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Political Economy of Bihar: Incentives, Corruption, and Industrialization
The political landscape in Bihar is characterized by a vicious cycle of organized interests that prioritize maintaining the status quo over fostering industrial growth. The lack of engagement between politicians and industrialists, exemplified by Nitish Kumar’s neglect of industrialists over four years, creates a disincentive for business development. This institutional inertia is compounded by a unique economic environment where agricultural land’s value is artificially suppressed due to restrictive land use policies, leading to widespread corruption linked to land certification changes. Scams, like those involving shifts in land use classification, illustrate the manipulation of property laws for financial gain. Additionally, the interplay between prohibition policies and illegal trade indicates a collaboration between ostensibly opposing forces, reflecting a broader pattern of aligning incentives that sustain a corrupt system. The absence of robust industries amplifies these dynamics, as the economy becomes trapped in cycles of low investment and high corruption, ultimately stifling job creation and long-term growth potential.