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The Bihar Growth Story & What’s Missing

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Bihar has been reporting astounding economic growth numbers, 13.1% at last count. More pertinently, there is a palpable sense of change and optimism about the future. But where has this growth come from? Does Bihar really beat the other big states now? More importantly, what has economic growth delivered for Bihar?


To try and answer some of these questions, IndiaSpend’s Dhritiman Gupta delved into Bihar’s economic & social data going back a decade. The broad conclusions were; first, the state has ridden an agricultural growth wave in the last decade, like Gujarat. However, it’s a reversal in industrial growth that could be a key reason for growth numbers leaping up.


Second, despite its economic successes, in the same period, Bihar has failed to bring about similar changes in poverty reduction, per capita income and literacy. In absolute numbers, the number of poor in Bihar has increased in the last 5 years, unlike in most other states.


Biggest GDP Gainer


Let’s first look at the GDP figures of Bihar vis-à-vis a few big states, selected on the basis of their similarities with respect to Bihar (Gross State Domestic Product or GSDP figures & poverty rates) in 2000-01. We’ve also included a few advanced states like Maharashtra, Tamil Nadu, and Gujarat.


Even though simple comparisons of GSDP and growth over long periods may yield little, there are some important points that can be taken away from this table (Table 1).


Firstly, between 2000-01 and 2005-06, Bihar’s GSDP had grown by 34.8% (a simple aggregate), while similar states like Orissa had registered 93.6% growth. Even states which were on a much higher base than Bihar, like Maharashtra and Gujarat, recorded good growth rates of 94.2% and 123.7% respectively.


But between 2005-06 and 2010-11, Bihar almost doubled its GSDP, growing 84% (again as a simple aggregate) while all the other states were stagnating. Even a state like Gujarat, which did not have as high a base as Maharashtra in 2005-06, could only grow 56.2%. This also makes Bihar the biggest GDP gainer in the country (at least among larger states) since 2005-06.


Table 1


State-wise Growth Across The Decades


States GSDP2000-01(Rs Crore) GSDP2005-06(Rs Crore) % Growth from 2000-01 to 2005-06 GSDP2010-11(Rs Crore) % Growth since 2005-06
Bihar 58,223 78,494 34.8 1,44,472 84.0
Orissa 42,422 82,145 93.6 1,28,367 56.2
Rajasthan 81,060 1,36,285 68.1 2,04,398 49.9
Madhya Pradesh 74,582 1,18,919 59.4 1,82,647 53.5
Jharkhand 30,941 57,848 86.9 78,045 35.0
Chhattisgarh 25,840 49,408 91.2 79,166 60.2
Maharashtra 2,42,615 4,73,801 94.2 7,75,020 63.5
Gujarat 1,04,494 2,33,776 123.7 3,65,295 56.2
Tamil Nadu 1,42,065 2,49,567 75.6 3,91,372 56.8


(GSDP at constant prices 2004-05)


Source: Planning Commission Data


Bihar’s Year-Wise Growth Figures


Now, let’s look at Bihar’s year-wise growth rates. In a previous report, we had looked at that data to conclude that Bihar had actually done better than almost all states including Maharashtra, Gujarat and Tamil Nadu.


Here, we look at Bihar’s performance against ‘similar’ states like Orissa, Madhya Pradesh, and Rajasthan. We’ve not included Bengal in this report.


Table 2


Growth In Bihar Post Nitish Kumar Against Other States


Year Bihar Orissa Madhya Pradesh Rajasthan
2005-06 0.9 5.6 5.3 6.6
2006-07 17.7 12.8 9.2 11.6
2007-08 7.6 10.9 4.6 5.1
2008-09 14.5 7.7 12.3 9.0
2009-10 10.4 6.6 10.5 5.5
2010-11 14.7 8.6 8.1 10.9
2011-12 13.1 7.1 N.A N.A
Average Growth over 2005-12 11.3 8.5 8.3 8.1
Average Growth over1994-02 4.9 3.9 4.7 7.3
Change in % growth over the 2 periods 6.3 4.6 3.6 0.8


(Figures in %)


Source: Planning Commission Data


In terms of average growth over 2005-12, Bihar was one of the highest in India at 11.32%, just behind smaller states like Sikkim and Uttarkhand which had figures of 13.4% and 12.2 % respectively.


Madhya Pradesh, Orissa and Rajasthan had similar growth rates of 8% over the period 2005-12, but almost 3% lower than Bihar.


In terms of improvements in growth rate when we compare the periods 1994-02 and 2005-12, Bihar again leads this pack of 4 states with 6.3%. Rajasthan comes in last and kept growing at similar rates as 1994-02.


