Upsurging Bihar

Head Office:
Regional Office:
Inductus Consultants (P) Limited Inductus Consultants (P) Limited

C – 927, Dwarka Sector – 7,   311, N. P. Centre,
Palam Extension, Dwarka,   New Dak Bunglow Road
New Delhi – 1100 045 (INDIA)   Patna ‐ 800 001, Bihar, (INDIA)
Tel: 011 – 43686055,      Tel: 91‐612‐6450221, 6550335 – 44
Email: ho@inductus.in Email: patna@inductus.in

Helpline (24X7 Support): 92346 92346
www.inductus.in
Inductus                                                     1

Background:

Bihar is an eastern Indian state which is 12th largest in terms of its geographical size (98,940 sq km) and 3rd
largest in terms of its population. Bihar is very unique & distinct in terms of proportion of population around
70% of the population in the state is young & is below the age of 34. In the book The Wonder That Was India,
A L Basham calls Bihar a place full of “intellectual” ferment. He further writes of Bihar as a region which has
“not only produced philosophers and ascetics, but also merchant princes and men of action.” Bihar was the
richest state in India when the country got independence from Britain in 1947. Today, services and agriculture
are two main sectors of the economy of the state. According to a report in The Times of India, Bihar is among
the top‐most fastest growing Indian state during 2010‐2011. The economic growth rate was more than 11 per
cent in this period.

We have moved towards economic revival, through increased investment in infrastructure, better health care
facilities, greater emphasis on education & abatement in crime & corruption. Indian & global leaders as well as
economic leaders feel that Bihar has now good opportunity to sustain its growth & thus have shown interest in
investing in the state. We have also made strides in the areas of empowerment, judicial reforms, tax reforms &
public safety.  Bihar is all set for an Industrial Revival during the next decade.

The change in the economic & social design & development of the state is quite visible by its GDP growth in
the recent years which has been the reason of envy for many states. It’s very clear and obvious from the petite
percentage of contribution of the industrial sector that it is still in a very nascent stage and its contribution to
the state’s growth is negligible, if the industrial sector grows and flourishes in Bihar it can prosper like any
other developing or developed states in India.

Surely, the growth of industrialization will bring a revolution in the lives of general population and the toiling
mass.

There will be tremendous increase in the job opportunities, which will bring a downfall in the attrition rate i.e.
Brain Drain of its human resources in order to keep its resources intact and enhance the socio‐economic
development of the state.

Though endowed with good soil, adequate rainfall and good ground water availability Bihar has not yet
realized its full agricultural potential. Its agricultural productivity is one of the lowest in the country, leading to
rural poverty, low nutrition and migration of labour.

Bihar has all the potential to become a land of opportunities with the increasing scope of Industrialization and
changes.

Industrialization: The Last Decade

Bihar was the richest State at the time of Independence.  Bihar was growing at a steady rate till the mid 80s.
Even after the socio‐economic issues the state was growing at a rate of 72% during the early to mid 80s. This
means that Bihar was the fastest growing economy in the country during this time.

Bihar failed to keep up the pace in the 1990s and our economy completely collapsed during the period.

An Integrated Consulting Services Organization

Head Office: C – 927, Palam Extension, Sector – 7, Dwarka, New Delhi – 110 045 (INDIA)
Tel: 011 – 43686055, Email: ho@inductus.in

Patna Office: 311, N. P. Centre, New Dak Bunglow Road, Patna – 800 001.
Tel: 0612 – 6450221 / 6550335 – 44 Email: patna@inductus.in
Web: www.inductus.in

ISO 9001:2008 Quality Standardize Organization

The political scenario was more bureaucratic rather than development oriented. As the political scenario
became unrefined, our state gradually became development unfriendly and pretty soon it turned into a vicious
circle leading to the collapse of our economy. It led to shutting the door of our economy to new
entrepreneurial ventures.

The rise in crimes leads to the flight of Capital, Existing Business, merchants and dignified people as well as
leader to other parts of the country. This in turn created Unemployment, migration of resources which
brought Bihar on a state of Hibernation that lasted a decade.

The next major roadblock came after the bifurcation of Bihar and Jharkhand. After bifurcation in 2000, the
level of industrialization in the present state of Bihar slipped, since industry earlier was primarily concentrated
in the Chota Nagpur belt, now part of Jharkhand. Moreover, the net domestic product in Bihar is Rs 32004
crore, of which the share of the industrial sector is a mere Rs 1020 crore. Industry thus accounts for only 3.2%
of the state domestic product in contrast to the national average of 20.1%, making Bihar one of the least
industrialized states in the country. Bifurcation led to not only a decline of industry in Bihar, it also drastically
altered the regional representation of different industries. Currently, food, tobacco, leather and non‐metallic
mineral products make up the base of present industry in Bihar. What has been lost is the industry based on
coal, refined petroleum products, basic metals, motor vehicles and trailers, all of which were salient feature of
the industrial map of Bihar.

