By Ashok Gulati & Bidisha Chanda, Respectively Distinguished Professor and Research Assistant at ICRIER
The electoral battle for Bihar is in full swing. For a state of over 130 million, the second-most populous in India, the contesting parties have promised the moon. The main opposition alliance, Mahagathbandhan, has promised the most. It promises “one job per family within 20 days of government formation, with job process to begin within 20 months”. Bihar has 2.97 crore families. Even at Rs 15,000-20,000 per month, the total expenditure would be Rs 5.35-7.13 lakh crore annually. Bihar’s 2025-26 budget is Rs 3.17 lakh crore, exposing the absurdity of this job promise. This simple arithmetic proves the hollowness in thinking of the Mahagathbandhan. The manifesto also goes on to promise Rs 5 lakh “interest-free cash transfers” for five years, procurement guarantees for crops, and 200 free units of electricity. Clearly, Bihar’s political bazaar is open, and fiscal prudence or even the basic understanding of budgetary finance has left the room.
The National Democratic Alliance’s coalition of parties have been somewhat conservative in their promises, even though they also seem to be caught in the optics of “acche din”. Their promise of “one crore jobs” and “one crore lakhpati didis” sounds ambitious, and coupled with the recent Rs 10,000 transfers to 75 lakh women under the Mukhyamantri Mahila Rozgar Yojana, right before the election season started, is more of a revadi (dole) than a well thought out strategy. Having said this, one must acknowledge where Nitish Kumar’s tenure deserves credit: restoring law and order in Bihar was no small feat, and economists would concede that stability is the bedrock of investment. Yet bureaucratic efficiency is not a substitute for political vision. Bihar’s development story will depend on the mobilisation of private capital and structural transformation—something this government, despite a relative orderliness, has yet to achieve.
Prashant Kishore’s Jan Suraaj is a new entrant and perhaps most rational, avoiding revadis. But the reality is that for nearly 35 years, irrespective of who has ruled, Bihar has remained trapped at the bottom of India’s economic pyramid. In 1990-91, when Lalu Prasad Yadav came to power, according to ministry of statistics and programme implementation data, the state’s per capita income (PCI) was the lowest in the country at Rs 2,660—which was 43% of India’s average PCI of Rs 6,126. By 2005-06, when Nitish Kumar assumed office, Bihar’s PCI had risen to Rs 8,223, which was just 28% of the all-India average of Rs 29,169. Two decades later, the story remains largely unchanged. In 2024-25, Bihar’s PCI stands at just Rs 69,321, barely 34% of the national average (`205,324) and only 18% of Telangana’s, the state with the highest PCI.
All this only underlines a stubborn truth: Bihar’s long history of doles has done little to pull it out of the low-income trap. Yes, the state today boasts near-universal electrification and vastly improved road connectivity. The deeper malaise lies in how power and productivity are distributed. Agriculture, which still employs 54% of the workforce (Periodic Labour Force Survey, 2023-24), consumes barely 4% of the state’s total electricity (Agriculture Statistics, 2022-23). How can a sector expected to feed the state and drive its growth function on such meagre energy? Add to that their average holding size of just 0.39 hectares (Agriculture Census, 2015-16), likely even smaller now, and the picture becomes bleaker. On such slivers of land, what can a family of nearly five (National Family Health Survey, 2019-21) realistically grow to feed itself, especially when their population is still expanding faster than the national rate (1.43% vs 0.9%)?
What could be the potential strategy levers to change Bihar’s economic fortune, irrespective of which government comes to power? There are three clear pathways through which Bihar can still turn its latent potential into real prosperity. First, bet big on textile parks. After agriculture, textiles are the second-largest employer, and Bihar’s greatest strength is its cheap labour. Textile parks are low-capital, high-employment ventures—the best antidote to decades of palayan (escape). Pearl Global, founded by Deepak Seth, has a garment factory in Bihar, where they train women in making apparel for export markets. They currently employ hundreds of them. What is needed is at least 10 such factories to take labour off agriculture and into more productive and resilient occupation with assured incomes. If the incoming government can help scale up by giving incentives—such as contributions to pension funds or some capital subsidy—it can be a herald of creating productive employment in the organised sector.
The second lever of Bihar’s growth lies in its livestock sector. The SUDHA cooperative is a quiet revolution: milk’s share in agri-output has doubled from 14% in the triennium ending (TE) 2002-03 to 28% in TE 2022-23, with 76% of the consumer rupee reaching farmers, far higher than is the case in crops (Gulati et al., 2021). Poultry, too, is rising fast: between 2005-06 and 2022-23, egg and meat output grew 10.2% and 4.7% respectively. Yet, most comes from backyard units with limited scale. Bihar must attract large players like Venkateshwara and Suguna Hatcheries to build integrated value chains linking feed suppliers, farms, and processors, bringing in better breeds, technology, and assured markets.
The third lever for Bihar’s renewal lies in high-value crops like sugarcane, makhana, and litchi. The emerging bioethanol economy can anchor both farm profitability and industrialisation. Bihar’s Ethanol Production Promotion Policy is a good start, with 47 approved projects, but the state must expand beyond its 22 distilleries (eight molasses-, 14 grain-based), revive defunct mills, and scale up to meet national ethanol blending targets. Geographical indication-tagged makhana and Shahi litchi need scale and processing to move beyond artisanal value chains. The focus should be on attracting private investors in processing and exports while giving farmers interest-subvention credit for inputs, supported by proactive banking.
Regardless of which alliance or party takes charge next, one hopes it realises that Bihar does not need revadi economics; it needs dignified employment anchored in appropriate development strategies.
Views are personal