As Bihar engages in a fierce electoral battle, political parties are making extravagant promises that raise serious questions about fiscal responsibility and economic vision. The state, home to 130 million people, stands at a critical juncture where it must choose between populist freebies and sustainable development strategies.
The Promise Versus Reality Gap
The main Opposition bloc, Mahagathbandhan, has pledged one job per family for Bihar's 2.97 crore families. Even at conservative salary estimates of Rs 15,000-20,000 monthly, this would cost the exchequer between Rs 5.35 to Rs 7.13 lakh crore annually - significantly exceeding Bihar's entire 2025-26 budget of Rs 3.17 lakh crore. Additional promises include Rs 5 lakh interest-free cash transfers, crop procurement guarantees, and 200 units of free electricity.
The NDA has been relatively more conservative but still promises one crore jobs and one crore Lakhpati Didis. However, the recent transfer of Rs 10,000 to 75 lakh women under the Mukhyamantri Mahila Rojgar Yojana appears more like election-season freebies than well-planned economic strategy.
Bihar's Persistent Economic Challenges
Despite political changes over 35 years, Bihar remains at the bottom of India's economic pyramid. In 1990-91, when Lalu Prasad assumed power, the state's per capita income was Rs 2,660 - just 43% of India's average. By 2005-06, when Nitish Kumar took office, it had risen to Rs 8,223 but dropped to only 28% of the national average.
The situation remains alarming in 2024-25, with Bihar's per capita income at Rs 69,321 - merely 34% of the national average of Rs 2,05,324 and only 18% of Telangana's, the state with highest PCI. While Bihar has achieved near-universal electrification and improved road connectivity, the fundamental issue lies in how power and productivity are distributed.
Agriculture employs 54% of Bihar's workforce but consumes only 4% of the state's total electricity. The average landholding size has shrunk to just 0.39 hectares, while families average nearly five members. With population growth at 1.43% versus the national rate of 0.9%, the agricultural sector faces severe constraints.
Three Strategic Pathways for Economic Transformation
1. Bet Big on Textile Parks
Textiles represent the second-largest employer after agriculture, making them ideal for leveraging Bihar's cheap labor advantage. Textile parks require low capital investment but generate high employment - the perfect solution to reverse decades of migration. Pearl Global, founded by Deepak Seth, already operates a successful garment factory in Bihar training women for export markets. The state needs at least 10 such factories to shift labor from agriculture to more productive occupations with assured incomes.
The incoming government could scale such ventures through incentives like pension fund contributions or capital subsidies, creating productive employment in the organized sector.
2. Leverage the Livestock Revolution
The SUDHA cooperative represents a quiet revolution in Bihar's economy. Milk's share in agricultural output has doubled from 14% in the triennium ending 2002-03 to 28% in TE 2022-23, with 76% of consumer spending reaching farmers - significantly higher than crop sectors. Poultry has also shown impressive growth, with egg and meat output increasing by 10.2% and 4.7% respectively between 2005-06 and 2022-23.
However, most production comes from backyard units with limited scale. Bihar must attract major players like Venkateshwara and Suguna Hatcheries to build integrated value chains connecting feed suppliers, farms, and processors while introducing better breeds, technology, and assured markets.
3. Focus on High-Value Crops
Bihar possesses significant potential in high-value crops like sugarcane, makhana, and litchi. The emerging bioethanol economy can anchor both farm profitability and industrialization. The state's Ethanol Production Promotion Policy represents a good beginning with 47 approved projects, but Bihar must expand beyond its current 22 distilleries (8 molasses and 14 grain-based).
The state needs to revive defunct mills and scale operations to meet national ethanol blending targets. GI-tagged makhana and shahi litchi require significant scaling up and investment in processing to move beyond artisanal value chains. The focus should be on attracting private investors in processing and exports while providing farmers interest-subvention credit for inputs supported by proactive banking.
Whichever government assumes power must recognize that Bihar requires dignified employment anchored in appropriate development strategies rather than revdi economics. The state's future prosperity depends on mobilizing private capital and driving structural transformation through these three strategic pathways.
