The NDA Government, and Chief Minister Nitish Kumar, has made ‘development with justice’ an aim of the state. The Finance Ministry has given priority to create investment opportunities for big industrial houses like Reliance. Improvements in law and order, with a more proactive bureaucracy has led to a gradual improvement in the economy of the state. NDTV dubbed this as the “Quiet Transformation”. In January 2009, Nitish Kumar was awarded the CNN IBN Indian Politician of the Year award for helping put Bihar on the sustainable development and growth track. Again in January 2009, the ASSOCHAM Investment Meter stated that the private sector invested over Rs 304 crore in Bihar during the third quarter of 2008.
After November 2005, the government of Bihar has introduced several laws, which it hopes, will provide a positive contribution the future development of the state’s industries.
- Bihar Single Window Clearance Act
- Bihar Infrastructure Development Enabling Act.
- New Industrial Policy
- Price Preference Policy
- New Policy Initiatives for Entertainment, Tea Processing and Sugar Sectors
- Policy for establishing higher Technical Institutions in Private Sector
- Simplification of VAT Regime
- VAT reimbursement @80% of the deposited amount for a period of 10 years with a ceiling of 300% of the capital investment. Provisions for incentive even in zero VAT cases.
- Reimbursement of 50% of the amount spent on plant & machinery for captive power generation.
- 25% of the VAT reimbursement for the existing units.
- Exemption from electricity duty for new units. Exemption from Stamp Duty and registration fee on land transfer. Incentive granted on land/shed in Industrial Area/ Industrial Park etc.
- Incentive granted on land/shed in Industrial Area/ Industrial Park etc.
- Corpus fund creation for sick & closed units.
- Exemption from annual minimum guarantee/ monthly minimum guaranty. CST reduced to only 1% for small & medium industries.
Improvements and Investments
Roads Construction and Investment
The government is working on the expressway from the Purvanchal border through Bihar to Jharkhand, and has also decided to expand the state highway from Patna to Muzaffarpur from its current poor one lane to a four lane expressway. The central government funded north-east corridor expressway will run through the northern part of the state making the north better connected with the rest of India. The state now spends (2007–2008) Rs 2,222.08 crore on roads, compared with Rs 51.2 crore between 2003-2004. In September 2008, $420 Million (USD) loan from the Asian Development Bank (ADB) was provided to the government to improve nine state highways. The loan would be used to convert nine state highways into double-lane roads covering a total stretch of 820 kilometres. The governments aim is to convert these roads into double-lane traffic corridors as per international standards and bids have been invited for the conversion of these roads in accordance with international bidding procedures. The ADB had also given its consent for development of 1,500-kilometre stretch of state highways into two-lane roads as per international standards under Bihar State Highways Project (BSHP). BSHP will be executed in two phases. The nine roads have been included in its first phase.
Mobile Phone Growth
Bihar also has the largest growing mobile phone market in India. Bihar registered the maximum increase in annual telecom subscribers, marking a growth of 88.2 per cent in the fiscal 2007-08 as compared to the 51.1 per cent in 2006-07. The total number of mobile phones in Bihar increased from 57,73,370 in 2006-07 to 108,69,459 in 2007-08..
For industrial development, the NDA government has cleared a total of 135 proposals worth Rs 71,289.64 crore, submitted by big entrepreneurs for setting up medium and large industries. The proposals are related to sugar mills, ethanol, engineering and medical colleges and power production in the state. A sum of Rs 602.54 crore had already been spent on various activities pertaining to the cleared projects, which are likely to create job opportunities for over 114,000 people. The proposals include opening of 23 new sugar mills and the expansion of seven existing ones, apart from the production of ethanol in two sugar mills and five sugarcane juice production plants. The projects regarding five power plants, 12 food processing units and 15 steel processing and cement plants have also been cleared by the state.
Tax Collection Improvements
There has been an improvement in tax collection by the state government. Tax collection growth in the first half stood at 265%. Patna witnessed a growth of 43.09% in personal income tax collections at Rs 559 crore.
Impact of the NREG
The implementation of the National Rural Employment Guarantee (NREG) scheme has also led to a dramatic fall in the number of migrant workers in India’s Punjab state.
State GDP from 2004 to 2007
Under Presidents rule (February to November 2005) and the current NDA government (Nov 2005 till date) the state’s GSDP is growing on average by 12% per annum. And from 2004 to 2007, the state’s GSDP has grown by 22%. The growth rate has resulted in visits by Indian business leaders to Patna making commitments to invest in the state’s fast growing economy