There is a serious decline in various economic indicators like GSDP, Growth rate etc during this tenure coining
the fact that the state was facing a major slowdown. Because of the lacklustre performance of the state as well
as the degrading socio environmental issues as compare to other states several growth related funds from the
central government was blocked because of corruption.

During this tenure Bihar went back so many steps that even if we run with all our might it will take
considerable amount of time to catch up.

Bihar: The Dire need for Industrialization.

If we see into the area of social & economic development of other developed or developing states of the
country and compare it from ours, it is quite visible that the maximum contribution to their growth is from the
industrial sector.

For example, Gujarat is amongst the richest states in India. The population of Gujarat is roughly 5% of India,
but the state’s contribution to India’s GNP is 11% and its GDP is 6.59%. The GDP contribution of Bihar is 2.92%
which includes only 9% of the industrial sector and the growth rate of Bihar in the last few years has indicated
that we have immense potential to grow and contribute into the country’s economy.

Gujarat has become prosperous through rapid industrialization along with contribution from service and
agricultural sector.

Choosing an Industrialized Based Growth model and executing it like a corporate is the biggest achievement of
the state. To choose the industrial based growth we have to win the trust of the investors.





Bihar has seen an unprecedented upsurge in its growth rate after the political alteration. With its GDP growing
at a Miracle rate of 11.44%, we foresee Bihar as a developed state in the coming future. Bihar is Upsurging
and, is the “Ultimate Land of Opportunities” with abundance of natural, water & human resources. Big
Industries are interested and willing to invest into the state we just have to materialise the things.

We have to understand our own strengths and overcome our weaknesses, which cannot be done in a day,
continuous initiatives and steady steps will take us to our destination.

Bihar is a resourceful state. We are having abundance of Human Resources, the population of Bihar is
103,595,177 out of this total population 60% is young and at a workable age. Having this highest proportion of
working group we cannot lag behind any other state in India. The things where we are lagging behind the
other states are opportunities and investment of heavy industries.

Industrialization will lead to acceleration of jobs opportunities.

The topography of Bihar is described as a fertile alluvial plain occupying the gangetic valley. The major crops of
Bihar are: paddy, wheat, lentils, sugarcane, jute etc. The principal fruits are: Mangoes, banana, jack fruit &
litchis. “Bihar is one of the very few areas outside China which produces Litchi”.

Bihar is richly endowed with water resources, both the ground water resources and the surface water
resource. Not only by rainfall but it has considerable water supply from the rivers which flow within the
territory of the state. Ganga is the main river, which is joined by tributaries with their sources in the Himalayas.

State also has non‐exhaustible source of ground‐water which is in use for drinking, irrigation purpose,
industries uses and production of hydro‐electricity.

After November 2005, the government of Bihar has introduced several laws, which it hopes, will provide a
positive contribution the future development of the state's industries.

2006
 Bihar Single Window Clearance Act
 Bihar Infrastructure Development Enabling Act.
 New Industrial Policy
 Price Preference Policy
 New Policy Initiatives for Entertainment, Tea Processing and Sugar Sectors
 Policy for establishing higher Technical Institutions in Private Sector
 Simplification of VAT Regime

2007
 VAT reimbursement @80% of the deposited amount for a period of 10 years with a ceiling of 300% of
the capital investment. Provisions for incentive even in zero VAT cases.
 Reimbursement of 50% of the amount spent on plant & machinery for captive power generation.
 25% of the VAT reimbursement for the existing units.
 Exemption from electricity duty for new units. Exemption from Stamp Duty and registration fee on
land transfer. Incentive granted on land/shed in Industrial Area/ Industrial Park etc.
 Incentive granted on land/shed in Industrial Area/ Industrial Park etc.





 Corpus fund creation for sick & closed units.
 Exemption from annual minimum guarantee/ monthly minimum guaranty. CST reduced to only 1% for
small & medium industries.

