Bihar?s turnaround under the Nitish Kumar government has been applauded in all quarters. The state government?s reform agenda has led to tangible developments. But the job is far from done. Bihar?s deputy chief minister Sushil Modi talks to FE?s Indronil Roychowdhury about the future course of action.
Bihar has now become a showcase for a turnaround state. What was the key to this success?
The key to this turnaround was enforcing systems and bringing about discipline. Bihar had a government, but it lacked governance. There was no monitoring, no vigilance, and no feedback was taken on the status of state or central programmes. Rabri Devi as the chief minister did not hold any meetings with government officials. It was a bureaucracy-run show and there were loopholes in every aspect of governance. We plugged all the loopholes and things started changing. But plugging the loopholes was not an easy thing to do.
So, what measures did you take to plug those loopholes?
Three measures helped us a lot. First: We made an Act to ensure that everyone got time-bound service and it brought the administration to work. Second: The entire cabinet, followed by government officials, were asked to declare their assets and we put it on the website. Further, we checked if all declarations were correct and took action against those holding disproportionate assets. Third: We made a law that any court case regarding disproportionate assets pending for 15 years would be scrapped and the state will confiscate the amount of assets, that have been questioned. We have used many such assets to make schools, colleges and fund anganwadi programmes.
When you took over as the finance minister, Bihar was in a bad financial shape. What measures did you take to revive the state?s financial health?
To keep a state in proper financial health, what one needs to do is to generate proper revenue, narrow down fiscal deficit, make adequate capital expenditure and boost the state?s GDP growth. We took the strategy of first plugging the leakages, which were resulting in huge revenue losses. For example, revenue income from excise on liquor never exceeded R250 crore in the last 25 years but in the last six years we have taken it to R1,900 crore. We ended 2010-2011 with R1,900 crore of excise from liquor and it is expected to exceed R2,000-2,200 crore this year.
We increased our plan size from a level of below R2,000 crore during the earlier government?s period to R4,500 crore in the first year after we assumed power. This year, we have submitted a plan size of R24,000 crore. The Planning Commission money helped us to invest in a lot of social infrastructure projects, without which one cannot enhance further income generation.
Simultaneously, the state started spending its full share of money in projects, which got matching grants from the Centre and we made sure that we didn?t lose a single paisa on account of getting that central fund. We tapped cheap loans from the World Bank and Asian Development Bank with moratorium of 25-30 years. That helped us revamp our entire road network. Bihar also got a special area package of R4,500 crore from the Centre. All these together helped us in bringing about buoyancy, effecting in an average 10% GDP growth in the last six years.
What about the debt scenario? How bad is it?
When we took over, Bihar?s debt service was 57% of its GDP. We have brought it down to 28% right now. The 13th Finance Commission has asked states to restrict debt services at 25% and we will be able to do it. We are ahead of many states in this regard. But whatever loans we have taken, we have used these for capital expenditure. As regards to expenditure, we have decentralised the powers. Earlier, any expenditure over R5 lakh required a cabinet clearance but we vested power on various authorities. For example, to make a single expenditure of above R5 lakh, we have set a distributive mechanism through which various authorities can sanction various components of that expenditure. This has been done to put development on a faster track.
You first concentrated on roads and that gave a facelift to Bihar, so what?s your priority now?
Health, education, irrigation, power, everything is a priority in Bihar. But we first emphasised on roads because the economy can?t move without roads. Farmers couldn?t even bring their produce to the markets due to bad roads. Next important component is power and we badly need it, since Bihar produces only 150 mw of power of its own and gets only 10% each of NTPC?s total production from Barh and Kahalgaon. Our peak demand is 1,700 mw but our peak supply is 600 mw. We have received investment proposals worth R2.04 lakh crore in the power sector, but we have no coal. We have asked the Centre to provide us coal linkage.
But the new linkage policy has been scrapped. Coal bocks will now have to be taken through e-auction.
We are against e-auctioning of coal blocks to the states. How can the states participate in e-auction and take it at the highest price. We are also not looking for blocks at the state?s dispensation because developing a block will take six-seven years. We want a linkage quantity to facilitate power production and those who can get captive blocks or have existing linkage, they can actually facilitate us.
But land availability is a problem and you are against acquiring farm land as most of Bihar?s land is under agriculture.
There are barren lands too and we are against forcible acquisition of agricultural land. If someone is willing to give land, he can sell. We have fixed a price 240% above the market rates for industry to buy land and equity offers to project-affected persons. Some industries have got land on this condition and many more are willing to follow suit. Our emphasis is on agro-based industry and we have got 251 food processing industry proposals. We got two dozens of ethanol project proposals but the Centre is not allowing making of ethanol directly from sugarcane. So we need to boost the sugar industry and we are working towards it.
Agriculture and industry will stay side by side in Bihar.