Cash transfers improve Bihar’s delivery mechanism

“In the happiness of his King’s subjects lies his happiness; in their welfare his welfare. He shall not consider as good only that which pleases him but treat as beneficial to him whatever pleases his subjects” – Chanakya, Arthashastra.

Nitish Kumar seems to be paying heed to Chanakya’s principles on good governance. As we continue our journey through Bihar, a state that VS Naipaul once described as the place where “civilisation ends”, we focus on the steps taken by the administration to improve the delivery of services and boost investment. Hello and welcome to Ministers of Change – CNBC-TV18’s special edition series, I am Shereen Bhan.

On the show this week we examine how the use of cash transfers has improved Bihar’s delivery mechanism

Gurcharan: The big idea is not the bicycle but cash transfers. We look at the infrastructure created to deliver basic education

Neena Jha: Not just quantity but quality of education, raising the level of human resource

We point out what Nitish Kumar needs to do to sustain the 11 per cent growth clocked in 2010

Ron Somers: Needs to sustain growth by bringing in private investment

And industry tells us what they want from the govt to drive investment

Adi Godrej: Govt must provide us with resources like land and infra

Suraksha, Sadak and Shiksha were Nitish Kumar’s big promises in the first term and he’s delivered on all three. Experts say Nitish has succeeded because these reforms have been delivered with a touch of difference. For instance, it is the first state in the country to meet vacancies in its police force by recruiting retired army personnel.

Neelmani, DGP Bihar: This is now being copied by other states

Having laid 11,000 km of roads, the mission is to develop state highways so that one can travel to Patna from any part of Bihar within six hours. And here too the approach has been a novel one

Pratyaya Amrit, Secretary, Roads Department/Former CMD, Bihar Pull Nirman Nigam: The biggest challenge was paucity of contractors, so to overcome this simplified the procedure for registration, now registration takes 24 hours

And this sight is not only symbolic of the empowerment and education of the girl child. It’s also a symbol of a new approach to delivering subsidies and services to the disenfranchised via cash transfers.

Mukesh Ambani, Chairman, Reliance Industries: The CM shot this down and decided that the they would distribute Rs 1800 in good faith as long as they had a card

Rajesh Bhushan, Director, Bihar Education Project: The CM suggested that all such transfers should take place in schools and entire community must be invited and this should be pre-publicised so that everything happens in the public domain.

Since 2007, the Bihar govt has spent less than Rs 200 cr on cycles for 8.7 lakh schoolgirls under the Mukhyamantri Balika Cycle Yojana but the results have been extraordinary. Successful implementation of this scheme has led to a dramatic drop in the rate of girls dropping out of school; in fact the state claims to have halved the drop out rate. Under this Yojana girls are rewarded with bicycles if they manage to reach the ninth standard… the scheme is now being expanded to cover boys as well.

Meanwhile, enrollments in schools have risen 4 times. Simply because the govt constructed 15,000 schools and funds for this have come largely from the Central Govt’s Sarva Shiksha Abhiyan programme. In the last four years allocation to the state has almost doubled and consequently the criticism has been that Bihar is over dependent on central schemes

Nitish Kumar: Central and state govts have to work together

Neena Jha, COO, Astirc – Centre of Excellence: As a person who used to travel from Bettiah to Patna at least three times a year you never saw so many schools functioning, even if the building was there many other things would be missing, most of all the teacher

Recognizing this, over 2.5 lakh teachers were recruited to fill vacancies and this was done by decentralizing the entire process. Panchayati raj institutions were empowered to recruit teachers. But there was no quality check built into the system. So some individuals who are still completing their education are teachers… like at this primary school in Shankarpuri in Madhepura district.

Rajesh Bhushan, Director, Bihar Education Project: This sort of large recruitment had not taken place in history of Bihar so there was bound to be criticism. So now we are conducting teacher competency tests and creating a panel of teachers from which decentralised units can pick teachers.

Nitish Kumar’s pet project now is the resurrection of the Nalanda University under the mentorship of Amartya Sen and APJ Abdul Kalam. This university will open it doors only in 2013 but over the last 6 years the govt has managed to transform Patna into a hub for quality higher education. IIT Patna has been functioning out of a temporary campus since 2008 but that doesn’t mean it’s not at par with its counterparts in other cities

Anil Bhowmick, Director, IIT Patna: Some of our brightest students are from Bihar so decided to set up campus here. Student teacher ratio here better than other IITs

Students have come here from all parts of the country and don’t seem to regret the experience like these students at the Chanakya National Law University who didn’t take too kindly to being asked if they felt they had taken a step down by choosing to study in Patna

Piyush Bhandari, Chanakya Natl Law University: There are only 10 national law universities in the country and this is one of them. We have moot courts, etc, so there is no such point of saying that we are in Bihar and not getting facilities

Perdha, Chanakya Natl Law University: One needs to see Patna with their eyes and not with their ears

So one sort of migration out of the state: that of students moving out to study, is on a decline but there’s hardly any change in the traditional migration that takes place. The slow pace of industrialisation and no forward movement on the politically sensitive issue of land reforms has meant that over 5 million people continue to move in and out of the state every year to earn a livelihood. And the situation post the Kosi floods of 2008 has worsened especially in high-migration districts of Supaul, Saharsa and Madhepura.