Why Industrialization (Highlights)

 Industrialization plays a significant role in the process of economic development.
 There is a direct relationship between high level of income and industrial development. (Fact based
on the growth pattern of Developed countries).
 Strong industrial base is required for generating gainful employment opportunities.
 Decreases Unemployment.
 Minimizes Brain Drain.
 Minimum import of Industrial product from outside and this helps in reducing the trade gap.
 Satisfy the variety of demands of the consumer's.
 Supply‐Demand Gap is minimized.
 Change in the socio‐cultural environment of the economy
 Rise in Standard of living of people.
 Makes people dynamic, hard‐working, mobile, skilful, efficient, and punctual.
 Makes people entrepreneurial
 Secures Economy by making it self‐depended.
 Competitive advantage over other State/Countries.
 Competition leads to higher efficiency and productivity.
 Innovation – Without Industrialization, we would have never thought of building cars, planes etc. We
would have remained at zero rather than eyeing for infinity.
 Converts our position from debtors to creditors.
 Makes us Export oriented rather than import oriented leading to capital inflow.
 Organized and constant development.
 Socio economic growth broadens the mindset of people leading to a healthy socio‐economical as well
as political environment.
 Proper allocation and harnessing of unused resources.

Major Roadblock to Industrialization in Bihar

 Availability of Land
 Infrastructure.
 Skilled manpower.
 Transport or Connectivity.
 Power / Electricity.

New industrial policy of the government and support to the entrepreneurs & investors:

In view of the rapid changes in the Global Industrial Scenario, Bihar Industrial Incentive Policy‐ 2006 has been
reviewed with an objective to attract domestic and foreign investment as well as revival and expansion of




business operations of the existing industrial units by providing the right industrial ambience. After reviewing
the same, it was felt that in view of the present scenario, it is imperative that a new industrial incentive policy
be prepared so as to promote balanced industrial development and enable industries to contribute towards
the social and economic development of state.

Under this proposed policy, there are provisions for granting incentives such as:

 100% Exemption from Stamp Duty and Registration Fees during the pre‐production phase.
 Capital Subsidy for industrial units.
 Inclusion of Entry‐ Tax in the re‐imbursement of 80% of VAT.
 Incentive also to existing units for Captive Power Generation / Diesel Generating sets and subsidy on
non‐conventional sources of energy production.
 Re‐imbursement of expenses incurred on project reports, technical know‐how fees, Quality
Certification, Electricity Duty etc.

With the implementation of Industrial Incentive Policy‐ 2011, it is expected that the development of the State
will get a boost and it will result in rapid industrial development with enhanced employment generation. The
industries of Bihar would be able to play a positive role in the overall development of all the citizens of Bihar.

Incentives to be provided to industrial units of the state to speed up industrial growth and investment in Bihar:

 Pre‐Production Incentives
 Post production incentives
 Project report incentive
 Incentives on land/shed
 Financial assistance for technical know‐how
 Incentive/subsidy on Investment on plant & machinery purchased for captive power generation/ DG
set
 Exemption from Monthly minimum charges/ Minimum base energy charge/ Demand/ Billing demand.
 Capital subsidy
 Incentive on quality certification

Small & Medium Scale Enterprises:

The emphasis should also be put on the development of small scale industries. Way forward for Bihar would
come from SMEs. We have to first understand our strengths. Agriculture is our strength; we have to encourage
agro‐based industries like food processing in the state. It will ensure inclusive development of the state.

Different districts in Bihar are rich in different resources which may facilitate the growth & upheaval of agro‐
based /Cottage industries, which is our strength.

Agriculture:

Bihar has significant levels of production for the products of mango, guava, litchi, pineapple, brinjal,
cauliflower, bhindi, and cabbage in India. Despite the state’s leading role in food production, investment
in irrigation and other agriculture facilities has been inadequate in the past.





Bihar accounts for 71 per cent of India's annual litchi production

 Maize accounts for 1.5 million MT(or 10% of country production)
 Sugarcaine produces 13.00 million MT
 Litchi production is 0.28 million MT(Bihar contributes 71% of national production)
 Makhana levels are 0.003 million MT(Bihar contributes 85% of national production)
 Mango is 1.4 million MT(13% of All India)
 Vegetable production is 8.60 million MT (9% of All India)
 Honey Production is 1300 MT (13% of All India)
 Aromatic Rice 0.015 million MT
 Milk Production (Present) :4.06 million MT. COMPFED has established 5023 cooperative societies with
2.54 lakh membership ‐highest among the eastern states.
 Fishery production levels are 0.27 million lakh MT

Sugar
The Indian Business Directory states that the Bihar Sugar Industry has flourished in the last couple of years due
to the efforts taken by the state government to revive the industry. The Sugar Industry has been helped by the
climate of the state, which is very suitable for the growth of high‐grade sugarcane. The main benefit of the
industry is that it provides employment to many people, especially in the rural areas. Further, it provides
facilities of transport and communication, and also helps in the development of the rural areas by mobilizing
the rural resources. The total number of sugar mills in Bihar Sugar Industry is 28 out which only 9 are
operational. The total area under sugarcane production is 2.30 lakh hectares and the total production of
sugarcane is around 129.95 lakh M.T. The location of the sugar mills of Bihar Sugar Industry are Samastipur,
Gopalganj, Sitamarhi, West Champaran, Chorma, Dulipati, and Supaul.

