Opinion: Finally, The Headline Bihar Has Been Waiting For

“Bihar will emerge as an investment destination.”

That was the statement made by the late Ratan Tata, then chairman of Tata Sons and the Centre’s Investment Commission, in September 2006. Around the same time, Mahindra & Mahindra chairman Anand Mahindra promised that his group would enter the state in a “big way”. The slew of promises made to the state included significant investments in sectors such as infrastructure, automotive, finance, and information technology.

It took nearly 18 years for Tata’s prediction to come true. Long shunned by investors despite assurances, Bihar has now been embraced by the Adani Group, which has pledged to invest ₹28,000 crore in the state—an amount that is close to 70% of all the investment the state received in five years beginning 2017. For a change, promises have been followed by concrete actions on the ground. The group has already begun its investments, focusing on three key sectors: logistics, gas distribution, and agri-logistics. These initiatives have already generated over 25,000 direct and indirect jobs. Further investments in these sectors are expected to create an additional 27,000 job opportunities.

A boost from a big investor like the Adani Group is exactly what Bihar had been waiting for. It couldn’t have come at a more opportune time.

Let’s rewind a bit to understand why Bihar desperately needed this push now. In the 1980s, the agricultural sector accounted for nearly 51% of Bihar’s economy, significantly higher than the national average of 36%. In contrast, the industrial sector contributed a meagre 10%, compared to the national average of 25%. While these two sectors prospered in most parts of India during the 1990s, Bihar experienced a painful and accelerated decline.

This period also coincided with a population explosion in the state. As opportunities dwindled, the demand for education, healthcare, jobs, housing, value-added food items, and vehicles sharply increased. With investment rates crawling in the low single digits and capacity addition at dismal levels, Biharis were left with little choice but to migrate. The scale of this migration, however, took everyone by surprise.

According to a study, “About 55% of households have at least one migrant worker. More than 90% of migrant workers work outside Bihar, with a little over 85% employed in urban areas outside the state, particularly in construction and manufacturing sectors. By far, the dominant form of migrant work is in urban centres in other states, making it relatively long-distance in nature. Nearly all migrant workers from rural Bihar are male, and three-quarters of them are below 45 years of age.”

As the migration narrative persisted, the pandemic struck, severely impacting lives and livelihoods. It dealt a significant blow to the very idea of migration, and Bihar has yet to fully recover.

This called for a reimagining of Bihar. The idea of holding an investment summit, the first edition of which took place in 2023, could not have come at a more opportune moment. During the inaugural summit, MOUs worth ₹50,000 crore were signed, and the figure skyrocketed to ₹1.8 lakh crore in the second edition this year. A big share of that came from the Adani Group, which emerged as the largest investor in the state.

Viksit Bharat Can’t Be Without Bihar

Despite years of growth fuelled by a very low base and remittance-driven services sector, Bihar continues to rank near the bottom on almost all development parameters. Its per capita income is just 33% of India’s average, a significant decline from 70% in the 1960s. The state’s level of urbanization is alarmingly low at 12%, far below the national average of nearly 35%.

Although Bihar is home to nearly 9% of India’s population, its contribution to the country’s GDP is only 2.8% today. In 1961, it contributed 7.8%, slightly less than Maharashtra, Tamil Nadu, Uttar Pradesh, and West Bengal. While most other states have maintained or increased their share—states like Karnataka, Andhra Pradesh, and Gujarat have seen significant rises—Bihar has experienced a steep decline over the past six decades.

A report by the PM’s Economic Advisory Council observes that “after a decade of modest improvement from 31.2% for bifurcated Bihar in 2000-01 to reach 35.4% by 2010-11, its relative per capita now hovers around 33%. Though this means that an average person in Bihar still has an income level 77% lower than that of an average Indian. We understand that household incomes may be bolstered by remittances but the gap is very stark….Bihar will need to accelerate its economic growth considerably to make progress toward closing this gap.”

The massive investment from the Adani Group—as well as from other companies such as NTPC Green, Ashoka Buildcon, Shree Cements, NHPC, Coca-Cola, and Haldiram—can help the state make a quantum leap.

Bihar needs a paradigm shift, and investment-led growth is the only option it has at the moment. The political class must do everything possible to ensure the state remains investor-friendly. After all, migrants like me and many others deserve the option to return to our roots.

(The author is Consulting Editor, NDTV)

Disclaimer: These are the personal opinions of the author