Bihar's turnaround analysed at London School of Economics

LONDON: The turnaround in the growth of Bihar, one of the poorest and most populous states, was at the centre of a panel discussion at the prestigious London School of Economics ( LSE).

A new collection of essays titled "The New Bihar: Rekindling Governance and Development", edited by Rajya Sabha MP N K Singh and director of LSE India Observatory Nicholas Stern, was launched at an event at the premier educational institute yesterday.

"Bihar is a state with a long and rich history which hit rock bottom for about two decades and got left behind from the mainstream development of the country," said Singh, an economist and former Indian finance secretary.

"But its turnaround in the last eight-nine years has seen a growth rate of 13.5 per cent last year."

But Singh said the battle is "far from being won" as Bihar needs additional and incremental growth because estimates show that if the state continues to grow at 13 per cent, it will take 20 years to approximate India's average rate of growth.

Co-author Stern said Bihar still houses the highest proportion of people in poverty and is a region where the UK has been active through the Department for International Development ( DfID), support which is likely to end as the government withdraws its aid programmes in India.

"We are not pulling out of Bihar, simply changing the nature of DfID's interaction in the region and to transform it into more of a partnership," said Danny Alexander, chief secretary to the UK Treasury.

He, however, questioned the sustainability of the Bihar growth story and whether any change in leadership as a result of elections may apply brakes to it.

"A lot of Bihar's success is down to its leadership (Chief Minister Nitish Kumar) and unless another leader has a similar vision, the sustainability is questionable," agreed Karan Bilimoria, the Cobra Beer founder-chairman who drove the only major foreign direct investment ( FDI) into Bihar when he purchased a brewery in the state a few years ago.

"We took a risk and in two-and-a-half years, have tripled our capacity. Bihar needs investment and I am confident it will flow," he said.

While marketing expert Suhel Seth flagged a lack of proper marketing of "Bihar's changing paradigm", Indian High Commissioner Ranjan Mathai said the Bihar story proves that "given the relatively low base as a starting point, even small changes in policies and regulations can trigger growth".