Questionnaire formulated to assess fund devolution to states from center has an interesting story to tell on the direction he might take. Specifically, this finance commission has decided to focus on funds flow from ministries, departments, and via PPP mode etc to various states. Further, the economic survey has also made out a strong case for underdeveloped states. Coming in this backdrop, it was natural to expect something good for Bihar in this budget. And yes, the general budget indeed has offered some glimmer of hope for Bihar. Yet, it is not certain if this glimmer of hope on special treatment of underdeveloped state is going to translate into anything in its ultimate analysis. Especially, when this government is going through the motions of pre election financial year under a very tight economic condition, this appears to be more of a non statement to me.

General Budget:

First and foremost, let us take up the statement on revisiting criteria for determining backwardness based on distance on certain parameters from the national mean. These parameters are likely to be national income, human development index, and social infrastructure index and distance physical infrastructure index. Statement further says that the same will be used for determining future policies and fund devolutions. However, it does not specify it beyond that, leaving out scope for various interpretations. One interpretation could be as touted by Mr Nitish Kumar and another could be as presented by Dr Raghvansh Prasad Singh. Mr Chidamabard does not say policy will extend to determining special status criteria nor does he sets up any commission to revisit the criteria for granting special state status. So, whether this announcement is only for a political overture?  It is more likely to be so.

So, coming to more substantive announcements, this budget has following good news specifically meant for Bihar

• Allocation @ Rs. 30 crores for a Central Agriculture University in Bihar – So upgradation of Rajendra Agriculture University to central university is likely to materialize now.  Funny part is that Mr Tariq Anwar is not even aware of this to claim any sort of credit.
• Allocation @ 11.70 crores for setting up of Regional Center of NIPCCD for training of ICDS and ICPS staffs at Patna and Mohali together.
• Allocation @ 125 Crores Nalanda University as against planning commission approved of  Rs 1827 crores (source: planning commission website).  Most commentators (including Raghuvansh Babu) have failed to see this allocation mentioned in the details of expenditure budget.
• Allocation @ 5000 crores under BRGF state component for Bihar, KBK districts, west Bengal and Bundelkhand region together.  Allocations reduced on this account compared to last year. It is down to 5000 crore from last years 6990 crores.   However, share of Bihar is not stipulated specifically.

(Sources of above allocation figures: Detailed expenditure budget)

There are some other schemes from which Bihar is likely to benefit significantly  like allocation for green revolution (@1000 crores) in eastern India, increased allocation of drinking water and sanitation, allocation for LWE districts (@ 1000 crores), BRGF district components, allocations for secondary schools and so on…

However, there are areas where case of Bihar has been ignored with potential to harm its long term economic competitiveness in national context.  Critical ones among those parochial policies are:

• No announcement for “Eastern Economic Corridor” even when large scale allocation has been made as a sub plan within plans of various ministries for Delhi Mumbai Industrial Corridor. These apart, a direct allocation @325 crores  has been made under industry ministry.  Announcement was also made on the progress in planning the details of Bengaluru  Channai Industrial Corridor as is being done in collaboration with JICA.  Announcement was also made on launching the Mumbai Bangaluru Industrial corridor, perhaps with participation of UK, as interest was also evinced by visiting PM of UK recently in this corridor.

These priorities are very much out of tune with the 12th plan theme of inclusive growth. If government has any concern for inclusive growth, it should have taken up development of Eastern Economic Corridor ahead of all other Industrial Corridors.  With increased economic attractiveness and beginners advantage going to western and southern states, late comers like eastern region will not stand a chance for equitable economic development for next 25 years at least. Prudent approach in inclusive growth would have warranted that Eastern Regions are given a priority leg up over other industrialized regions as far as public investment in infrastructure and setting up of industry is concerned. In simple words action of federal policy makers does not match their word. They are weaning off even inherent economic advantage of the eastern regions at a rapid pace instead of lending any helping hand. Bihar has also been ignored in following policies:

• No mega handloom park or any power loom park either. No proposal for setting up any National Manufacturing Investment Region nor there is any major Investment plan in state by any of the PSUs.

• No specific commitment for any kind of physical infrastructure in Bihar. No new highways or expressways for Bihar in this budget. No mention of proposing Bihar for improved regional connectivity to Nepal aka North East and Myanmar. No new port / airport for Bihar either in this budget or in the whole of 12th five year plan for that matter.
• No specific commitment on urban infrastructure of Bihar like metro/mono rail in this budget though five year plan implies that.
• DAE continues to ignore Bihar so does ISRO, CSIR, DSIR and DBT.  Bihar economy does hardly get any share of huge fund allocated to these agencies. MPs from Bihar must push for curtailment of funds to these agencies unless they become more inclusive and embrace Bihar in their folds.
• While colleges and universities in other states were given special budgetary grants in recent budgets @ Rs 100 crores on completing important milestones like 50 years, 75 years and 100 years, there is no such announcement for Patna College or for PMCH.
• While there is budgetary allocation to convert Bengal Engineering College in an IIEST, and a similar such plan is under consideration of planning commission for Cochin Institute of Technology, there is no such plan for Bihar even though Bihar requires technical institutes so desperately

