Bihar -The Challenge of Industrialisation

Bihar, the home to 104 million people, according to provisional estimates in the 2011 census ranked third by population behind Uttar Pradesh. Now, with both policing and connectivity having improved dramatically, industry sees no reason to be diffident.

Manufacturing and services sector have both shown substantial increases. The contribution of manufacturing to the state’s income has increased from 10.5 per cent in 1999-2000 to 16.61 per cent a decade later, while that of services has gone up from 50 per cent to 61 per cent in the same period. Agriculture’s share may have consequently declined; even so agricultural growth in 2009-10 was 8.85 per cent.

In a reflection of the frenzied construction activity in the state, Bihar is now the fastest growing cement market in the country – 28 per cent growth in the past year against a national average of nine per cent.

With better roads and little fear of attracting the attention of car thieves or kidnappers, people are buying cars: leading auto maker Maruti Suzuki reported a 30 per cent rise in sales in Bihar between April and December 2010.Government figures show that the number of vehicles in the state has grown four times, from around 80,000 in 2005-06 to 3.19 lakh in 2009-10. Many more people are visiting the state, as revealed by the amount of aircraft movement: in 2004-05, a total of 3,814 aircraft landed or took off from the state’s airports; five years later the figure was 10,726.

Telephone connections – landlines and mobiles taken together – have risen 10-fold in five years, from 4.2 million in 2005-06 to 41.5 million until March this year. With growing incomes, people are buying more: FMCG major Samsung’s sales grew by 25 to 30 per cent between April and December last year.

The State Industrial Promotion Board (SIPB) had approved proposals worth over Rs 1.99 lakh crore in various sectors, including energy and ethanol. But the land availability remains a matter of primary concern. Recently, at Nabinagar in Aurangabad district the local farmers had protested violently for more compensation for their land and a standoff was created at the place halting the power project installation for some time. Industry needs faster acquisition of land for developing new, modern industries.

Unable to secure land, the state cabinet in January approved new rules relating to the conversion of agricultural land into non-agricultural, which effectively absolves the government of responsibility in getting land for industry. These rules leave buyers free to purchase agricultural and other land directly from farmers at market rates and use it for industrial purposes, after paying a conversion fee. But the decision is unlikely to set industry rejoicing, since it is looking for land not just anywhere, but in places where the infrastructure it needs is already available or can be easily set up.

The State Government of Bihar has now decided to work as a facilitator between potential investors and land owners to prevent unnecessary dispute and collision over the issue of acquisition of land for setting up industries. Given the controversies surrounding land acquisition in different parts of the country and resistance of landowners , the state govt. has become cautious in its bid to acquire land even for public good including industries.

The government has adopted a new model for the acquisition of land for industry and other ventures of public good, where it would act merely as a link between investors and landowners. Besides, the government has also been creating its own land bank.

The new policy, called ‘Aao Bihar (Come to Bihar)‘, is aimed at giving investors a sense of certainty that land would be available for them in Bihar. “The Govt. will not directly acquire land. Instead, the government would work as a link between investors and landowners. The new method envisages creating a pool of land owners, with each owning more than two acres of land, who are willing to sell their land for public good at their own desired rate.

Under this policy, farmers, either individually or in group, willing to sell their individual or collective chunk of land would have to submit the details to the DM concerned, who, in turn, would check the legal papers to ascertain that they are not disputed. The DM, then, would forward the verified details of the chunk of land to Bihar Industrial Area Development Authority (BIADA), which would put the details on its website showing the price quoted by the farmers concerned. “The investors would have a reference pool of chunks of land to acquire them for their ventures,

The new method of land acquisition had worked wonders in buying of land for thermal power plant in private sector in Banka district, where 700 acres of land had been acquired. It is hoped that this state policy will  boost the inflow of industries in Bihar.

Corruption and Power came as biggest challenges in the second regime of the NDA government  On corruption, though Govt. has ‘waged war’. Launching a crackdown on corruption he devised many innovative ways and means to checkmate its fawning wings but on the issue of bringing power to the state, the Govt. has  so far not succeeded in making  any breakthrough.

