Ep 345: Economic Learnings of India for Make Benefit Glorious Nation of Bihar
Sep 4, 2023
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Economic experts Mohit Satyanand and Kumar Anand share insights from their study and road trip through Bihar. Topics include the economic conditions and poverty in Bihar, challenges in the education system, the economic implications of alcohol ban and the sand mafia, lack of economic activity and industrialization, the connection between nutrition and brain development, and economic challenges faced by Bihar.
Bihar's poverty is a result of systemic issues, such as limited industrialization and low agricultural productivity.
Understanding Bihar's political economy reveals the intricate relationship between power, money, and policy decisions.
Education and infrastructure are critical for Bihar's development but are currently inadequate.
There is a lack of hope and optimism among the people of Bihar, contributing to a sense of despair.
Bihar suffers from a stark contrast between underdeveloped rural areas and slightly improved small towns.
Strong leadership and economic growth are crucial for uplifting Bihar's condition.
Deep dives
Bihar's dual identity: Large and poor
Despite its potential as one of the largest countries in the world, Bihar remains one of the poorest regions. The perception of Bihar as a separate entity, even within India, is due to the stark contrast between the living conditions of those in Bihar and those in urban, prosperous areas. The vast majority of people in Bihar live in poverty, often unseen and unrecognized by the rest of the country. This highlights the need to address the underlying causes of poverty and the failures of policy and ideas that have contributed to Bihar's current state.
Evaluating Bihar's poverty and economic challenges
Bihar's poverty is not just a result of individual circumstances, but a consequence of systemic issues. For instance, the low level of industrialization in Bihar limits job opportunities and economic growth. The shortage of industries means limited access to revenue sources for the government, leading to budget constraints that impede investments in critical sectors like education. Additionally, the high population density and fragmented land holdings make it challenging to attract private investment and worsen the already low agricultural productivity. These factors contribute to Bihar's economic stagnation and perpetuate the cycle of poverty.
The complex interplay of politics and economics in Bihar
Understanding Bihar's political economy reveals the intricate relationship between power, money, and policy decisions. The pursuit of both notes (financial resources) and votes (political support) drives politicians' actions. In Bihar, where industries are scarce, politicians often resort to alternative sources of revenue, such as the sand and liquor mafia. Industries are not prioritized due to the limited revenue potential and difficulty in providing unencumbered land and necessary infrastructure. The political competition that could stimulate development and progress is hindered by the vested interests of a few and the lack of viable economic alternatives.
Education and infrastructure challenges in Bihar
Education and infrastructure play significant roles in Bihar's development trajectory. The education system, plagued by inadequate resources and poor quality, fails to cultivate the human capital necessary for economic growth. This, coupled with the lack of investment in infrastructure, such as roads, electricity, and industry, further hampers Bihar's progress. The absence of industry and limited job opportunities exacerbate the challenges, leading to a reliance on government jobs and an overcrowded public sector. Unless these issues are effectively addressed, Bihar will continue to struggle with poverty and economic underdevelopment.
The Lack of Hope and Optimism
During the road trip through Bihar, it became apparent that there was a lack of hope and optimism among the people. Various individuals from different sectors, including education, trade, real estate, bureaucracy, politics, and media industry, expressed a pessimistic outlook. The absence of positive voices, coupled with the visual deprivation observed in the rural areas, painted a bleak picture of the state. The low per capita GDP, underemployment, and lack of development only further reinforced the sense of despair. The hope that was once present in Bihar seemed to have diminished, leaving behind a feeling of resignation and cynicism.
Contrasting Realities
Bihar showcased a stark contrast between the rural areas and the small towns in terms of development and available resources. While the villages lacked basic amenities like proper housing, clean cooking fuel, and infrastructure, the small towns saw some progress. However, even in the towns, there was a dearth of aesthetic beauty and leisure opportunities. The lack of investment and job opportunities forced many Bihar's to migrate to other states, seeking better prospects. The underdeveloped nature of the state was evident in the disparity between the quality of life in Bihar and even the smallest towns in Germany.
The Role of Leadership and Economic Growth
Effective leadership and economic growth were highlighted as crucial elements for uplifting Bihar's condition. The initial period (between 2005 and 2012) showed promise and hope, with efforts to improve infrastructure, law and order, and governance. However, political considerations and shifting priorities seemed to have hampered further progress. The lack of investment and job opportunities contributed to the negative sentiment among the locals. It became evident that Bihar needed strong leadership to drive economic growth and create opportunities for its people.
The Need for Change in Perception and Opportunity
The perception of Bihar as a backward state needs to be challenged, as many Biharis themselves believed the development to be moderate rather than backward. The focus must shift towards creating opportunities for leisure, beauty, and cultural enrichment in the state. Investment in infrastructure, education, and employment generation can pave the way for a brighter future. Breaking the cycle of underemployment and enhancing the standard of living should be the goal, along with providing quality healthcare, education, and basic amenities to all sections of the society.
Challenges of Investment in Bihar
Investors are reluctant to set up industry in Bihar due to a trust deficit between industry and the government. The government has failed to deliver on promises made to industry, leading to a lack of policy certainty. The uncertainty and unpredictability of government actions make it difficult for new investment to come in, hindering economic opportunities in the state.
Political Imperatives and Short-Termism
Indian politics, especially in Bihar, is often driven by short-term thinking as politicians prioritize winning elections and catering to specific interest groups. However, examples from other states show that political leaders can balance short-term incentives with a long-term vision for economic growth. Social and economic development require a farsighted political approach, where governance and policies focus on both immediate needs and long-term economic growth.
Lack of Policy Certainty and Infrastructure
The lack of policy certainty in Bihar, with changes in government decisions dependent on unpredictable factors, creates obstacles for potential investors. Manufacturing and industrial development require not only supportive policies but also functioning infrastructure, such as efficient transportation and reliable power supply. Bihar has struggled to create a conducive environment for industry and attract investment, resulting in a limited number of new factories and industrial growth.
Youth Aspirations and Mindset Shift
Youth aspirations in Bihar still tend to focus on government jobs, given the lack of role models and opportunities for entrepreneurship or economic growth. There is a need to change mindsets and foster ambition among the youth by showcasing success stories of economic development and providing the necessary resources for skill development, education, and job creation. A shift towards a more entrepreneurial mindset can drive innovation, create job opportunities, and lead to long-term economic growth.