The industry can be divided into 2 groups – the unorganized sector, which comprises traditional sweeteners
manufacturers, and the organized sector, which consists of sugar factories. The producers of traditional
sweeteners are considered to be a part of the rural industry and they manufacture khandsari and gur. These
are consumed mainly by the rural people and are produced in substantial quantities. The total production of
sugar in Bihar Sugar Industry was 4.21 lakh tons in 2002‐2003 and in 2003‐2004, the figure stood at 2.77 lakh
tons. Again, in 2004‐2005, the figure was 2.77 lakh tons. The state government, in order to boost the Sugar
Industry in Bihar has decided to privatize the state‐run sugar mills that have not worked for many years. The
state government has also approved the proposal for the setting up of 15 new sugar mills in the state which
will bring in an investment of Rs. 3,771 crore in Bihar Sugar Industry.

Leather

The state is very rich in cattle population. There are 50,000 footwear artisans in the State. State has tanneries
in the private sector. More tanneries & footwear units are to be set up in the private sector.

Textile

Total number of weavers in Bihar is more than 90,000. Bhagalpur is known as leading silk city. Gaya –another
major weaving centre –around 8000. There is a strong traditional handloom clusters in the districts of
Bhagalpur, Gaya, Nalanda, Darbhanga, Madhubani, Siwan, Patna. Infrastructure Leasing and Financial Services
is preparing Project Report for Textile Parks and also for Cluster Development Programmes. However, most of
textile centres in state on decline, producing low value goods.





Small Scale Industries

The small scale industries have contributed to Bihar's economic upsurge. The total investment of SSI's is Rs
88.75 crore. Small/artisan‐based industries are generating 5.5 lakh mandays in the current fiscal till December.

The role played by the small scale industry in the economic activity of advanced industrialized countries like
Japan, Germany, Great Britain and the United States of America is significant. Many Nations, both developed
and developing exteriorized that the small industry sector is a useful vehicle for growth, in the later for the
creation of new employment opportunities on a wide scale in the shortest possible time.

Encouragement to small scale industries in the rural as well as urban areas like:

Agro‐based and other SMEs can be developed & promoted, in the rural as well as urban areas; it will create
employment opportunities for the local people. It will also prevent people from going outside in quest of job.
The investment of heavy industries is a slow & steady task, thus to attain the growth at a faster pace we need
to revive the sick industries as well as by advent of new small scale industries.

Bihar: Moving towards a brighter Day

Bihar has changed a lot in recent years. With the change in law & order, better political governance. Bihar is
more open to new industries and ventures than before. The current government’s efforts to ensure
development at par with tier‐1 states are being praised by everyone. Bihar has resurrected in these recent
years from such a morbid state. Though the efficiency of the state has increased still the deployment of the
resources as well as proper harnessing of resources is not yet at par.

The state can no longer be characterized as lazy, vision less state. It seems that Bihar has decided to go on a
path that will let it touch a completely new horizon.

It may prove to be true in the case of Bihar that, as opportunities will grow the resources will pour from
outside as well as inside.

If the current momentum for progress can be sustained, the state can hope to bring prosperity to its people.
The road to development will now need the combined efforts of the state and the central government, the
private sector, civil society, Bihar’s migrant population, as well as the international community.

We need to create our future from the future rather than the past. We need to learn from our past mistakes
but we must have our growth future oriented to keep the dynamism alive and innovation active.

In the words of Winston Churchill – “The empires of the future are the empires of the mind.” Hence keeping
our mind active, focused and future growth oriented we can bring a change in the currently crumbled state of
BIHAR and hope to recover from this situation with great results. Therefore, looking into the background,
history and current contextual scenario of the state it can sure be said that “Industrialization of the state and
Upsurging of SMEs holds the key for Bihar.





Upsurging Bihar

Recommended

Recommended

More Related Content

Similar to Upsurging Bihar

Similar to Upsurging Bihar (20)

Recently uploaded

Recently uploaded (20)

Upsurging Bihar