Industrial Development in BiharResources, Planning & Industries

Crops

The farmers in Bihar grow a variety of crops. Three major crops are rice, wheat, and maize.

• ▹Rice is cultivated in all districts of Bihar.
  • Autumn rice, aghani rice, and summer rice are three different varieties of rice grown at three different times of the year.
  • The average production of rice is around 5 million tonnes each year.
  • Bihar is the sixth-largest rice-growing state, accounting for 8 % of area and contributing 7 % to the national rice production. But the yield of this important crop remains one of the lowest in India.
• ▹The average annual wheat production is approximately 44.5 million tonnes.
• ▹A world bank report suggest that, even as crop yield levels remain low in Bihar, there has been an uptick in productivity growth over the last 15 years.
  • The yields of all the three major crops — rice, wheat, and maize — have doubled during the period.
• ▹Apart from food-grains, the state produces oilseeds, fibre crops, sugarcane, fruits, vegetables.
• ▹Bihar is known all over India for its litchi and mango. The four most important fruit crops in Bihar are mango, guava, litchi and banana.
• ▹Bihar produce 85% of Makhana national production.

  Example: Makhana (fox nut) from the ponds of Darbhanga and Madhubani is a ready raw material for food-processing units.

• ▹Other crops include Maize, Sugarcane, Barley, Gram, Oil seeds and Jute.

Water resource

• ▹The state of Bihar is endowed with abundant surface and groundwater resources, enough to meet the growing demands of different sectors such as agriculture, industry, household, and environment.
• ▹Though water is considered as a renewable resource because of regular replenishment by the rain spells, the growing population and indiscriminate development is inducing stress on the natural water ecosystems.
• ▹Bihar is also prone to excessive flooding, where more than 70 percent of the population are living under the constant threat of floods.

Forest resource

• ▹The recorded forest area in Bihar was around 6877 sq. kms., which is nearly 7.3 percent of the total geographical area of the state.
• ▹Bihar is endowed with rich deciduous natural sal forests, which are spread over the southern districts of Kaimur, Rohtas, Aurangabad, Gaya, Jamui, Munger, and Banka.
• ▹In addition, the moist deciduous forest occupies the district of West Champaran in the northern plains.
• ▹Valmiki national park is only national park in Bihar.
• ▹Share of Forestry and Logging in Agriculture GSVA has been around 8% since last 3 years.

Financial resource

• ▹The total revenue receipt and capital receipt of Bihar in 2018-19 was Rs 1,31,793 crore and Rs 20,494 crore respectively. The revenue receipt in 2018-19 was 12.2 percent higher than the previous year.
• ▹Bihar has consistently been a revenue surplus state since 2004-05. The revenue surplus for Bihar was 1.34 percent of the GSDP in 2018-19.

  Example: Revenue surplus means the state's day-to-day income (taxes, central share, grants) is more than its day-to-day spending (salaries, pensions, interest).

• ▹State government has limited capacity to raise revenue by itself. Since last few years, around 70-80 percent of the total revenue receipts of the State Government came from the Central Government by way of state's share of the divisible pool of central taxes and grants-in-aid.
• ▹Buoyancy of State's Own Taxes w.r.t. GSDP (Ratio) in 2019-20 was only 1.3.

  Example: A buoyancy of 1.3 means that when GSDP grows by 10%, the state's own tax revenue grows by about 13%.

Planning & Development Department

• ▹Planning & Development Department of government of Bihar is key department for the Plan Formulation.
• ▹It is responsible for:
  • formulating the multi-dimensional strategy for the overall development of the state,
  • consolidation of developmental schemes of various departments,
  • creation of 15-Year Vision, 7-Year Strategy and 3-Year Work Plan under continuous development target, divisions and divisions in various departments,
  • Reviewing and evaluating the progress of expenditure,
  • Collection of statistics for Plan Formulation and implementation of Regional Plans.
• ▹Bihar State Planning Board has been constituted to strengthen the planning machinery.
• ▹Currently, Bihar planning for development is based on the 15 years vision document aimed to achieve the sustainable development goals.

