Why Resource-rich Bihar is the Least Developed State of our Country?

by Madhvi Bansal

If we look at the history of Bihar till the independence of our country it remained a center of knowledge and a very flourished region of the subcontinent. Nalanda, which remained one of the biggest knowledge centers of Asia, is in Bihar. Great religions like Buddhism and Jainism thrived well on the holy land of Bihar. After the advent of the British, Bengal and Bihar region was the first for which Britishers were tempted for. But with due course of time, the picture of Bihar changed completely and it becomes the least developed region of India. Bihar performs worst in almost all developmental parameters. Bihar is very rich in natural resources and geographically it is located in most fertile Gangetic alluvial plains. Despite such a huge reserve of natural resources, why Bihar is suffering from acute poverty? Today, in this article we will discuss the reasons for the backwardness of the state.

Reasons for the backwardness of Bihar

After the independence, the country was on its own, so we developed our own developmental policies and India grew exponentially specifically after LPG reforms, but the growth of the country was and still is very uneven. This growth pattern majorly benefited the states with industries but left out the agriculturally dependent states like Bihar. Worst hit for the Bihar was when it was divided into two states and major natural resources went to the newly formed state Jharkhand. Today, Bihar can be seen at last in the tables of malnutrition, literacy, life expectancy, infant mortality rate, morbidity, etc. For this poor performance  many socio-economic and political factors are responsible, some of these factors are:

High population with poor human capital

In terms of area, Bihar is 12th largest state of India, but population-wise it is third largest in the country and if we take population density of Bihar into account which is 800 persons per kilometer square, Bihar stands second in the list, where National average is 329 persons per km square. It is very obvious from the above fact that in Bihar per capita land distribution is worst in the country. The problem is not only of land distribution but also the available human resource lacks basic skills. At the time when the share of agricultural laborers is falling in-country, the share of agricultural laborers increased in Bihar from 41 % in 1971 to 48% in 2001. Also, there is lack of vocational training centers due to lack of investment. The existing agricultural sector is unable to absorb the increasing labor force and this gives rise to another major problem of migration from the state.



Ironically, the erstwhile knowledge hub of Asia is now at the bottom of literacy tally. According to the last census, the literacy rate of Bihar was 63.8 2. Also the state board is full of corruption, you have many times seen the fake board toppers in news. State also lacks skill development centers. The poor education system is one of the biggest reasons for the backwardness of Bihar.

Poor Agrarian sector

As we have discussed above, the Bihar is primarily the agrarian in nature, more than 80% of its population is living in rural areas, which is heavily dependent on agriculture and livestock. The biggest problem in the agrarian sector of the state is that the large land tracks are with a handful of landholders and the majority of the population is small and marginal farmers in even a large number of people work as agricultural tenants. This leads to a situation, where marginal farmers and tenants do not possess the money to invest in the sector and big landholders do not want to invest as it is not their primary source of income. So private investment is almost negligible in the state. Not only private investment is bad, but public expenditure in the agricultural sector is very poor, the state invested only one-fourth of what states like Punjab and Haryana did. The irrigation system of Bihar is very bad, farmers here are heavily dependent on the rain and only 50% land in Bihar is equipped with the provision of artificial irrigation, this figure for Punjab is 90% and above that existing irrigation infrastructure is not of much use due to poor electricity infrastructure and high prices of diesel. At the time when other state governments work giving subsidies on electricity and diesel to farmers, Bihar government was unable to do so in paucity of funds. Due to the lack of investment productivity of Bihar agricultural sector is very low.


Politics of a state plays a key role in the development of the state. In this domain also Bihar had faced the worst political crises in the country. After the independence the power in Bihar went into the hands of the elite upper class, they continuously suppressed the poor sections of the state. This suppression gives rise to political parties which became the voice of lower castes, and this led to the emergence of deep-rooted caste-based politics in Bihar, which is still very prevalent. These political parties get votes only on the basis of caste so these parties did not give much heed towards development. Also, Bihar politics faced much instability, which leads to poor implementation of the policies. As a result, Bihar lacks roads, railways, industries, and other social infrastructure.

Availability of funds

Funds are the basic requirement for the development. The distribution of funds in our country takes place according to the formula designed by the finance commission of India. Historically, since the first 5-year plan of development, Bihar received a very Small chunk from the total devolved fund. The per capita fund is comparatively very low than other states, also the other states oppose the increment in funds on the basis of population as this will disincentivize the efforts done by other states to control their population. Moreover, the disbursed funds are not utilised properly by the state due to inadequate administrative capacity. Also, the grants in aid  received by the Bihar is very less if we compare it with grant given to other states like Punjab in Gujarat. As we have already discussed the plight of the agricultural and industrial sector of the state, other revenue base of the state is very small, which in turn lay fiscal burden on the state government.

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Industrial policy

Before independence, Bihar was flourishing with rising textile industry, but British agrarian policies crippled state very badly. After independence, the poor state had only one advantage that it had rich mineral resources, but disadvantage was also nullified after the implementation of Freight equalization Policy of 1952. According to which the government-subsidized rail freight fares for equating the cost of raw materials throughout the country. This proved the most detrimental to the state of Bihar, as it was very rich in coal resources. Many industries wanted to set up their plant in Bihar, but after this policy implementation they did not required to do so as rates were same throughout the country. So, the industrial footprint in Bihar is very low, also the FDI in this state is one of the lowest in the country for example per capita FDI of Maharashtra is rupees 5019 in 2007, whereas it was only rupees 89 in Bihar. Poor industrial sector is one of the biggest challenge in the development of the state.

Way Ahead

To ensure the development of India and make our a country a major global power, every part of the country must be developed. Bihar is full of immense talent as most of the IAS, IPS , IITians are from Bihar, all it needs is a fiscal push and political will. The Center should offer some special package to the state and may also relax some sharing responsibilities of centrally sponsored schemes like the northeast States. There must be concurrent efforts from both Central and state government to improve educational and social infrastructure of the state and also generate employment opportunities in the state to avoid interstate migration from Bihar. Robust awareness programs should be launched by the governments to spread awareness about population control and health, deep rooted corruption must be wiped out from the state. If above steps are followed religiously, then it is not an impossible task to develop Bihar like other states.