It is evident that the otherwise fast growing state of Bihar lags far behind in many of the critical human development indicators. The benefit of the base effect is giving a high growth rate to the state. What is important is that the focus of the state policy needs to shift to human development

Bihar’s success story has been hitting headlines very frequently in the recent past. The story going around in various sections of the media is that Bihar is the fastest growing state of the country, even outperforming traditionally fast growing states like Maharashtra, Tamil Nadu and Gujarat. This fact gets substantiated in the recent Economic Survey. In the Economic Survey (2011-12) presented in the Parliament, it has been mentioned that in 2011-12 Bihar’s GDP grew at a rate of 16.71% which is just double of Gujarat that grew at 8.20%. The Survey also mentions that the growth in Bihar during the period of 2005-06 to 2011-12 was 10.17%, higher than Gujarat once again (refer to the data in the table below).The per capita income growth in Bihar was also 15.44% which sounds impressive by any standard. While on the growth front Bihar’s performance has been terrific without doubt, on development front the state has failed to perform and continues to be a nadir.  Bihar’s success story has in fact brought the growth versus development debate once again at the fore. Is growth in itself enough? Does growth take care of all sections of population and does trickledown effect always works?

Institutions like the World Bank and IMF have been found emphasizing the need for development more than growth. The development focus in recent times has moved to the human development index. It is pertinent to note that growth is a quantitative measure while development is more of a qualitative measure of how an economy has performed. Needless to say, concepts like the Human Development Index and the performance based on this is being used as the parameter for tracking development of economies.

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Let us look at the development aspect in the context of Bihar. The same Economic Survey which presents a rosy picture of Bihar in terms of growth presents a completely contradictory picture in context of development. Some startling facts coming out of the Economic Survey about Bihar are as follows:

• • The poverty estimates indicate that the highest poverty headcount ratio (HCR) exists in Bihar at 53.5% as against the national average of 29.8%. In 2009-10 compared to 2004-05, Bihar has displaced Odisha as the poorest state, with Odisha's situation improving considerably in 2009-10. Lowest poverty is in Himachal Pradesh (9.5%) followed by Kerala (12%).

• • Bihar has the highest decadal (2001-11) growth rate of population (25.07%), while Kerala has the lowest rate (4.86%).

• • As per usual status (adjusted) NSS 66th round 2009-10, the unemployment rate (per 1000) among the major states is the lowest in Gujarat (18) and highest in Kerala (73) and Bihar (73) in urban areas.

• • In terms of decadal growth rate in bank branches, Haryana (59.5%) has the highest growth and Bihar the lowest (14.4%). Even a north-eastern state like Assam (16.5%) is better placed than Bihar. Himachal Pradesh (89.1%) has the highest percentage households availing of banking services while Assam (44.1%) is the lowest followed by Bihar (44.4%).

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It is clearly evident that the otherwise fast growing state of Bihar lags far behind in many of the critical human development indicators. The benefit of the base effect is giving a high growth rate to the state. Bihar has a GDP which is around one-fourth of Maharashtra and hence the base effect will continue to benefit the state in the years to as far as economic growth is concerned, while development may not happen naturally because of growth. What is important is that the focus of the state policy needs to shift to human development. More focus needs to be on spreading health access to common man, making agriculture more productive, and emphasis on education especially on primary education. The government also needs to rope in private sector for more employment generation. Bihar needs to develop not just grow.

Other stories by Vivek Sharma

(Vivek Sharma has worked for 17 years in the stock market, debt market and banking. He is a post graduate in Economics and MBA in Finance. He writes on personal finance and economics and is invited as an expert on personal finance shows.)