Development of industries in Bihar

• ▹Since the distant past, Bihar has been suffering from surplus population in an agrarian economy and the burgeoning population has been migrating towards the urban centres in the state and beyond.
• ▹Admittedly, the remittances from migrants have positive impact on consumption demand, but it fails to add to the production capacity of the state's economy. The most sustainable solution for this problem is rapid industrialisation.

  Example: Money sent home by a worker in Surat helps his family buy food and clothes in Bihar, but it does not build a single factory in Bihar.

• ▹The share of Primary, Secondary and Tertiary sectors in the GSVA was 21.3, 19.7 and 59.0 percent, respectively.
• ▹Given the large size of working population, Bihar would require a kind of industrialisation that is broadly labour-intensive and also leads to large-scale capital formation within the state, expanding the base of the non-agricultural economy.
• ▹Bihar, a state with abundant physical and human resources, has enormous potential for industrialisation. The State Government has adopted several strategies for industrialisation of the state.
• ▹The state has developed agro-processing industries, based on its comparative advantage in the agricultural sector.
  • Food processing, dairy, sugar, manufacturing, and healthcare are some of the fast-growing industries in the state.
• ▹The official data on informal enterprises shows that a significantly large section of the working-age population has been engaged in small scale production activities.
  • Importantly, the informal enterprises have contributed substantially to capital formation and employment generation in the state.
• ▹Bihar Industrial Area Development Authority (BIADA) has facilitated industrialisation in Bihar through several reforms.
• ▹The impact of major reforms was visible, as the level of investment has increased in the last two years. Furthermore, the revenue collection from the minerals in Bihar has substantially increased from Rs 1083 crore in 2017-18 to Rs 1557 crore in 2018-19.
• ▹The tourism sector has also attracted a significantly large number of foreign and domestic tourists in the last few years.
• ▹The state has performed remarkably well in providing electricity, gas, water supply, and other utility services (EGWUS), which facilitate the production process.

The weak industrial base

• ▹The comparison of the contribution of the industrial sector to the Gross State Value Added (GSVA) across states suggests that it was the lowest in Bihar among all the major states of India.
  • Till now, with a preponderance of small-sized industrial enterprises, Bihar's industrial economy is driven by the demand for consumption goods.
• ▹The sectoral composition suggests that the industrial sector's contribution to GSVA in Bihar was merely 20.0 percent in 2017-18, 11.2 percentage points lower than the all-India average.
  • The lower share of the industrial sector in Bihar indicates a strong presence of the tertiary sector, as the agricultural sector has contributed only 25 percent of GSVA.
  • Within the secondary sector, the size of the manufacturing sector is also very small in Bihar.
• ▹To increase the contribution of the industrial sector in the GSDP, the State Government has strategized industrialisation by introducing a well articulated Industrial Investment Promotion Policy, 2016 and brought in some institutional changes to aid the process of industrialisation.

Schemes and incentive policies

• ▹Chief Minister Micro and Small Industries Cluster Development Scheme to establish Common Facility Centres for 8 clusters.
  • Till date, Rs. 17.96 crore has been granted for the establishment of a Common Facility Centre at 7 clusters.
  • As part of the scheme, an apparel park in Bihta (Patna) and a leather goods complex in Muzaffarpur have been proposed.

  Example: A Common Facility Centre gives many small units in one cluster shared machines, testing labs or design studios that none of them could afford alone.

• ▹Under Industrial Incentive Policy-2011 and the Bihar Industrial Investment Promotion Policy, 2016, an amount of Rs. 284.75 crore has been approved by the State Government to provide basic facilities to the industrial units.
• ▹Chief Minister Scheduled Castes and Scheduled Tribes Entrepreneurship Development programme.

Udyog Mitra

• ▹Over the years, Udyog Mitra has played a pivotal role in promoting industrialisation in Bihar. Udyog Mitra provides consultancy services to prospective industrialists to establish and/or expand their industry, make required project profile, provide necessary information and address various issues that arise during the operation of industrial units.

  Example: A young entrepreneur planning a makhana-processing unit can go to Udyog Mitra for help with a project report, the clearances needed and the incentives available.