It seems that in excessively focusing on ‘Special Category Status’ Bihar is loosing out on all possible economic advantage it can derive from federal government. In the end, even if state were to get a special category status it will be too late and too little. No industry will come to Bihar, in spite of such status, in future leaving the more enabling environment in the upcoming Industrial Corridors in west and south. There are no other compulsions for them to move to Bihar as country will be any way an integrated market. They can produce anywhere and sell anywhere else in the country, including Bihar.  Bihar will eventually continue to be an economic colony for rest of India, receiving donations and doles from rest of India. Budget announcement implies the same in no uncertain terms.

Railways Budget:

Bihar has been a landlocked state and is not privileged to have any sort of shipping infrastructure or shipping related industry. Such industries are any way destined for states having benefits of coastlines. Landlocked states should have been at least privileged to have the railway industry and civil aviation industry. But even this is not acceptable in this country where regional aspirations tend to overwhelm over genuine national aspirations.  So when Mr Lalu Prasad Yadav pushed for railway industry in Bihar he had a point. However, this met with lot of heart burns. Even those states which have anyway benefits of enjoying much larger investment in port infrastructure and shipyards started crying foul and staked their claim for setting up of railway industries in their jurisdictions. Once Bihar lost railway ministry, the railway manufacturing projects and Bihar specific railway line projects were also pushed on the back burner.  So much of a tribute to our unifying Indian nationhood!

With a railway minister from national political party, having interest in Bihar also, there was an expectation that something better will happen on the earlier announcements made during the UPA I government. However, same stands completely belied now with not a single word on completing those projects. Fortunately, pink book shows some token allocation for those projects, like it has been the case in the earlier years also. Not taking forward the earlier projects and announcing a slew of new production units would mean that old investment gets locked in pending projects without any economic or social return at all. And this kind of economic (mis)management has been the hallmark of the UPA government ever since.  To be true to PM and PMO, they made some feeble noise over last two years in regards to Madhepura and Marhaura projects, but it seems no body listens to them.

Anyway, Bihar can take some solace in the following aspects of railway budget:

• This budget has not been as hostile to Bihar as was the case under TMC brigade.
• Allocation for ECR is more or less in the range of other larger zones.
• Among very few new line projects, Bihar is likely to benefit from doubling of stretch between Hajipur and Ramdayalu Nagar.
• Pirpainti Jasidih link, though mostly in Jharkhand will also do good for Bihar.
• Significant commitment has been made to Nepal border railway line, that is, Sitamrhi- Sursand- Jaynagar- Laukahi. @ Rs. 90 crs.
• Significant allocation to Bharat Wagon Limited as well.

On the other side, there is continuing disappointments in the railway budgets, like:

• 16 pending railway line projects have got only a token investment only. These are:
• Bihta – Aurangabad via Anugarah Narayan Road @ 1cr
• Motihari-Sitamarhi @ 1 cr
• Arariya-Galgaliya @ 2cr
• Supaul Arariya @ 1cr
• Jalalagarh- Kishnganj @ 2cr
• Nawada- Jamui- Laxmipur @ 1cr
• Gaya- Chatara  @ 1cr
• Gaya- Rafiganj- Daltonganj @ 1cr
• Dehri- Banjari @ 1cr
• Bihariganj –Kursela @ 1cr
• Muzaffarpur- Darbhanga @ 1cr
• Bariyarpur- Mananpur @ 1cr
• Aarah-Jagdishpur-Bhabhua Road @ 1cr
• Muzaffarpur- Katra-Janakpur Road @1 cr
• Sultanganj-Katuriya @3 Cr
• Darbhanga -Kusheswarsthan @ 3 cr

Needless to say these are unlikely to get completed even by year 2025. Even serious work on some of these projects may only start during the next five year plan unless, of course, Bihar gets to have a control over this ministry in year 2014 general election.

• Plan for DRM offices at Bhagalpur and Thawe appears to have been shelved for good.
• Toke allocation for most of the other production units like Dalmiyanagar project, Sonepur project and also Garkha Project. Not enough money for upgrading Jamalpur Workshop either.

Bihar is in crying need for railway bridges at Bakhatiyarpur- Patori, Bhagalpur- Naugachhiya-Bihariganj, Teznarayanpur- Sahibganj, Aarah- Chhapara on the Gangase and Kusheswarsthan- Mahishi on Kosi, Thawe-Motihari on Gandak. These projects will entail investment in excess of Rs.5000 crores. Then there is requirement for doubling Kiul-Gaya stretch and Narkatiyaganj- Barauni line.   It seems state cannot do anything but only wait.