Inclusive development is about sharing the fruits of growth with the bottom of the pyramid. It goes beyond welfare schemes to encompass equality of opportunity, enhancing human capabilities across the population, and generating broad-based productive employment. If inclusiveness is the aim of India?s policymakers as they pursue high, sustained growth, they should applaud Bihar?s assembly election results.
Bihar is the poster child for inclusiveness. It is India?s poorest state, handily ?beating? rival Uttar Pradesh for that dubious title. It has been conveniently and appropriately the first letter of the BIMARU acronym, which joined Madhya Pradesh and Rajasthan with it and UP to symbolise a sickness that supposedly afflicted India?s heartland, that of poverty and misery. So Bihar doing well economically is a great advertisement for the idea of inclusive development. And the electorate rewarding the state?s political leadership for providing inclusive development is a validation of ideas espoused, if not always followed, at the national level.
Development begins with and builds on growth. How has Bihar done? From 2000 to 2005, India?s per capita income growth averaged about 3.9% a year. The corresponding figure for Bihar was 3.1%. From 2005 to 2009, the all-India average annual growth was about 6.9%, while Bihar, after a change in government, came in at 10.3%. Subtract the 3% all-India acceleration, and Bihar?s net increase is 4.2% in the second period. It may not be that all of this increase was due to the change in state leadership in 2005, but voters were surely rational if they went with the positive correlation and gave the ruling coalition a second term.
Was this accelerated growth inclusive? Here there can be no single number to make the case. But the list of examples of how things changed is persuasive. An analysis of the growth drivers indicates that higher infrastructure spending was a big factor. This spending went for roads and bridges, which connect villages to towns and cities, and give people easier and better access to markets and government services. The national government can be pleased with providing these increased funds, but the new state government actually spent the money, and spent it reasonably well.
Bihar?s Chief Minister apparently also did simple things like sitting in his office all day and attending to business, making decisions expeditiously. He restored some semblance of responsibility and accountability to the civil service. He raised police morale and cracked down on crime. He pushed through the hiring of teachers and opening of new primary schools. As much as anything else, the basic functions of government are a precondition for growth and development of any kind.
Nitish Kumar also did some interesting things to include the 50% of the population that often gets left out or marginalised?women and girls. He increased women?s reservations in panchayats from 33% to 50%. He provided free bicycles for over a million high school girls, so they could go to school and back more easily. Women captured over half of the seats in panchayats elections, turned out in record numbers for the state assembly polls, and made clear that they cared about the focus on law and order and on education.
This is not a new utopia, of course. Caste still matters in Bihar, as it does in all of India. And Bihar is still India?s poorest state. Other chief ministers have had good runs in promoting growth and development in their states. Sometimes they have lost elections despite their success. Bihar?s challenges remain enormous. But there are important lessons in what has happened in Bihar in the last few years, and in the recent assembly elections. These lessons have been hinted at over the last two decades, in different state and national elections and economic outcomes.
One lesson is that governance matters enormously for economic performance. A second lesson is that good governance is not difficult to achieve when there is good leadership. A third lesson is that campaign financing as an excuse for corruption won?t wash?good economic and social outcomes trump expensive political marketing, bribes and pandering to voters? base instincts as drivers of political success. A fourth lesson is that good outcomes have to be inclusive?this has been realised before at the national level, but not always translated clearly into the right actions. A fifth lesson is that federalism works if done right?let spending take place at the level where efficiency and accountability are highest, and let demonstration effects turn into domino effects across states and districts, towns and villages.
The success of Indians on the global stage, in a variety of professions, in many parts of the world, has made one thing clear. Indians in their own country deserve better leadership than they have been getting. Bihar?s recent experience may be a significant step in the right direction.
The author is professor of economics, University of California, Santa Cruz