Considering how important winning Bihar is for the BJP and prime minister Narendra Modi, the announcement of a Rs 1.25 lakh crore package for the state is not surprising. While its good the PM has agreed to pump in big money into a Bimaru state, that’s just half the picture. Infrastructure accounts for 72% of the spend—Rs 54,713 crore (43.8%) is on national highways, Rs 13, 820 crore (11%) on rural roads and Rs 21,476 crore (17.2%) for petroleum & gas projects. But, ironically, the announcements are about just a compilation of projects over time. In January this year, petroleum minister Dharmendra Pradhan announced Rs 25,000 crore of oil & gas projects in the state including the expansion of the Barauni refinery, new gas pipelines and more LPG connections. In end-May, road transport & highways minister Nitin Gadkari stated that Rs 50,000 crore would be spent on roads and highways in the state. What that means is that over Rs 88,000 crore of the proposed Rs 1.25 lakh crore package is old hat.
Now, the Union government has notified 21 of the 37 districts in Bihar as backward. That entitles any unit set up between April 1, 2015, and March 31, 2020, to 15% additional depreciation under Section 32(1)(iia) and 15% investment allowance under Section 32AD of the Income-Tax Act, on the cost of plant and machinery acquired and installed during the period. What Bihar has got is nothing new, but a repackaged deal that has been marketed well. It remains to be seen how many of these projects actually take-off. Or, will it all depend on whether the BJP comes to power in Patna or not?