Bihar is currently one of the worst states in the country when it comes to power. The state has to depend solely on Central allocation of power of which it gets less than the quota. Getting no effort bearing desired results, the state government itself took up the cudgels and invited private and government owned companies to set up power plants in the state ‘for which the government would provide all kinds of help. Some of them came, some started the process, and some signed agreements.

State Energy Minister shri Bijendra Prasad Yadav recently apprised the State Legislative Assembly that the state’s power scenario would improve only by 2016 as most of the power projects undertaken by the state government would start generating power by that time.

Bihar has a daily requirement of about 2,200-2,500 MW of power and it generates only 40-80 MW. The Centre allocation of power to the state is 1,649-1,692 MW but the state currently gets a meager 750-1100MW “which is enough for Patna only”, said the energy minister. The state is facing a power deficit of about 1,000-1,200 MW daily. However with the completion of Nabinagar thermal power station, renovation of Barauni and Kanti thermal power stations, one thermal power station coming up at Sangrampur village in East Champaran, Lakhisarai and Chausa and Pirpaiti, the power scenario would improve by 2015-16.

Besides these, the NTPC units of Barh and Kahalgaon too will start generating power but “like other 16 states where the power stations are coming up with Centre agreeing to provide them 50 per cent of the generation, Bihar too should be accorded the 50 per cent formula from the upcoming Barh and functioning Kahalgaon thermal power stations,” stated the minister. Power-starved Bihar should also be provided coal linkage to overcome the grim situation, he added.

Realising the gravity of situation ,The chief Minister of the State visited the neighboring country of Bhutan last month and stayed there for four days to see the power scenario of the country. He even visited some of the power projects to get an idea of hydel projects to generate power in Bihar.The Bihar Chief Minister later made a demand to the UPA government at Centre that Bihar should be allowed to have equity stake in Bhutan’s power units so that the power-starved state would get assured power from the neighboring country.

The state has demanded 1500 MW power from Bhutan’s Punatsangchu I & II power plants. The state has also to provide 600 MW of power from Arunachal Pradesh as the state was earlier being promised.

The State is concentrating on adding generation capacity.  PPA for more than 20,000 MW has been signed. But ultimately the state has to bye power through bidding process  and until and unless distribution sector is improved the situation is not likely to ease Distribution sector which is the most crucial segment of power sector and the real challenge of reforms lies in efficient management of distribution system. As someone has rightly said, our power sector is a leaking bucket; the holes deliberately crafted and the leaks carefully collected as economic rents by various stakeholders that control the system. The logical thing to do would be to fix the bucket rather than to only emphasize shortages and make exaggerated estimates of future demand for electricity. Emphasis has always been in buying from open market or to augment generation capacity both in public and private mode without improving the Aggregate Technical and Commercial (AT&C) losses and efficiency in distribution sector. This looks like pouring more water into the bucket so that the consistency and quantity of leaks are assured.

Meanwhile, millions in the state are forced to live in the lantern age as electricity has become an exclusive luxury for people in most parts the state.. The generator economy is the most thriving business in Bihar today. The private generator operators charge Rs 15-20 for a bulb and Rs 5 for charging mobile phones in most of rural Bihar and people as per their financial capacity and need get hooked to the generator wire.

Renewable energy like Solar photovoltaic, biomass, co-generation and  mini hydel have the potential but it has yet to pick up & infrastructure of the nodal agency is put in place.

According to a recent survey conducted by an NGO Greenpeace, even the Rajiv Gandhi Gramin Vidutikaran Yojna (RGGVY) has failed miserably in achieving its mandate and objectives in Bihar largely because of faulty approach and methodology of the scheme. Though, Bihar is one of the largest beneficiaries of the RGGVY scheme in terms of budgetary allocation, during the survey it was found that 10,234 villages across 20 blocks of Saran district have been brought under the RGGVY scheme but the survey report found that 78 percent of the population is still living in complete darkness. Due to shortage of power and other problem life theft of conductor and  burning of mini capacity distribution transformer under HVDS program,in fact  the de-electrification of electrified villages have stared.

The real power challenge, therefore, for our award-winning Chief Minister of Bihar has begun  with power and will only flourish  with power.