Where is Bihar really headed?
Apr 21 2013
Prima facie, nations could hold that being land-locked, they face enormous transportation costs compared to sea-routes and therefore, cannot participate in international trade. In a federal set-up, states normally do not use this argument for backwardness since they can participate in trade with other neighbouring states. In any case, this argument in the context of the 21st century competitiveness, where knowledge, services, and value-addition are the mantra, is specious.
For comparison sake, Switzerland, a land-locked nation, inspires awe. World Economic Forum’s Competitiveness Report 2011, ranked Switzerland world’s Number 1 country in terms of global competitiveness index. Geographically, it is surrounded by economically powerful nations such as Germany, Italy and France. The country is known for its high-technology engineering goods, famous brands of chocolates, dairy products, watches, jewellery and of course, private banking and tourism. It’s approximate 8 million population has a per capita income of $ 70,000 (GDP roughly $550 billion), perhaps, the highest in the world. On the other hand, Kenya has a large coastline and many natural resources, yet its per capita income is just about $800 (less than Indian average, but much higher than Bihar’s, which is approximately $400). According to a central government estimate, almost 45 per cent of Bihar’s population exists in severe poverty conditions.
Till a couple of years ago, Germany was the largest exporter in the world (before being overtaken by China). Except for one port at Hamburg, most of its states are also land-locked — yet Baden Wurttemberg (on the extreme other side of Hamburg and where I lived) is one of the most prosperous ones. This state has some of the most famous names in automobile and engineering manufacturing in the world including BMW, Audi, Porche, Volkswagen and Bosch.
Back home, poverty levels in many parts of India, especially in land-locked BIMARU states, is appalling. But this is completely man-made (consider Punjab and Haryana for comparison purpose). Nobody else can be blamed for the almost missing institutional frameworks for governance. Where are the industries and educational institutions that can create a spiral of local employment, income, and business? Bihar, till the 1960s, was a leading cement producer — what happened to those industries? Harking back to memories of bygone era of Asoka, Nalanda, and Pataliputra can neither provide roti , kapada, makaan, bijli, sadak or paani to the teeming millions.
Baden Wurttemberg and Switzerland are living examples of how land-locked states can focus at different stages of the production processes and intangible services, which in turn form part of a larger and (inter)national value-chain of industries (INVC). The central government’s backward region aid and financial packages are important to kick-start development in backward states, but without a concomitant accountability and monitoring mechanism, it can never produce the desired results. The big question is whether people in Bihar, or for that matter any other region (including UP, Bundelkhand, and Orissa), will eat the fish just for one-time, or would they learn a permanent skill of how to fish?
This means that the political leadership of land-locked states has to appreciate that creation of vital infrastructure, educational and institutional frameworks are the sine-qua-non for entrepreneurs and firms to perform. In their book, Why Nations Fail, professors Acemoglu and Robinson argue that the wealth of a country (state) is most closely correlated with the degree to which the average person shares in the overall growth of its economy. This means that regions can benefit from open markets and interdependent global economy only through competition, innovation and fair trade. Every state has an abundance of dormant and potential entrepreneurs — it only requires a proper audience and ambience for them to flourish — for example, Anand Kumar’s initiative of Super-30 at Patna has achieved global accolades from Time magazine and US president Obama’s special envoy. (By the way, has the Bihar government tracked the future and whereabouts of these Super-30s that make it to the IITs every year, and whether they came back to serve the state?)
Bihar is representative of a remarkable story of mismanagement, lawlessness (as depicted so powerfully in Prakash Jha’s movies), sense of entitlement to a very few, and caste-based elitism in most backward parts of India. It is criminal to keep people abysmally poor for long periods of time and blame it on ‘nature’. There can be no one-size-fits-all solutions, but then broad contours of development models remain the same globally. The political leadership must therefore, be extremely careful not to promote myths and misperceptions that prevent large populations from obtaining a minimum level of human dignity and human rights.
(The writer is a professor of strategy and corporate governance, IIM-Lucknow)