Driving down from Saharsa to Rampur Lahi in Madhepura there was little to remind one of the havoc wrecked by the Kosi in 2008. For almost 5 months large swathes of land remained submerged under flood waters and 4.5 lakh people lived out of 404 relief camps. The management of one of the biggest natural calamities in the state in recent years drew praise for the government and Nitish Kumar was felicitated by our sister channel CNN-IBN, with the Indian of the Year award in 2008

Nitish Kumar, Chief Minister, Bihar: This is not an award for an individual but for a state that has moved down the path of development

But two years on it’s still only the basics that are being taken care of. In January this year the World Bank approved a $ 220 million loan to support rebuilding efforts for below poverty line families.

Villager, Rampur Lahi – Madhepura: Humain nahi laga tha ki ghar milega. Jab ghar sanction hua tabh bhi nahi laga ki milega kyunki gaav mein panchayat se opposition thi. Phir jab paisa mila tabh bhi nahi laga ki ghar banega kyunki kitne projects aise hi rukh jate hai. Par aaj humara ghar ban gaya hai. Officers ne humain bolo tha ki goos mat dena, agar koi maange toh humain directly phone karna

And this sense of empowerment for the people of Bihar is a novelty and an important tool of change. But the situation at this “colony” built by the Mahindra Group in Pattori village is illustrative of how resettling a community doesn’t amount to its rehabilitation. Houses here were allotted to the poorest: all of them landless labourers, most belonging to the Musahar caste, traditionally rat-catchers. But today, of the 45 houses, only a few are occupied.

Nagorishi Dev, Pattori – Madhepura: Bhukha aadmi ghar nahi dekhega, bahar kaam karne jayega… log kahi, kahi chale jate hai

Prakash Jha, Filmmaker and CMD, P&M Infra Ltd: The biggest change in Bihar will be brought through economic development

Adi Godrej, Chairman, Godrej Industries: The main thing about industrialisation is that it adds to job creation, value addition and GDP growth

SP Sinha, President, Bihar Industries Association & Chmn, Hotel Maurya: Bihar is starting from a clean slate; it’s like a baby being born so you have pangs of birth also. Hopefully in his second term Nitish should be able to deliver

And Nitish had better make industrialisation a priority because the magnitude of the problem at hand is huge. While the state grew at an impressive 11%, contribution of agriculture to GDP languished. And a more telling indicator: remittances by migrant labourers to the state accounted for 7% of Bihar’s GDP while industry contributed just 9 per cent.

Coming up, we look at the challenges of industrializing Bihar and what the govt needs to do to aggressively woo investors

Ron Somers: Infrastructure, infrastructure, infrastructure

Satyajit Singh: Deficit is the pro-active role of the govt and by that I mean the CM

Kamayani: land acquisition process a little skewed

“Hence the king shall be ever active in the management of the economy. The root of wealth is economic activity and lack of it brings material distress. In the absence of fruitful economic activity, both current prosperity and future growth are in danger of destruction. A king can achieve the desired objectives and abundance of riches by undertaking productive economic activity” – Chanakya Arthashastra

Today Patna is comparable to most Tier II cities in the country in terms of economic activity and consumption patterns. Malls like this one built by filmmaker Prakash Jha is the first of 7 in line to open up in Patna. People today are consuming goods and services with little fear of attracting unwanted attention from the local mafia. Maruti Suzuki reported a 30 per cent rise in sales in Bihar last year and telephone connections have risen 10 fold in five years. The share of services to the state GDP has increased as well, from 50.5 per cent to 61.6 per cent in 10 years and this is bringing back Bihari youth like Ashwani Singh to explore work opportunities in the state.

Ashwani Singh, Glodyne Technoserve: See it as a great opportunity to come back home and have access to new opportunities before everyone starts rushing in. People are leaving lucrative jobs with companies in Bangalore, Delhi, Kolkata to come back to Bihar.

It seems as if things are coming full circle for Bihar. At independence, Bihar was the 6th most industrialised state in the country. 25 per cent of India’s sugar output came from Bihar and the mineral-rich state was home to some of the biggest iron, steel and cement plants in the country. But the freight equalization policy introduced by the central govt in the early 1950s stunted the growth of industry in the state.

SP Sinha, President, Bihar Industries Association & Chmn, Hotel Maurya: Bihar lost out in the 1960s right through the 1980s. Other states had gone far ahead. In the 1990s when the economy was liberalized, businesses in Bihar had no surplus to reinvest in the state.

Rise in lawlessness, languishing infrastructure, and the politics of patronage in the 1990s kept new investment in the state at bay even in areas with tremendous potential for investment like agro industries and tourism. And then in 2001, the state was divided; Jharkhand was carved out of erstwhile South Bihar.

