Wednesday, June 27, 2012

Bihar defies India's economic slump, and how

Manoj Chaurasia in Patna

While the Manmohan Singh-led UPA government at the centre is battling hard to somehow contain the economic slump now badly affecting the Indian economy, it is surprisingly a different story out there in the cow-belt of Bihar.

At least, this is what explains the amazingly high demands of vehicles among the “poor” residents in this eastern Indian state whose economy, as Bihar government records claims, has grown by an startling 11.36 percent in the past six years of Nitish Kumar regime, leaving far behind even the most developed states like Gujarat, Maharashtra and Punjab.

Official figures suggest that the sale of vehicles has registered a terrific 500 percent jump in the past five years in Bihar defying the current trend in the country when the sale of vehicles has been badly hit owing to the spiralling fuel price and high interest rate especially in the past seven months.

In the first two months of the current fiscal as well, around 75,000 vehicles have been sold in Bihar showing people’s love for luxury and triggering a debate among the economists about the increasing “purchase capacity” of common Biharis.

State authorities, though, have a different story to tell. According to them, silky roads and improved law and order have pushed up the vehicle sales in Bihar as in the changed situation driving has become a pleasure here. 

They say the vehicles’ sale is registering a growth of 50 to 55 percent every year as now there is no bump on state’s roads once known for being pot-holed, ditched looks virtually turning the whole of the state into a market of auto-parts.

Now with good roads cutting the travel hours just by half, driving is not only a pleasure here but it has also replaced the markets of auto-parts with markets of automobiles itself with many leading national as well as international automobile companies opening up their show rooms across the state, apparently encouraged by the good cash flow in the market.

The illuminating show rooms of prominent car-making companies, such as General Motors, Hyundai Motors and Ford India in addition to very own “Maruti Udyog” even in far-off places are just an indication of how state’s economy has grown over the years, says the government.

The available statistics too appear to be supporting the government’s claim. As per government records, a total of 80,363 vehicles were sold in 2005-06 ~ the year when the Rabri Devi government had quit the throne in Bihar but in the last financial year (2011-2012), its sale touched a whopping 440,000 (including 32,090 cars) figure~ recording a jump of more than 500 percent! 

As per the records, in the financial year 2005-06, the total number of vehicles sold in the state was a petty 80,363, which went up to 1,47,309 vehicles in 2006-07;  1,61,757 in 2007-08;  2,20,413 in 2008-09;  3,27,433 in 2009-10;  3,86,223 in 2010-11 and 4,39,671 in the last financial 2011-12 while in the first two months of the current financial year, as many as 74,928 vehicles have already been sold.

So, from where this money is coming when according to government’s own record, the total percentage of state’s population living below poverty line (BPL) is around 70 pefcent?  

“The rise in sale of vehicle is indicative of the fact that state’s economy is slowly getting strengthened”, Bihar’s transport minister Brishen Patel said. He added that the smooth roads and lack of fear factor among the villagers had further hastened the vehicle sales. According to an official report, altogether 13,322. 80 km of roads have been built by the Nitish Kumar government since it took over in November 2005.

However, the economists familiar with the overall state of affairs in Bihar reject the government’s “turnaround” theory resulting in push in car sales and, instead, describe the “huge flow of black money in markets” as the prime reason behind the alarming jump in car sales in the last few years. 

“The growth model of the Nitish Kumar government is such that money has got centrelised in very few hands (just 5 to 10 percent people), state’s plan size has increased from Rs 6,000 crores to now 28,000 crores while corruption has grown up by 500 percent in the last few years under the NDA regime. Much of the money being used for buying cars is, thus, obviously ‘ill-gotten’ wealth which ought to have been spent on launching development schemes”, explained an eminent economist and a senior professor of economics at the Patna University Professor Nawal Kishore Chaudhary. 

According to him, the present economic condition of the state is such that the ‘looted’ money is being utilized in only two things ~ they are either being invested in real estate which has alarmingly pushed up the land price by five-fold or for enjoying luxury by purchasing expensive cars. “The present economic scenario prevents the ‘corrupt’ to invest money in big business since there is no or limited scope for setting up big industries”, he opined.

Economists say that the growth in Bihar is not sustainable as it has been virtually led by the secondary and tertiary sectors with construction contributing 26.6 percent and hotel business contributing 20.1 percent of the state total growth while agriculture which is the mainstay of state economy and upon which more than 80 percent of state’s total 10 crore population is dependent has shown a negative growth under the present NDA regime. 

“If Bihar has really shown a turnaround and outperformed developed states in the country in matter of economic growth, why would have the chief minister constantly harping on seeking from the Centre the special category status for his state despite his request being rejected earlier by the UPA government?” ask the economic experts. 

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