio of Bihar continues to remain at the bottom. Currently it stands at 31.1 percent, far below the national average of 75 percent and way behind the rate of states like Maharashtra (98 percent), Rajasthan (82.5 percent), West Bengal (62.6 percent) or even Madhya Pradesh (62.2 percent).

The CD ratio across districts shows wide variations, from 18.8 percent in Siwan to 57.7 percent in neighbouring West Champaran. CD ratios of Regional Rural Banks (RRBs) also show variations across different districts with an even wider range, the highest being 63.3 percent for Katihar and the lowest being 19.9 percent for Jehanabad, the survey said.

The self-help groups (SHGs) and the SHG-Bank Linkage Programme, implemented by commercial banks, RRBs and cooperative banks, have emerged as the major micro-finance programmes in the country. As on March 31, 2007, a cumulative number of 72,638 SHGs were credit-linked to banks and the total credit flow to these SHGs was Rs.2.03 billion.

If the record 16 percent growth rate is to be believed, Bihar has left behind good-performing states like Gujarat, Maharashtra, Karnataka and Tamil Nadu.

Last year, for the first time in the annals of the Bihar legislature, the state government tabled the status report on the Economic Survey of Bihar. The report stated that Bihar was lagging behind other states on all development indices. The state ranks at the bottom with respect to Human Development Indicator (HDI) with the HDI for Bihar being about 20 percent lower than the national HDI.

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