Learning from Bihar


Jul 6, 2018-

The provincial governments have presented their budgets for the fiscal year 2018-19 to their respective Provincial Assemblies. The annual financial plan of Province 2 is worth Rs29.78 billion, of which 48.60 percent has been set aside for current expenditure and 51.40 percent for capital expenditure. The budgetary document aims to attain good governance, social and physical infrastructure development, poverty reduction and better service delivery.

Days before the budget was issued, Nepal Rastra Bank published province-wise data reflecting the country’s socio-economic indicators which showed that almost 24 percent of the country’s poor live in Province 2. The Human Poverty Index (HPI) and Human Development Index (HDI) are lower than even Karnali, which is known as one of the most deprived regions in Nepal. The literacy rate is the lowest among provinces. One million-tonne grain deficit exists in this plain and fertile province. Moreover, it exhibits the highest infant mortality rate (IMR), and only 26 percent of the households have toilets, which is the lowest rate in the country.

The status of Province 2 brings to mind an article published in the February 2004 issue of The Economist which described the Indian state of Bihar as ‘an area of darkness’ due to widespread poverty and run-down infrastructure, education and health systems. There is a similarity between the socioe-conomic backwardness of Province 2 and Bihar. However, things have been changing dramatically in Bihar since its Chief Minister Nitish Kumar took over. Thus, it won’t be unwise to trace the policy prioritisation and reform strategies that have been adopted to transform Bihar.

Policy shift

Coming to power in 2005, Nitish Kumar pushed for a platform centred on development and social justice, as against his political rival Lalu Yadav’s patronage politics. He carefully prioritised and sequenced transformative and reformist policies. Above all, the ‘rule of law’ was identified as being the barrier to all governance reforms, and the existing laws were reviewed for relevance. The next focus was on connectivity in the rural state. Roads, bridges, hospitals and school infrastructures were carefully planned to be free of supply-side constraints, thereby stimulating additional demand.

Efforts were also made to reduce the number of steps in the governance procedure for maximum accountability with lesser blockages. Reforms were introduced in public offices by computerising the treasury and launching e-tendering for faster tender processing. A mechanism for leakage control, simplified taxation and computerised revenue monitoring and single window revenue checkpoints were created. Programmes for agro-marketing were also introduced. Policies were reformed to incentivise farmers to grow profitable crops. Farmers-scientists interaction programmes were held to share ideas, lessons and technologies.

As a result, farmers’ income doubled and infrastructural development surged. Jobs were created, investments soared and revenue generation increased. Bihar achieved the second highest economic growth rate among the Indian states. Such changes allowed spending on socio-economic services like better education, energy and health. This marked a major shift in the overall infrastructural, socio-economic and human development of Bihar.

At the home front

The government of Province 2 should also prioritise development and social justice to bring about tangible governance. Considering the budgetary allocation, the provincial government can focus on policies for developing road networks, provision for better seeds, construction of cold stores in each district and distribution of modern agricultural equipment. However, they are not enough. The priority accorded to basic facilities and social and human development seems to be inadequate. A mere Rs310 million has been allocated for the modernisation of three major hospitals and a trauma centre in the province with the highest IMR in Nepal.

Similarly, the allocation of Rs216.3 million seems unrealistic to implement the ‘one toilet for

each household’ project in a province in which only 26 percent of the households have toilets. The energy sector too deserves more than the Rs80 million it has been allocated. Likewise, the budget has allocated almost Rs300 million for girls’ education through the ‘Beti padhau, beti bachau’ programme, hostels for Dalit students in each district and the development of Rajarshi Janak University. This is unrealistic for addressing the lowest literacy rate of the province. Further, allocating only Rs530 million for irrigation seems to be not enough. This budgetary prioritisation will not allow a rapid shift in the HDI ranking of the province.

In order to address the highest HPI of Province 2 and overcome its food deficiency problem, policies should be oriented towards increasing agricultural production via value-added agro-processing and agro-based industries. Though modernisation of agriculture has been provisioned in the budget, incentive plans for profitable crops, crop insurance and contract farming are lacking. Additionally, the budget should aim to attract investments with a clear policy framework. Strategies should target ease of doing business, formulation of business friendly laws, simplified tax system and a single window business registration mechanism.


These steps will help to bring investments in all sectors that will generate employment,

stimulate growth and boost the province’s infrastructural and overall development.

To overcome expenditure constraints, the government can engage in partnership with the private sectors and facilitate trade and communication in the province. Delegating decision making powers to authorised corporation boards for rapid execution of infrastructural projects and collaboration with donor agencies for soft loans can transform Province 2.

Finally, a mechanism for better accountability should also be a priority of the government. The existing consumer committees and school management committees should be revived. With better accountability and transparency, revenue generation will get a boost and this will allow more public spending. The government can target better schools, higher enrolment, recruitment of teachers and health workers, free health cards and insurance with the increased revenue. Social development programmes should focus on disadvantaged sections like Dalits, Muslims and women. This will lead to exemplary good governance in Province 2 and turn it into a development model.

Mishra is a lecturer at National College, Kathmandu

Published: 06-07-2018 08:00

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