Shaibal Gupta, Founder & Secy, Asian Development Research Institute: Division of Jharkhand was disastrous, it was done without proper thought and most of the institutions that were built were in South Bihar and North Bihar was always agrarian

It is for this reason that for the last 5 years Nitish has had a single-point agenda with the Centre: special status for Bihar. The govt hopes to attract businesses to the state by offering tax holidays and sops. But as industry points out that won’t be enough.

Gurcharan Das, Former CEO, P&G: It will take a while for industry to go back to Bihar, because it’s been bitten once

Adi Godrej, Chairman, Godrej Industries: It’s a very agrarian state especially after Jharkhand and there was never a serious attempt by past govts to industrialise. But now we’re seeing law and order is very much under control and the govt is investing in roads and other infra projects but I still don’t see much industrialisation. Will need an industrial policy that will provide investors with resources they need like land and infrastructure

And like we’ve seen in other parts of the country making land available for industry will be a sensitive issue given that 81% of its workforce is dependent on agriculture for livelihood

CK Mishra, Principal Secretary, Industries: We are not thinking of creating big SEZs. Instead we are looking at creating land banks. Will acquire land in each district, 100-200 acres, have ear marked Rs 1500 crore just to create a land bank. Acquisition has not been simple but we will not take land forcibly.

Nitish is quick to learn from the mistake of Buddhadeb Bhattacharjee’s disastrous attempt at land acquisition but the state’s laws need to be refined further to help rehabilitate the “bataidars” or landless labourers, who have no rights to ownership and thus compensation.

Kamayani, Jan Jagran Abhiyan: Land acquisition process a little skewed: there is a better compensation package for those who willingly give up their land. In any community there are tillers who have no rights to the land. This is one of the Bandyopadhyay Committee recommendations as well. By doing this you are acting in favour of non-resident zamindars

So land is one problem and power is the other. Bihar generates only about 100 MW of power daily. And despite the 900 MW it gets from the central grid; the state is facing a deficit of 1,000 MW a day and this without any major pressure or demand from industry.

While the deficit is significant the state is working towards boosting captive power generation. NHPC and NTPC are putting up power plants in the state and MoUs have been signed with private players as well but all of this is likely to come online only closer to 2015. Creating infrastructure for industry block by block is one of the govt’s biggest challenges in its second term, something even Ron Somers, who is leading the first ever delegation of the US India Business Council to Bihar, recognises

Ron Somers, President, US India Business Council: Infrastructure, infrastructure, infrastructure will be the key and we are looking to partner the govt in putting in place this infrastructure

But companies like Ruchi Soya, India’s largest manufacturer of edible oils, is pumping in Rs 200 cr in the state because it has spotted a huge market potential. Dinesh Shahra sees Bihar as a gateway to East and North East markets and is innovating to bridge deficits

Dinesh Shahra, MD, Ruchi Soya: UP and Bihar are traditionally power deficit states, so we’ve set up a wind power cogen facility to meet our energy needs. Will set up a 6 MW biomass plant, surplus will be sold to the power grid

Over the last year Godrej, Britannia and Parle have also made investments and United Breweries which has one of its oldest plants here is also looking to up investments in the state. New entrant Hero Cycles is also setting up a manufacturing unit in the state which is today one of its largest market.

Pankaj Munjal, MD, Hero Motors: It is untapped, there is very little industry so the potential is yet to be unleashed. And with a good leadership in place, leadership is everything, water flows from the top

Guru Malladi, Partner – Govt Svcs, E&Y: The industry, govt interaction in the last year has been increasing and there is a lot of debate on tourism and agro industries

Ron Somers, President, US India Business Council: Want to bring food processing industry to the state. Talk to govt, private agriculturists and businesses to see how we can create a functional supply chain to take farm produce to the marketplace not just in India but internationally

CK Mishra, Principal Secretary, Industries: Three years is what I would give for major industries to come to Bihar. One big industry has to come and that will trigger a boom

But it has already been three years for Shakti Sudha – the largest supplier of makhana or fox nut in the country. At the opening of the processing plant in Patna, the Chief Minister hailed it as the beginning of the “white ball revolution”. A 4200-strong farmer network that acts as Shakti Sudha’s back-end supply chain is in place but it’s no where near a revolution yet. Satyajit Singh, who also heads CII’s Bihar Council, says the need of the hour is bold decision-making

Satyajit Singh, Chairman, Shakti Sudha / President, CII Bihar Council: The bureaucracy is doing its role, but when the matter comes to taking bold decisions the CM takes it very lightly, he’s not coming with a bold decision.

An unlikely criticism of Nitish Kumar but one that seems justified when one looks at the numbers: in the last 5 years 398 projects worth Rs 1.81 lakh cr have been approved by the state promotion board but only a fraction of these have actually taken off. People tracking Bihar’s story say gaining industry’s vote of confidence and creating a multiplier effect will help strengthen Nitish’s politics. In his first term Nitish Kumar changed the landscape of social development and in his second term he will now have to become the face of Bihar’s economic progress to be hailed Bihar’s true karmayogi.

Next week on the Ministers of Change we look at efforts made to create alternative livelihoods for women and experiments to bring transparency and weed out leakages in the state sponsored schemes.

Source: CNBC-TV18

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