Bihar's Economy Shows Structural Shift with Industrial Sector Growth
According to the Bihar Economic Survey (2025-26) tabled in the legislative assembly on Monday, the state's economy is witnessing a significant transformation. The construction, manufacturing, and services sectors are growing at a faster pace, with the share of the industrial sector increasing sharply over the last four years. This represents one of the most substantial changes in Bihar's economic structure, which was historically dominated by agriculture.
Agriculture: The Unwavering Backbone
Despite the industrial surge, agriculture continues to be the foundation of Bihar's economy. Production of staple crops like rice, wheat, and maize has shown consistent growth. The state maintains its position as a leading producer of fruits, vegetables, makhana, and litchi. Additionally, there has been strong growth in milk, fish, and egg production.
Farmers are benefiting from improved access to essential resources including quality seeds, reliable irrigation, consistent electricity supply, and agricultural loans. New government schemes focusing on fish farming, seed home delivery, irrigation infrastructure, and farm machinery distribution are helping farmers increase their income while building resilience against climate challenges such as floods and droughts.
Sectoral Contributions to Gross State Value Added
The economic survey provides detailed insights into sectoral contributions:
Secondary Sector:
- Construction accounted for 15.1% of GSVA, leading this sector
- Manufacturing contributed 9%
- Electricity, gas, water supply and other utilities contributed 2.7%
Tertiary Sector:
- Trade, repair, hotels, and restaurants collectively accounted for 13.3% of GSVA
- Trade and repair services alone contributed 12.2%
- Transport, storage, communication and broadcasting accounted for 10.2%
- Real estate, ownership dwellings and professional services contributed 9.1%
Primary Sector:
- The crops sub-sector accounted for 9.1% of GSVA in 2024-25
- Livestock contributed 5.8%
Fiscal Trends and Government Expenditure
The survey reveals important fiscal developments. Loans and advances from the central government have increased significantly, with fresh borrowings rising from Rs10,672 crore in 2023-24 to Rs16,500 crore in 2024-25. Outstanding liabilities in this category grew from Rs36,051 crore as of March 31, 2024, to Rs51,220 crore as of March 31, 2025.
The state government's outstanding liabilities have shown a steady increase from Rs12,484 crore in 2020-21 to Rs19,678 crore in 2024-25. In broader terms, outstanding liabilities rose from Rs2,27,196 crore in 2020-21 (36.7% of GSDP) to Rs3,74,134 crore in 2024-25 (37.7% of GSDP), indicating continued expansion in absolute liabilities.
Expenditure patterns show significant changes:
- Salary expenditure increased from Rs21,842 crore in 2020-21 to Rs38,475 crore in 2024-25
- Developmental spending reached 67.4% of total state government expenditure in 2024-25, growing from Rs1,12,122 crore in 2020-21 to Rs1,89,892 crore in 2024-25
- Non-developmental expenditure increased from Rs53,574 crore in 2020-21 to Rs92,047 crore in 2024-25
The total receipt in the revenue account of the state has shown healthy growth, increasing from Rs1,28,168 crore in 2020-21 to Rs2,18,658 crore in 2024-25, indicating steady fiscal expansion.
Investment and Entrepreneurship Growth
Bihar has attracted substantial investment interest, with 4,353 investment proposals received between 2016-17 and 2025-26 (up to September 2025). Of these, 3,539 secured Stage-1 clearance. The total proposed investment amounted to Rs1.11 lakh crore, with significant inflows recorded between 2016-23 and 2024-25.
Under the Bihar Industrial Investment Promotion Policy 2016, 956 industrial units have become operational, representing an investment of Rs10,635.90 crore and generating employment for 42,999 people.
Entrepreneurship initiatives have shown remarkable progress:
- Under the Mukhyamantri Udyami Yojana and Bihar Laghu Udyami Yojana, 7,74,567 applications were received between 2023-24 and 2024-25
- The Bihar Startup Policy 2022 has certified 1,239 startups by the end of 2024-25
- The state government disbursed Rs32.18 crore as seed funding to support these startups
Broader Economic Expansion
The survey indicates comprehensive expansion across industry and business sectors. Tourism is experiencing growth, supported by increased spending on tourist facilities and infrastructure development. This multi-sectoral growth reflects Bihar's evolving economic landscape, balancing traditional agricultural strength with emerging industrial and service sector opportunities.
The economic transformation highlighted in the survey demonstrates Bihar's progress toward a more diversified economy while maintaining its agricultural foundation and addressing fiscal management challenges.
