Bihar to spend in 5 years what Gujarat did in 50 years

NEW DELHI: An ongoing exercise at the Planning Commission lays bare Bihar’s ambitious growth agenda. Its total plan outlay for the 12th five-year plan (2012-17) at Rs 2.69 lakh crore is more than what a fast growing state like Gujarat has spent in the last 50 years.

Bihar’s projected expenditure in the next five years will be the third highest among all states, next only to Andhra Pradesh and Maharashtra.

The increase in Bihar’s plan expenditure is more than 350% during the 12th plan period with its GDP expected to grow at 13%. The projection seems realistic as during the 11th five-year plan, Bihar’s economy expanded an average 12% when all other states grew in single digit, including Gujarat (9.6%) and Maharashtra (8.6%).

Gujarat’s total plan outlay for the 12th five-year plan has been projected at Rs 2,51,000 crore, double of what it had spent in the previous five years (Rs 1,28,500 crore). Between 1961-2011, Gujarat’s plan expenditure was Rs 2,30,256 crore.

Currently, states are engaged with the Planning Commission for approval of their outlays for the 12th five-year plan. Most states have projected their expenditure and how they will raise these resources, an estimated borrowing and demand for central contribution.

Bihar has promised to fund a major part of its huge expenditure, Rs 1.60 lakh crore or 59% of the total plan outlay during 2012-17, through its own resources and 20% through borrowings and the remaining 21% or Rs 56,394 crore through central contribution.

This may not be an unrealistic target given the track record of Bihar’s resource mobilization. During the 11th five-year plan (2007-12), Bihar funded 54% of its total plan expenditure through its own resources while its borrowing was pegged at 21% and the central contribution was only Rs 18,822 crore or 25% of the total outlay. On other parameters too, Bihar has performed well. The state’s fiscal deficit was 2.9% compared to the Centre’s 5.7% in 2011-12.

Andhra Pradesh ranks top among states with highest plan expenditure projected at Rs 3.73 lakh crore for the plan period of 2012-17. Maharashtra is second with Rs 2.75 lakh crore. Rajasthan, the largest state in terms of area, has projected its plan expenditure at Rs 1.94 lakh crore just below Karnataka’s Rs 1.95 lakh crore.

Bihar is banking on a rainbow revolution, aiming 7% increase in agricultural production to achieve its target growth while continuing its focus on infrastructure development and industrialization. A Delhi like Metro network for capital Patna and a brand new airport are some of the planned infrastructure development initiatives the state has in mind.

It has already secured committed central assistance of Rs 20,000 crore for the 12th plan period. The state’s social sector spending will constitute at least 35% of the total plan outlay in education, health, drinking water supply and sanitation.


1 Comment

  1. Dr. Narayanan EdadanJuly 31, 2012 at 4:20 pm · Reply

    The proposed budget outlay is very impressive, particularly the intent to raise nearly 60% through own revenue sources. Hope the target would be achieved. The big ticket spent would be more focused if the State has a VISION which could be dovetailed through urban and rural local plans and the Vision could be owned by all the tiers of governments, not only the State Government. The weak institutional capacity and private sector investment orientation of urban local governments and their inertia to own the local economic development agenda is a serious threat to the long term sustainable development of the State. Given the low urbanization, negative in some towns, there is an over arching focus on rural development, rightly so from the political economy perspective, but this approach could bring serious dis economies in the long run, after all all countries require efficient urban system to realize the economies of agglomeration and productivity .The fact that cities and towns are engines of economic growth and the need of efficient urban spaces with quality infrastructure seemed to have forgotten by our planners. It is very creditable that the law and order situation and road connectivity of the state have improved significantly. Given the immense agro-based and tourism potential of the State, there are great opportunities for cluster development in the State. An urban economic Vision making carried out by my team has revealed that nearly 30% towns would like to be agro-based processing towns, nearly 15% would want to be educational towns, 11% want to be industrial towns and 11% tourism towns. The question is whether the state has an urban vision and strategy to realize the vision of local stakeholders. Unless and until, the State has a structured strategy to translate the local aspirations through innovative institutional reforms and change the investment orientation of local government officials (the transaction cost of doing business in the state is high as compared to other states), the social and economic impacts of the big ticket spent by the government on infrastructure would be compromised and given the current dispensation of the government on weak enforcement of environmental safeguards, it is important that the State Government is being proactive to ensure environmental sustainability of the development initiatives.

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