Developmental Agenda of Bihar in Light of State Budget 2017-18

In the State Budget 2017-18, State Government’s focus on key sectors remains same and is expected to give the same result. What is new to be considered is to give more focus on education and agricultural. More focus could have been given on higher education and SME development!


Amid high tension elections in five Indian states, what is not reflected in the mainstream media is analysis of the development and economic trends by state Governments. Unfortunately, this job is not being taken up by NITI Aayog seriously, the erstwhile Planning Commission. NITI Aayog is now burden on Indian economy and became a retirement plan for few blue eyed bureaucrats in India. It has been conceived that NITI Aayog will work as an organisation to promote cooperative federalism in India. In view of this, NITI Aayog, as a Think Tank, should also assist state governments and provide research and study material to the people of this country on a verity of economic and developmental issues related to States. Unfortunately, it has not been happening.

However, the current focus is the budget of the Government of Bihar. State Government’s budget is important to understand the synchronisation between the centre and the states when it comes to economic policies and practice. The budget speech by Mr. Abdul Bari Siddiqui, the Finance Minister of the Government of Bihar indicates that the current budget is prepared in consultation with Finance Minister of the Government of India and certainly the Chief Minister of the Government of Bihar. The budget has a broad focus on development, poverty alleviation and financial stability. In this context, it is important to assess the means to achieve these in this budget. According to PolicyTimes Bureau analysis, there are major three aspects that need to be evaluated to achieve the first two goals. In this article, the third goal of the budget is not discussed.

First and foremost is the estimated expenditure in the areas that can create jobs in the state. These areas are infrastructure, industry and agricultural sector. On account of infrastructure, the disbursement to energy sector (conventional) in 2016-2017 was Rs. 754369.52 lakh (revised estimate) increasing at the rate of 25% when compared to 2015-16 (actuals). The budget estimate for the year indicates that the same will decrease by 36% over 2016-17. However, the disbursement in non-conventional energy is expected to increase by 63% in 2017-18 over 2016-17. This is in line with the Centre’s initiatives for non-conventional energy sources particularly for solar energy. Another important component of infrastructure is transport. Overall disbursement to transport sector is likely to remain unchanged when compared with the budget estimates of 2016-17 with the revised estimates of 2017-18. Agriculture is an important source of employment in Bihar. The rich the sector is, the richer will be the state and its people. This sector needs overhaul and massive transformation. However, in line with the centres’ approach, the sector continues to lag behind as the state is not focussing on attracting investment in the sector. Overall disbursement as per the budget estimates of 2016-17 and 2017-18, will remain more or less the same. It means that the employment generated during last year by agriculture will more or less remain the same.

The second important is the expected allocation to rural development. The budget estimates indicate that the disbursement to rural development will increase by 14% in 2017-18 over the last year. Most striking is the disbursement to rural employment which was Rs. 217573.88 lakh in 2016-17 (budget estimate) and it is likely to decrease by 23% to Rs. 167615.00 lakh in 2017-18. This is being compensated with expected increase in disbursement to other rural programmes by 26% in 2017-18 over 2016-17. As a result, rural employment is likely to remain same.

Finally, education has important role in Bihar’s path to achieve goals set out by the current budget. The budget announced that three new universities will be established namely, Purnia University, Patliputra University and Munger University. In addition, 11 proposals for establishing new private universities in the state were submitted of which negotiations for four is underway and for rest seven, “Letter of Intent” has already been granted. In addition, the allocation of budget as per statement of disbursement indicates that overall disbursement to education, sports and arts will increase by 13% in 2017-18 compared to the budget estimates of 2016-17. The same for technical education will be 25%. Given this scenario, this indicates that the current budget for education sector focusses on technical education and skill development which is again aligned with the centre’s approach. Total disbursement is in this sector is 18% of the grand total disbursement for the year 2017-18.

The takeaways from the above is clear. State Government’s focus on key sectors remains same and is expected to give the same result. What is new to be considered is to give more focus on education and agricultural. There is a greater need to focus on reforming state’s education sector. It would need special focus for short term period (especially 5- 7 years) to allocate major components of budget to this sector consistently. Second takeaway is that the Government is focussing on technical education. The focus needs to be given on quality education rather technical education.