How has Nitish Kumar performed in his 3rd term as Chief Minister?


Nitish is seeking votes for his fourth term amidst challenging times of the pandemic. Unemployment and return of migrant workers has emerged as the top most issue in these elections as per C-Voter survey.

The country has recorded its worst quarterly performance in decades in Q1 FY 2020-21 and one of the strictest lockdowns employed by India has impacted lives and livelihoods. It’s natural that the economy will be on top of mind of many voters when they go out to press the EVM.

Per Capita Income

Bihar’s per capita income has been growing steadily over the past decade and half. The YoY growth while being volatile has mostly been clocking above 10%.

However, when compared to India’s per capita income growth rate, Bihar has started to lag. Over the last five years Bihar’s per capita income has been constantly under performing India’s growth rate despite Bihar’s low base.

In 2015 Bihar’s per capita was ~Rs29,000 which was 34% of India’s per capita level of Rs ~79,000. Due to its subdued growth it continues to be at 35% level even in 2020.

Unemployment

Bihar continues to witness high unemployment levels. The problem is more acute at Urban level where close to 9.0% of the working class was unemployed in 2018 compared to Indian average of 7.7%. While this gap between the state and India has narrowed in 2018 (130 basis points), in 2005 it was 190 basis points and even worse at 390 basis points in 2010.

The rural unemployment had also shot up in 2018 to 6.8%. Bihar largely being a rural economy (11.3% urbanization rate) is impacted more with this double whammy. 

As of Sep. 2020, Bihar’s unemployment rate is very high at 11.9% compared to 6.67% of India average (CMIE Data), due to severe migrant crisis.

Spend on education and health

Over the years, Bihar has been consistently spending higher than other states with respect to its education under Nitish, however, the state’s literacy levels continue to be amongst the lowest in India.

Female literacy is at 53.3% (only Rajasthan is lower at 52.7%) compared to India’s average of 65.5% while 63.8% Male literacy level (lowest in India) is also lower than Indian average of 82%. The overall literacy level of 63.8% (lowest in India) is way below all India average of 74%.

Expenditure on Medical and Public Health and Family Welfare As Ratio to Aggregate Expenditure in Bihar was 4.1% vs national average of 4.7% for 2017-18 as per RBI report on states fiscal health. During the last 10 years or so, it has been lower by 100 bps; however, between 2000 to 2008, Bihar was higher than the national average.

Bihar seems to have got its act together as despite lower than other state’s average revenue spent annually through its budget, it’s critical health related parameters are better than indian average except IMR.

Industrial output and wages

Bihar has been improving across  industrial sector performance metrics and also rising up in the value chain. However, this has not translated into more income for the workers. An average person working in a factory in Bihar was earning only Rs 1.35 lakhs / yr which is almost half of all India average of Rs 2.7 lakhs / yr. (Which Year?)

A factory worker earned even less at Rs 0.9 lakhs/yr compared to an average Indian level of Rs 1.6 lakhs. Excluding the north eastern states, Bihar’s average salary & wages level is the lowest in India.

Agriculture

Agriculture accounts for more than 20% of the state’s GDP. Foodgrains account for ~95% of the agricultural output. In addition more than 80% of the state’s population is dependent on agriculture for their livelihood.

Barring a few years, Bihar’s yield (kg / hectare) has been lower than all India average. Most of the other states in India are not as blessed as Bihar with respect to natural habitat for farming like alluvial soil, groundwater and climatic conditions providing scope for crop diversification too.

In his 3rd term, Nitish has managed to draft policies and provide support to farming resulting in an uptick in yield.

Lalu’s 15 Years versus Kumar’s 15 Years

The average GDP growth during Lalu’s 15 years tenure was 10%, it is 15.3% during Nitish rule of similar tenure, 1.5 times of Lalu.

Per capita income of Bihar became 2.57 times during Lalu’s tenure. It was a tad lower at 2.29 times during Kumar’s 15 year tenure. .

Source: RBI Handbook of Indian States

Despite sushasan, Bihar continues to be a laggard

Nitish is credited with putting Bihar on the path of development. GDP growth under him has been one of the highest among the states. Despite the undoubtedly appreciable work done by Nitish in last 15 years, the economy is a laggard:

  1. Bihar’s per capita income is less than one-third of national average.
  1. Bihar’s per capita income is lowest in the country.
  1. BPL families in the state account for more than 30%, national average 22%.
  1. Urbanisation in Bihar is at 11%, compared to national average of 31%.
  1. Unemployment rate in Bihar is higher than the national average.

To sum up, it will be interesting to see if people actually vote in Bihar on the basis of economic performance or on the basis of caste dynamics like witnessed in the past.

As per Crowdwisdom360, LJP and smaller parties are hurting both NDA and MGB making this election very difficult to predict.

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