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Bihar's Growth Fine Print
India's poorest state has been posting impressive GDP growth. But the figures may need sharper scrutiny
Since the start of 2009, Bihar’s growth rate was one of those rare state-level economic variables hotly debated and discussed throughout the country.
Reports of Bihar being the fastest growing state in the country made every one sit up. Despite many academics and journalists poring over its economic data, consensus on its true growth rate has yet to be reached. And given that state-wise economic growth data tends to get reconciled with a lag of two years, consensus is elusive.
A cursory look at Bihar’s growth figures over the last decade explains why they lend themselves to such varied interpretations and analysis. Not only has the yearly growth rate swung wildly every year, the data also gets revised from the initial estimates. The initial estimates for 2007-08 and 2008-09 were nowhere near the final figures (see graph). As a result, the analysis on Bihar’s economy and Nitish Kumar’s rule could change between February and March (when the last state economic survey was released) since Bihar no longer grew at 6.35 percent — it grew at a more remarkable 10.74 percent.
Infographic: Hemal Sheth
Given the volatile characteristic of growth data, observers like Shaibal Gupta of the Patna-based Asia Development Research Institute feel that Bihar’s economic growth has yet to stabilise and as such, it is too early to comment based on the growth data alone.
Praveen Jha, professor of economics at the Jawaharlal Nehru University stops short of saying that the figures are fudged. “The volatility is simply inexplicable. In fact, a committee led by state cabinet minister, Jagdanand Singh, during the last year of RJD (Lalu Prasad’s party) rule concluded that the data collected within the state is not reliable,” points out Jha, who has done a detailed analysis of Bihar’s growth rate.
A look at Gujarat, which is close to two and half times Bihar’s economy and is seen by many as the fastest growing state in the country today, reveals a crucial difference. While the growth rate in Gujarat may occasionally decelerate from one year to another, it never registers negative growth or an actual decline in the state GDP. Bihar, on the other hand, is habituated to going two steps forward and one step back. Arresting this tendency could just be the key thing that Nitish Kumar needs to focus on in his second term.
(This story appears in the 14 January, 2011 issue of Forbes India. To visit our Archives, click here.)
Comments 5
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DhananjaykumarsharmaWhen Bihar has started growing since 2005-06 Nitish started resurgence of Bihar, then what is the need of painting a big shadow of Bihar comparing it's Jungle Raj ( 2001-2005) Led by Lalu ke Bhalu. I challenge all mediapersons & anyone who is trying to paint bad image of Bihar If you have guts stop Bihar if you can. Now Bihar is on fast tarck & Bihari stamped it by giving full Historical win of Mr. Nitish. so now no " My Ke LaL " can stop Bihar becoming no one by 2015. If someone is jelous of it let your heart stop breathing. I bet Jha & Mishra & who ever so called great economist if you have guts calculate Bihar grouth you will find it will be double than predicted by it's goverment. Reson is our Goverment machineries are not business minded like Gujrat other our rate could be double that it's shown here. If you do not believe take a tour of Budhha Vihar ( now one of the piece state of India ) & you wil find what kind of super developments are going on there.
on Feb 6, 2011 -
Mayank Mishra
Well so what was the conclusion of Forbes?? Whatever you are seeing in bihar is the real growth and on relative parameters there is no two step back..figures some time done show the correct pictures. There is a healthy growth and it will be sustained in the the coming days. Voltality and Fluctuations are not going to give any thing Fundamental about the real growth. These are more statistics tools.
on Jan 11, 2011-
Udit Misra
The conclusion is that Bihar'€™s economic growth is still not broad based and as such prone to huge fluctuations. There are also some question marks about the quality of data. As a result, any analysis about Bihar'€™s economy and governance solely based on the state’s economic growth rate is likely to give an incomplete picture.
on Jan 11, 2011
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Tv Sinha
Looks like even an international magazine like Forbes is getting the flu of bias from the Indian English journalists who are genetically incapable of seeing anything positive in Bihar. Let me just say that the methodology of data collection has not undergone any change from the time when Bihar was shown as the perpetual laggard. Why did any of the journalists / so called academics not challenge it then?
on Jan 9, 2011 -
Pranshu Bhutra
Not at all a well-written article. Could have been so much better. Absolute lack of analysis. More studies should been quoted such as the boom in construction and the faulty accounting methodology used. Not of FORBES standard
on Jan 7, 2011
