Can NDA transform Bihar from a labour supplier to a job creator?

On paper, Bihar’s economic performance has been decent. Its economy has grown 3.5 times from ₹2.5 trillion in 2011-12 to 8.5 trillion in 2023-24. Per capita income has grown eight times between 2004-05 and 2023-24.

But on the ground, the state remains one of India’s poorest. Its performance on human development factors is worrisome and pulls down India’s overall score.

The state is unable to provide employment to its youth and remains the largest supplier of labour to other states and even other nations. This is the case because Bihar has not experienced industrialisation like many other states have done or progressed economically.

With the National Democratic Alliance (NDA) poised to win an impressive mandate in the state assembly elections and retain power, the time is right to undertake large-scale industrialisation in Bihar. It may not be easy. Agriculture still accounts for 76% of employment in the state. Manufacturing plays a small role, contributing just 7.6% the the gross state domestic product (GSDP).

Lack of infrastructure and a proper ecosystem that manufacturing needs have prevented industrialisation of the state.

Many years ago, a leading Tamil Nadu-based sugar mill got a licence to set up a sugar mill in Bihar. It made perfect business sense. With a good diurnal temperature (difference between the peak and low temperature during the day), sugarcane cultivated in Bihar had a very high recovery rate (percentage of sucrose content in the cane).

This meant higher output at a low cost. But the project never really took off as the entrepreneur concerned soon realised that the area allotted for the sugar mill had no road infrastructure to transport the sugar that will be produced.

For reasons best known to the policy makers there, no sincere effort was made to develop them. They instead chose to offer the electorate freebies and tall promises.

Even in this election, Rashtriya Janata Dal leader Tejashwi Yadav promised to offer one government job per family in a bid to regain power. However attractive that promise appeared, the people of the state seem to have ignored it, if the results are any indication.

If the NDA wants to offer Bihar a real return gift, it must begin with rapid industrialisation of the state. This would involve a huge investment in infrastructure, identifying sectors that suit Bihar and putting in place investor-friendly policies.

Human resource development needs to be reimagined. Bihar needs to come up with a compelling offer to draw investors. It is not something that has not been attempted before.

The BJP, after coming to power in Odisha, another labour-intensive state, has rolled out policies for large-scale industrialisation of the state. That the state has skilled its workers effectively has helped.

Today, the state’s bureaucracy is tuned to attracting investments in a diversified manner. A mineral-rich Odisha is now seeking non-mineral investments, and industrial clusters are being developed across the state for uniform development.

Realising that its workers dominate the textile sector in Tamil Nadu and elsewhere, it has focused on attracting textile investments into the state. It is already seeing significant success. Bihar should learn from Odisha and set the stage for transforming its economy. Only then can its people realise their dream of working closer home.