There’s a stark similarity between how India went on to become a Third World country from being one of the world’s wealthiest nations till the eighteenth century and Bihar’s fall from the seat of power and influence. Indians and Biharis can often be seen reminiscing alike about how their country and state, respectively, were once the greatest and most prosperous places on the globe. However, it is not a result of the usual romanticisation of the past that is common in human behaviour, but rather of an era that was genuinely experienced and recounted by their forefathers.
Bihar’s fall from a position of prosperity can be attributed to multiple factors spread over the last two centuries. However, the three most important factors for Bihar’s economic decline in the period of modern history have been listed by Arnab Mukherji and Anjan Mukherji in a 2012 paper titled “Bihar: What Went Wrong? And What Changed?”
The permanent settlement
Under the subjugation of British rule, different land revenue systems were implemented across different parts of the country. The three most important land revenue systems were the Permanent Settlement, the Ryotwari system and the Mahalwari system. Bihar, which was a part of the larger Bengal state at the time, came under the Permanent Settlement, brought into effect by Lord Cornwallis in 1793.
Under the policy of Permanent Settlement, tax revenues were fixed for each zamindar, and the revenue was delinked from agricultural output. This limited any incentive or efforts on the part of the government to improve agricultural productivity through investment in infrastructure or public goods. The Permanent Settlement land revenue policy was in sharp contrast to the Ryotwari system introduced by Thomas Munro in the Madras and Bombay Provinces, which determined tax revenue in relation to agricultural output. The Ryotwari system created incentives for improving the productivity of farms, and so, invariably led to better investments in public health, education and infrastructure. The long-term result of Permanent Settlement was an ailing agricultural sector and associated agrarian sectors with minimal public investment. Its impact also spilled over to the quality of public services such as health and education in Bengal, Bihar and Orissa.
The freight equalisation policy
The Freight Equalisation policy was one of the first industrial policies applied immediately post-Independence. It formed the bedrock of Jawaharlal Nehru’s vision of heavy industry-led development of the nation. The policy was adopted in 1948 with the intention that industry could develop all over the country without undue disadvantage to areas with minimal mineral deposits. This ensured that basic raw materials like coal and iron ore were available at the same price throughout the country. Experts argue that this policy led to an erosion of what could have been a comparative advantage for Bihar in developing value-added activities and mineral-based industries. Industries such as automobiles, which require steel as a major input, based themselves in western and southern states rather than Bihar since they could purchase inputs at the same price anywhere. This had a serious long-term impact on the composition of Bihar’s GDP, which remained heavily dependent on agriculture.
The period of 1990-2005
The most recent and the larger reason for Bihar’s fall from grace is what this book is about. The period from 1990 to 2005, often dubbed as “Jungle Raj”, was a controversial period in which the government de-emphasised the state’s urgent development issues in order to pursue the ostensibly higher goal of social empowerment. Recruitments to public posts and development expenditures were highly curtailed in the belief that they would primarily benefit the upper castes. During these fifteen years, the state experienced an average annual growth rate of less than 1 per cent, while real per capita income nearly stagnated.
Some of the other factors attributed to Bihar’s backwardness are arguably a lack of focus by the central government, as also seen in the skewed allocation of revenue and resources away from states such as Bihar and Orissa. As a result, infrastructure and public goods such as health and education were underfunded.
It is ironic how Bihar, the pioneer of education, free public health and movements against caste and social inequality, is today plagued by the same problems that it once presented solutions to, for the entire country and world. While Bihar in modern history has never been a poster boy of economic or social development, it certainly wasn’t as bad when it entered the twentieth century. In fact, when Bishop Hebber was sailing up the river from Kolkata in the early nineteenth century, he thought Patna was much like St Petersburg. Bihar, post its formation as a separate state from Bengal in 1912, provided outstanding leadership during the freedom struggle, in the form of Dr Rajendra Prasad, Jayaprakash Narayan and Jagjivan Ram, among others. Even after Independence, they went on to play major roles: Dr Rajendra Prasad was the first president of India from 1950 to 1962, Jayaprakash Narayan was hailed as the architect of “total revolution” and the principal leader of the opposition against the Emergency in the 1970s, and Jagjivan Ram was one of the tallest Dalit leaders and deputy prime minister of India from 1977 to 1979. From Independence until 1990, Congress dominated Bihar with the exception of brief periods under the rule of socialist parties and then the Janata Party in 1977-80. The Congress leadership, largely upper caste-dominated, enjoyed the unconditional support of upper castes, Dalits and Muslims over the years to form a deep seat of power. In 1990-91, Bihar was already lagging with a per capita income that was 49 per cent of the national per capita income. However, this fell further to 33 per cent of the national average by 2004-05.
Excerpted with permission from Broken Promises: Caste, Crime and Politics in Bihar, Mrityunjay Sharma, Westland.
