Is landlockedness the reason for Bihar’s underdevelopment?

It is often argued that Bihar is disadvantaged because it is a landlocked State. Punjab and Telangana are landlocked as well, and they are doing relatively well. So how is being landlocked a constraint for Bihar?

R. Nagaraj: If you look at the success of Telangana, especially Hyderabad, it is mostly because of the tertiary sector; it has nothing to do with geography. If a State has an educated workforce and good infrastructure, being landlocked will not be an issue. Punjab, too, has a developed network of railways and roads, and has FCI (Food Corporation of India) godowns across the country to help with export of crops.

Manindra Nath Thakur: Let us look at Bihar’s prominent exports: makhana, litchi, and corn. It has been difficult for Bihar to transport these items from Patna to West Bengal or to any port. These, alongside the vegetables Bihar exports, are perishable. Moreover, significant costs are incurred due to road transport; time and distance are crucial factors in agrarian exports. One way Bihar is attempting to resolve this issue is by launching projects along the Ganga. So, it is not that concerns about being landlocked are not genuine, but they cannot be cited as a major reason for the State’s economic backwardness.

Prof. Nagaraj spoke of the tertiary sector; you spoke of agrarian exports. Bihar has been assessed as an agrarian economy. What should be its imperative going forward: industrialisation or agriculture?

Manindra Nath Thakur: In the last 10 years, the Chief Minister has tried to engage with industrialists. However, industrialists have often raised concerns about access to ports, citing the need to spend more on transportation. Having said that, I do think that in this modern capitalist system, no society can think of surviving with just agricultural products. While Bihar should capitalise on its potential in terms of agricultural production and processing, it must ultimately transition to industry. Without that, there is no future.

R. Nagaraj: Before we think of high-technology and/or manufacturing industries, we should consider where the comparative advantage lies. Four-fifth of Bihar’s labour force is in agriculture. But despite Bihar having fertile land and irrigation facilities, agricultural productivity is mostly less than the national average. Why is agriculture not picking up? That is the big question.

In the 1970s or 80s, a committee set up under the agricultural economist, S.R. Sen, was figuring out how to take the Green Revolution to the Indo-Gangetic belt. It came up with a plan for massive State investments in infrastructure and electrification to ensure that States have abundant water for the cultivation of wheat and rice. Surprisingly, the Green Revolution spread to the Malwa region of Madhya Pradesh rather than the Indo-Gangetic belt. We must understand what went wrong.

I think it will be both in Bihar’s interest and the national interest to get basic wheat, rice, and sugarcane cultivation going. This way, western India will be burdened less; it can conserve more water and move to value-added crops.

Manindra Nath Thakur: On the agrarian front, I don’t think Bihar should repeat the mistake that Punjab made during the Green Revolution, which produced a water crisis. Although Bihar has abundant water, it may face the same consequences as Punjab if water is overused. Moreover, increasing agricultural production is linked with the heavy use of fertilizers and pesticides, creating a health crisis. Therefore, I don’t support the shifting of agriculture to eastern India. Agriculture is not profitable anywhere in the world unless it is heavily supported by the State.

R. Nagaraj: Madhya Pradesh was also seen as a backward State. It does not have the same water resources as Bihar, yet the Green Revolution expanded there. Prosperity in the Malwa region is amazing. Therefore, I am sceptical about the idea that agriculture has no potential.

So what do you think are the factors that contributed to Bihar’s underdevelopment?

Manindra Nath Thakur: Apart from what I have said, there are also notions that the Centre is not interested in Bihar’s growth. The State, I think, is frozen in its transition from feudalism to capitalism. One of the reasons for this is the internal colonisation of the State. Earlier, Bihar supplied raw materials, but due to policies such as freight equalisation, it suffered significantly, and industries didn’t develop locally, despite having the advantage of raw material availability. Bihar ultimately lost revenues and its natural advantage. Now, with a supply of labour from Bihar, nobody is interested in developing the State.

R. Nagaraj: A commodity where freight equalisation was done and which benefited eastern India was cement. Steel did not accrue the same advantage. Cement has heavy transport costs compared to steel so the freight equalisation policy for it helped eastern India.

Furthermore, why Biharis are leaving Bihar has no element of capitalist conspiracy. In fact, when investments in agriculture were made in Bihar, migration to Punjab declined. It is clear that if people have more options at home, they will not move out.

Literature often suggests that Bihar has a ‘socialist hangover’, and that entrepreneurship does not draw confidence.

R. Nagaraj: The socialist ideology in Bihar is often equated with caste politics and caste in general — basically, distributing limited resources across various castes. If the focus shifts to productive investment, it will do a lot of good for Bihar. Policy must focus on how to augment production rather than looking at redistributing the limited resources more equitably or in a manner that helps people stay in power.

Manindra Nath Thakur: Bihar has never really followed the socialist model. It also failed to understand the logic behind India’s shift to capitalism. Bihar is currently at a significant disadvantage. For any structural change, there must be a solid commitment to reinvestment by the Union government. Unless that is done, the transition to capital will not take place. With respect to migration, if there are good working conditions and a decent income, no Bihari would like to migrate. The amount of investment required to help Bihar move out of this ‘frozen transition’ phase has not been made. It could be linked to general societal politics. One argument, as Shaibal Gupta used to make, relates to the lack of a distinct Bihari identity. Or as Prashant Kishore says, of the concept of Bihari asmita.

Would special status be of any help to Bihar?

R. Nagaraj: I am not sure it would help. The bigger question relates to whether it will be utilised productively or not. Bihar lacks the state capacity to use it. Whereas, if you give the same money to Andhra Pradesh or Tamil Nadu, they will grab it and use it better.

Being among the poorest states, Bihar gets a considerable amount of resources from the Finance Commission on considerations of its backwardness and to bring greater equality among States. When those are not utilised, the money lapses. Many of these grants are performance-based — meaning the State must raise its own share of resources to access the full amount. This often doesn’t happen in Bihar.

Manindra Nath Thakur: If a good amount of money is invested, it would certainly be beneficial. However, no change will come unless we make sure that the money we reinvest is not appropriated by a small number of people — elites, politicians, and contractors. If the money is invested properly, it leads to capital formation. But this also requires a kind of social revolution, one that raises public awareness that these funds are not free gifts, but more like loans. People must understand that we need to rebuild and strengthen our society in order to repay that investment.

About state capacity – many funding packages include a clause requiring the state to contribute a portion of the investment. Now, suppose you give me ₹100 and tell me that I have add to it to utilise the amount. I can’t do that as I don’t have the money. In a way that amounts to forcing me not to use the money. The special status might be of help — it might remove these conditions and allow us to access the support without being held back by limited state capacity.

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