Bihar’s Agricultural Boost


The natural question here is: what led to Bihar’s massive recovery? If we split up growth rates across sectors – agriculture and industry- we find that not only has Bihar demonstrated the fastest agricultural growth in the country, it also managed to reverse its industrial fortunes.


Bihar’s average agricultural growth rate over the period 2004-09 was 8.1%, the highest in the country. Bihar was closely followed by Gujarat, with a figure of 7.4%.


The corresponding figures for Orissa, Rajasthan and Madhya Pradesh were 2.9%, 1.1% and 0.8% respectively. Even though the average growth rates over the 5-year period masks wide yearly fluctuations, the figure of 8.1% is high.


Now let’s look at industrial growth rates.


Table 3


Industrial Growth Rates For The Decade


State Avg Industrial Growth 2000-04 (%) Avg Industrial Growth2004-09 (%) Improvement in Avg Growth rates over the 2 periods
Bihar -4.7 5.8 10.5
Orissa 6.3 17.5 11.1
Rajasthan -0.9 7.7 8.7
Madhya Pradesh -4.4 6.7 11.1


Source: Planning Commission Data


Bihar had an average industrial growth rate of 5.8% over 2004-09. Contrast this with Orissa which grew 17.5%, the highest in the country.


However, if we consider that over 2000-04, Bihar had a negative industrial growth rate of -4.7%, then its achievement over the next 5 years is notable. But Madhya Pradesh and Rajasthan also had negative industrial growth over 2000-04 and then recovered smartly over 2004-09.


Another way of looking at Bihar’s growth story relative to other Indian states is that it’s not industrial growth but agricultural stagnation that’s preventing these 3 states in specific and in general from catching up with Bihar’s overall growth numbers.


Whichever way you look at it, steady agricultural growth and good industrial recovery have been the cornerstone of Chief Minister Nitish Kumar’s success. But now comes the critical question: has the general well being of Bihar’s people improved?


Lowest Per-capita Income In Country


Let’s look at Bihar’s per-capita net GSDP and poverty reduction records.


Table 4


Bihar’s Per Capita Income Trends


State Per-Capita NSDP* 2000-01 Per-Capita NSDP2005-06 % Change over 2000-01 and 2005-06 Per-Capita NSDP2010-11 % Change since 2005-06
Bihar 6,554 7,813 19.2 13,632 74.4
Uttar Pradesh 9,721 13,445 38.3 17,349 29.0
Madhya Pradesh 11,150 15,927 42.8 22,382 40.5
Orissa 10,211 18,194 78.1 25,708 41.2
Rajasthan 12,840 19,445 51.4 26,436 35.9
Gujarat 17,227 36,102 109.5 52,708 45.9
All-India 16,172 26,015 60.8 35,993 38.3


Source: Planning Commission Data


(States covered are ones with lowest per-capita income in 2000-01. Only Gujarat is the exception.)


*NSDP: Net State Domestic Product is the production of citizen irrespective of his geographic location. For example, NSDP of Bihar will include production of people anywhere in India and exclude production of non Bihar people working in Bihar.


Bihar has the lowest per-capita income in the whole country in all the 3 years taken. In 2000-01, Bihar’s per-capita income was 40.5% of the all-India figure. In 2010-11, it was 37.8% of the all-India figure. However well Bihar may have grown it has failed to counter the deprivation of its people, relative to other states.


The Nitish Kumar Effect


But it must also be acknowledged that since Nitish Kumar took over the reins, per-capita income grew 74.4% increase, higher than all the states taken here. In the same period Gujarat (on a higher base) grew 45%.


Again contrast this with 2000-01 and 2005-06, when Bihar’s per-capita income grew just 19.2%. Progress has thus been swift, even though Bihar’s per capital income still lags its sister states.


Over 50% Of Population BPL


Let’s look at the state’s poverty reduction record. The states taken include ones with the highest poverty rates in 2004-05.


Table 5


Bihar’s Track Record In Battling Poverty


State % BPL population in 2004-05 % BPL population in 2009-10 % reduction in poverty
Bihar 54.4 53.5 0.9
Chhattisgarh 49.4 48.7 0.7
Jharkhand 45.3 39.1 6.2
Madhya Pradesh 48.6 36.7 11.9
Orissa 57.2 37.0 20.2
Uttar Pradesh 40.9 37.7 3.2
Rajasthan 34.4 24.8 9.6


(BPL-Below Poverty Line, Tendulkar Methodology used)


Source: Planning Commission Data


In 2004-05, 54.4% of Bihar’s population or approximately 50 million people lived below the poverty line (BPL). The figure reduced marginally to 53.5% in 2009-10. The absolute number of poor people had, however, increased to 54 million; an increase of 4 million (total population: 101 million).


