The wrong answer

Yes, Centre's unfair to Bihar - but 'special status' is no solution

In a giant rally in New Delhi on Sunday, Bihar Chief Minister Nitish Kumar reiterated that his party, the Janata Dal (United), saw the granting of "special status" for Bihar as central to support of a political formation at the national level. The special category status that Mr Kumar wishes for Bihar is something that has been traditionally granted to hill states in the Himalayan region - Uttarakhand and Himachal Pradesh - as well as to the states of the Northeast. States with this status have their development plans largely funded by the Centre, with 90 per cent of it coming as central grants. They are allowed to use central assistance funds for non-Plan expenditure and have significantly higher per capita rates of central assistance. Mr Kumar believes that Bihar, consistently a laggard, deserves exactly the same benefits.

There are problems with granting Mr Kumar the claims he has made. After all, special category status is granted to hill states because of specific geographical problems, making it more difficult to integrate them into India's economic mainstream. Such is not the case with Bihar. In that state, the problems have been largely man-made. It is worth remembering what the decade of the 1990s, under Mr Kumar's rival, Lalu Prasad, did for the state; where, in the 1980s, Bihar had grown on average at 4.9 per cent, only half a percentage point less than the rest of India, in the 1990s through till 2002 it grew at well below four per cent while India's growth accelerated after liberalisation. Failures of governance - thanks to a government machinery denuded of talent and disempowered - meant that, frequently, even whatever assistance it received was returned unspent or misallocated. Mr Kumar bears no responsibility for his predecessor's actions, but, equally, his state cannot be expected to benefit from the past failures of its politics.

That being said, it is also true that Bihar has not even been provided with the benefits from the Centre that it is entitled to in the current set-up. Leave aside for the moment the old iniquity of freight equalisation, which allowed the disproportionate development of the western edges of India even though resources were in the east. More recently, it is worth noting that, given Bihar's poverty, the state has limited revenue resources; however, it continues to receive less central assistance per capita than the national average, not more. The demand for special status, and more generous Plan investment, is understandable given that Bihar's per capita Plan outlay has been consistently near the bottom for Indian states throughout the post-Independence period. Even for the 12th Five-Year Plan, which is slated to run till 2017, central assistance is 24 per cent of states' Plan expenditure; for Bihar, the figure is 21 per cent. The Centre has admitted that Bihar's per capita total Plan expenditure remains much lower than the national average and the average expenditure on general category states. Mr Kumar is right to worry about step-motherly treatment.

However, this does not mean that special category status is the way out. After all, if Bihar translates political power into fiscal benefits, then other state satraps will be similarly empowered. West Bengal's Mamata Banerjee and Tamil Nadu's Jayalalithaa have already made similar demands. Clearly, Mr Kumar and the Centre need to meet each other halfway. The Centre must recognise that Bihar has been hard done by in terms of investment, and somehow find the resources to correct that. Mr Kumar must give up his single-point demand, and find other ways to ensure that the Centre gives Bihar the assistance it needs.