Bihar's expanding GDP can sustain populist schemes, say ruling alliance leaders

By Ajay Kumar
Patna, June 11 Ahead of the Lok Sabha elections in 2024, everyone is expecting populist schemes by the Central and state governments. It is expected to be highly competitive in the states where the BJP is not in power.

Bihar has the Mahagathbandhan government led by Nitish Kumar and Tejashwi Yadav and it is up against the Narendra Modi government at the Centre. Populist schemes are expected from both the sides.

After the emergence of the AAP, the trend of free schemes was frequently introduced in the country with free electricity, water, free travel for women in state city buses. It was picked up by the other parties like the Congress in the recently concluded Karnataka and Himachal Pradesh assembly elections. Even the BJP was giving 5 kg rice and one kg gram to poor people and also agreed on MSP for various foodgrains to farmers. The BJP used 'muft ki rewari' terminology for such schemes against the opposition parties despite it also distributing a similar kind of 'muft ki rewari' to lure voters.

Financial experts including the Union finance ministry and the Reserve Bank of India (RBI) always claimed that these 'muft ki rewari' will hit the economy and hence the discussion always starts on this point in the run-up to any election.

Bihar is considered as a relatively low-income state and as the Mahagathbandhan government is ruling here, it is in the crosshairs of the BJP leaders.

"When we discuss whether 'muft ki rewari' would hit the economy of the state, we have to analyse the current Gross State Domestic Product (GSDP), per capita GSDP of Bihar and per capita income of Bihar. As far as my knowledge is concerned, the GSDP of Bihar is higher than the national GDP," said Rajeshwar Singh, a Patna based financial expert and chartered accountant.

As per the data of the finance ministry, the state had bounced back from the Covid phase of 2020-21 and recorded robust growth of 10.98% in 2021-22 compared to the national GDP which was 8.68% in that financial year.

The current GSDP of Bihar at current prices was Rs 675448 crore and Rs 428065 crore constant price in 2021-22. The NSDP for the state in 2021-22 was Rs 614431 crore at current prices and Rs 382274 crore at constant prices. The resulting per capita GSDP of Bihar in 2021-22 was Rs 54383 at current prices and Rs 34465 cr at constant price.

Within the primary sector, the most important contributors to the growth of GSDP have been livestock and fishing and aquaculture which registered a growth between 9.5% and 6.7% between the financial years 2017-18 and 2021-22. Mining and quarrying have also registered a high growth rate of 9% during that period.

Within the secondary sector, it was EGWUS (Electricity, Gas, Water and Other Utility Services) having a high growth rate of 4.5% from 2017-18 to 2021-22.

In the tertiary sector, it was air transport (10.5%), Storage (21.3%), Financial Services (12.6%) and public administration (9.3%) for the financial years 2017-18 to 2021-22.

"One of the simple reasons for the sound economy of Bihar is high taxes in various sectors. For example, the price of petrol in Patna is Rs 108 per liter. When it would be compared to neighbouring Uttar Pradesh the rate is Rs 97 to 98'. Even the CNG is available at the price of Rs 87 per kg which is also higher than Delhi and Uttar Pradesh. The Bihar government has changed the old postpaid metering system to prepaid metering system. It allows the discom to cut the electricity of a particular house once the balance comes in the negative. The price of electricity is already high here. So, the state government is not having a headache of dealing with the defaulters," Singh said.

"The Nitish Kumar government is firm on petrol prices and not reducing state VAT until now. The common people generally believe that the prices of petrol, diesel, CNG are being controlled by the Centre which is right. Hence, if the state government would decrease the VAT on them, the common people would believe that relaxations are being given due to the Centre. Why would the Nitish Kumar government hurt its exchequer to give credit to the Centre? A similar situation exists for electricity as well. Bihar is a consumer state rather than a production state," he said.

"Bihar is a state where the caste factor is more important than financial freebies. Voting takes place on the basis of caste here more than any other issue. In case the Mahagathbandhan government would come with 'muft ki rewari', it would not hurt the state exchequer. The GSDP of Bihar went into the negative during the period of Covid (2020-21) but it recovered up to 10 odd percent in the financial year 2021-22," he said.

Mritunjay Tiwari, national spokesperson of the RJD, told : "When any government makes policies to benefit people from the deprived sections, it's called welfare. Nowadays, leaders of a particular party (BJP) are saying its 'Muft Ki Rewari' which is absolutely wrong."

"In the Narendra Modi government, the freebies meant waiving loans to the industrialists. They are well capable of managing their finances and living a good life. During the 2014 Lok Sabha election, then BJP prime ministerial candidate Narendra Modi promised to give Rs 15 lakh to every person of this country. That was actually 'muft ki rewari' which later on turned 'jhasa or jumla'. A number of industrial friends of the BJP top leadership like Vijay Mallya, Nirav Modi, Mehul Choksi, Lalit Modi and many others benefitted. That was actually freebies to them who turned fugitives," Tiwari said.

"The Nitish Kumar government has started a bicycle policy for school going girls, "Poshak Yojana" (School dress policy), Rs 25,000 to girls on passing intermediate (Class 12) and Rs 50,000 to girls on graduating, diesel subsidy to farmers for a limited period during a drought situation. These are essential things for common people. So the Nitish-Tejashwi government thinks of common people right from the beginning and does not come up with populist schemes at election time," Tiwari said.

Neeraj Kumar, MLC and chief spokesperson of the JD-U, told : "CM Nitish Kumar is a man of commitment and it is reflected through his working history. During the 2020 assembly election, the JD-U and the BJP jointly announced 19 lakh jobs and we have given jobs to many people in various sectors till now."

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