Look at Bihar’s record in poverty reduction against states like Orissa and Madhya Pradesh which reduced the percentage of BPL people by 20.2% and 11.9% respectively.


Of the bigger states, the absolute number of poor people has only gone up in Bihar, Uttar Pradesh and Chhattisgarh. For Uttar Pradesh the increase was 0.7 million (total population: 195 million) and for Chhattisgarh it was around 1 million (total population: 25 million).


Over this period, Gujarat reduced the number of poor people from 17 to 13 million. The best performer, however, was Maharashtra cutting the number of BPL people from 39 million to 27 million; a reduction of 12 million. Tamil Nadu and Orissa were also not far behind reducing the number of poor people by 7 million each.



Worst Literacy Rate In India


Now we will look at some social indicators beginning with literacy rates. Here we have included states which had literacy rates below 60% in 2001.


Table 6


Literacy Rate Comparison


State Literacy Rate in 2001 Literacy Rate in 2011 % Increase since 2001
Bihar 47.0 63.8 16.8
Jharkhand 53.5 67.6 14.1
Jammu and Kashmir 55.5 68.7 13.2
Uttar Pradesh 56.2 69.7 13.5


Source: Planning Commission Data


When it comes to literacy rates, Bihar ranks last of the 35 states in states and union territories in 2001 as well as 2011. To be fair, the state reported a 16.8% rise in literacy rates over the 10-year period.


But all states in a ‘similar’ situation as Bihar in 2001, namely; Jharkhand, J&K and Uttar Pradesh, also recorded impressive improvements, thereby leaving Bihar in the same relative position as in 2001.


Weak Life Expectancy Rates


Now let’s look at life expectancy figures for the state.


Table 7


Bihar’s Life Expectancy


State 2001-05 (No of Years) 2006-10 (No of Years)
Male Female Male Female
Bihar 65.6 64.7 67.1 66.7
Uttar Pradesh 62 61.9 64 64.4
Orissa 60.3 62.3 62.3 64.8
Rajasthan 64.1 67.2 66.1 69.2
Madhya Pradesh 60.5 61.3 62.5 63.3


Projected life-expectancy figures of the Planning Commission


Source: Planning Commission Data


Life-expectancy in Bihar is much less than states like Kerala and Maharashtra. But interestingly, males in Bihar are expected to live more than in the other four states taken. However, females in Rajasthan are expected to live more than females in Bihar.


In fact, Bihar actually is an exception of sorts. In all states except Uttar Pradesh and Bihar, females are expected to live more than their male counterparts. Of the 15 states for which data is available, females are expected to live more than males in 13 states in 2001-05 and 14 states in 2006-10, the only exception being Bihar.


The state of Bihar has some way to go before catching up with the gains made by industrialised states like Maharashtra and Gujarat, if that is an objective of sorts.


Bihar’s social indicators are still weak and perhaps somewhat contrary to the positive perception the state has enjoyed recently. However, the fact is that there is, as we said at the start, a sense of change and expectancy.


Bihar still has a way to go before recovering from the lost decades, particularly when it comes to poverty. Holding and nurturing the growth surge thus becomes all the more critical, Nitish Kumar or not.


Note: We’ve not included services growth in these estimates as state figures were not available

  1. RINKU K SINGH Reply

    July 24, 2012 at 4:30 pm

    sir its really a very gud n use full article to compare the growth rate wid past …n also wid other states. thnx

  2. Nikhil Shekhar Reply

    September 17, 2012 at 8:25 am

    I generally dont write comments, but I must in this case as the comparison is very objective and impressive without any bias.
    Any where else on web you will find that ppl have either gone for Bihar or against it, which should not be the case.

    I am a bihari and I know a lot is yet to be done not to mention percapita income of bihar is still lowest in the country forget about international standards and hence there still is a lot or room for growth.

    I totally agree with the opinion that bihar is recovering(to gain what it lost in Lalu’s time) at a very past pace but there is still a long way ahead.

    If every thing goes as it is (i.e. we can continue the growth rate of around 13%) for next 8, we will only come equal to the national average and not to mention that we need to take care of poverty/health/and new industries. It’s a gruesome task which must be done.

  3. Vivek Reply

    October 4, 2012 at 12:49 pm

    I was looking for an article on the growth comparison on Bihar with other states and I must say. The content on this site is very informative and has touched all the parameters which constitutes to build a developed state.

  4. MALAY Reply

    October 23, 2012 at 3:27 pm

    Thankx a lot for the comparision, the areas to given more boost up can be sorted out through the data. And well few data like education BPL may change drastically over the coming years, as lots has been going on that specific area espicially education to all.

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