Friday, August 28, 2015

Modi's package: Bribe or Indemnity.

Las Vegas makes an average of 90 billion dollars per year with 150,000 hotel rooms with 85 percent occupancy throughout the year. How was this city built? labourers working for Hoover dam would spend their free time gambling. Small gambling dens opened in Las Vegas to serve them. By 1935, Hoover Dam was completed and thirsty soil of Nevada could get soaked in the water of Colorado River and huge business empires were built with regular supply of electricity and water.

After devastating Floods in Bihar in 1954, Second dam similar to Hoover dam was to be built by India to protect the fertile plains of Bihar from constant risk of flooding by Kosi River. Suitable location for Kosi Dam lies in Nepal and high handed treatment by Nehru or economic embargo of Nepal by Rajeev Gandhi did force Nepalese rulers to keep this project awaited till now. 73% land of Bihar is under constant threat of flood as it is plain land with all the rivers originating in Nepal. While Kosi Dam building was being planned, Nehru took abrupt decision to shift the funds for construction of Bhakra dam. There could be many reasons behind this decision.

He may have wanted to compensate Punjab for its division. Punjabi lobby may have affected the decision of Central Government. If Koshi Dam had been built, it would be in Nepal technically and Nehru could not boast of it as "India's modern temples" in his own words or he could not build his goliath height statue at the entry gate as he built at Bhakra dam. May be because of his anger against Bihar for 1947 riots when Bihar was the only place where Muslims were at receiving end, or may be because of his ego tussle with Bihar CM Krishna Singh. There can be many speculations but end result is that Bihar remained far below in the priority list of Congress.

Even British penalised Bihar for having a defiant approach towards their Government. While they used Bihari labour force around the world for agriculture. The reason many countries like Mauritius and Fiji have bhojpuri as its second language. Still British never invested money for development of Bihar or for basic amenities like health and education.

At present, average per capita income of Punjab is 4 times higher than Bihar. If you survey the farms of Punjab, majority of the farm labourers come from Bihar. When NREGA income stopped labour migration to Punjab, Labour shortage in punjab was a common news in papers and punjabi farmers would offer free train ticket, higher wages etc to lure them to Punjab. 
An article written by ex deputy chief of Planning Commission Mr. N.K Singh shows more light to the issue of Step Motherly behaviour of Centre towards Bihar. you can read it here.

When Bihar was still not divided, it was one of biggest producers of minerals and coal which was transported to different cities of India. While cheaper raw material at source  and cheap labour force could help establish factories in Bihar and Jharkhand and give leverage to compete with States having upper hand because of access to seaports etc as they could easily earn revenue through import and export.  

In 1948, the then Finance Minister T.T Krishnamachari introduced Freight Equalization policy. Under this policy, basic raw materials were made available at the same price across the nation. The stated objective of this policy was to encourage development nationwide. But when have good intentions trumped market realities! This policy made sure that industries found no incentives whatsoever to invest in mineral rich but extremely poor states like Bihar. It subsidized the cost of transporting raw materials and thus nullified the advantage of Bihar and other such states.

In words of Arnab Mukherji and Anjan Mukherji,(1) "The asymmetry was acute, since there were no reciprocal benefits in terms of either industrial or agricultural goods and services that Bihar might have needed but did not have. There was no parallel industrial incentive given for capital to enter Bihar either. In the process, for a period slightly longer than four decades, the policy environment directly hurt industrialization and growth possibilities in Bihar and other mineral-rich states and created the paradox of a mineral-rich state also being among the poorest in incomes."

This policy was totally biased and still our central leaders drunk with socialism could not raise finger against it. No compensation was ever paid to balance this gap. While Bihar could have many factories but this policy ensured the decline of Bihar.

As this table shows, Bihar was never allocated the amount of money as per projected plan allocation on basis of national average. It has been compared with Punjab which is also a land locked state with agricultural economy. The source of this table is : Central Planned Inequality by Mohan Guruswamy which you can read here.

Another major factor for backwardness of Bihar was volatile political situation. Congress high command never allowed any CM to last for 5 years after 1961. From year 1961 to 1990, in 29 years there were twenty three chief ministers and 5 presidential rule. Due to this highhandedness of Congress, socialist parties formed by leaders who were output of JP movement gained power and Laloo Yadav became chief Minister. By his second term, he had become ruthless. He formed his own party and won elections after elections with help of Gundaraj and MY equation. If a stable Government was allowed to rule Bihar, it would be a different   story.

Bihari labour force worked in Punjabi farms for several hours under effect of opium added in the tea by the Punjabi landlords to get more work and many would die or end up on sick bed for years. After the rise of BJP, Bihari voters got another option and alliance of JDU and BJP won handsomely. But the period when Bihar was being ruled by NDA, India was being ruled by Congress led UPA. They had no interest in Bihar as Congress has negligible presence in Bihar. It is a Congress mukt state in true sense. Nitish Kumar dumped BJP because of miscalculation that Modi won't be able to win. Nitish did not want to disturb his Muslim vote that he had nurtured for a long time.

"Centrally Planned Inequality:  - Centrally Planned Inequality: Before liberalization, center through Planning Commission was the main engine of economic growth in India. As we will see the data, Planning Commission discriminated among states in granting outlays and funds. As Dharma Kumar succinctly summarize it, "the financing and assistance given by the central government over the first three plans were ad hoc and based on the need of ongoing schemes, many of which were initiated by the central govt. In fact, much of the distribution of resources continued in the line with the same sharing norms that existed before independence; the colonial past institutionalized inequality and uneven regional development, and the immediate post-independence period only accentuated it further, much to the detriment of Bihar"source: Chapter 12 "The Fiscal System" of book "The Cambridge Economic History of India Vol 2" by Dharma Kumar

Recently Prime Minister Narendra Modi announced a package of 125,000 crores for development of Bihar. It created unease in few people from other developed states with complains of unnecessary favour for Bihar. This state has got most fertile Gangetic plane but not of use because of regular flood fear, It has potential to become the food bowl of India. With such fertile land and hard working labour force, Bihar can produce 6 crops a year and same farmers who are forced to become rickshaw pullers in Delhi and die of tuberculosis, they can afford a good life too. This amount is very small if compared to the budget difference of last 60 years and losses due to freight equalisation policy. 

If Koshi Dam project had not been shelved, Bihar would serve as backbone of India. Talent pool of Bihar is strong to get big margin of seats in IITs, UPSC and other engineering colleges. If BJP wins, this will be the first stable government which will be  in Centre too. It will help change the face of Bihar. It is most important to note that package announced by our PM is not an electoral bribe but a long awaited reparation for all the wrongs that Bihar faced. It is time to help this state get its share of honour, the state which gave birth to religions, the state which gave great emperors like Ashoka and Chandragupta Maurya. The state of Kautilya. Time has come to regain the lost glory.

Hope is one thing Biharis have never abandoned.