By:- Syed Zahid Ahmad

Bihar having third largest population with lowest per capita income in India has turned into political Warfield where political parties are pretending state assembly election as State challenge. Like we hear that everything is fair in love and war, the political parties to attract lowest per capita income people with lucrative offers like distributing laptops, scooties and TV sets condition they wins the election. Such politics earnestly ignores the real threats for development of Bihar. All political parties are silent over drainage of manpower and financial resources from Bihar. In between the caste and religion based politics in Bihar, Muslims are taken for granted to support the political alliance raised to counter communalism. In return Muslims hardly get anything in a state where political parties are formed on base of castes.

While reviewing the challenges and scope for Bihar’s development, interestingly we found that during 2010-11 the annual growth rate in State Domestic Product of Bihar at 2004-05 prices was highest (14.77%) in India equating that with Chandigarh. We should think that if Bihar with lowest per capita credit equates Chandigarh (with highest per capita credit in India) in annual growth rate, how Bihar can perform if adequate and suitable finance is ensured for Bihar’s development? Financial engineering is required to design suitable products for landless labourers who have no capacity to pledge anything or arrange collaterals, but works hard for others.

It seems that the people really interested in Bihar’s development have either left the state for search of better livelihood or have lost their voices in state campaigns compared to masses speaking about party politics. So, the political leaders are either biting their opponents or singing tones soothing to their potential voters. No party seems serious about development plan for Bihar, rather focus on means to win the election and exploit the public after election.

Voters need to understand the economics of promises to distribute materials after winning election. Any particular party after winning election would not pay from the party fund for fulfilling any promises made in election manifesto. To fulfill such promises the state Government would require increasing revenues to raise required fund for distribution of materials. Increasing revenues will add on tax burden over taxpayers or consumers only. The higher tax structure would ultimately add pressure on inflation and create adverse environments for attracting investors. This would pull the growth trend down instead of pushing up. But voters are happy to hear such promises from parties because they don’t visualize its consequences over them.

Political parties need to propose alternate plans for increasing income and employment for people of Bihar whose prime activity – agriculture often get affected by floods. Micro Small and Medium enterprises (MSMEs) plays crucial role to create more income and employment with low investments. While in India the total number of registered Entrepreneurs Memorandum (EM-II) by MSMEs at DICs has considerably increased by 81% from 2,35,500 in 2010-11 to 4,25,358 by 2014-15; the condition of Bihar state is so pathetic.

In Bihar the number of registered EM-II in 2010-11 were 4,302 which reduced by 53% during 2014-15 as recorded to 2,009 only. The rate of decline was highest among micro level enterprises which constitute 81% of MSMEs at India level and 92% at Bihar level. By 2010-11 Bihar registered 4,267 micro level EM-II MSMEs which reduced to 1,851 by 2014-15. How can any state like Bihar develop if 57% micro level MSMEs will be closed down in just four years time?

Access to affordable finance is core requirement to boots economy. But again Bihar is the worst performing state in terms of credit disbursed by Banks. It is unfortunate that Bihar the third largest populated state draws lowest per capita credit. Bihar is getting merely Rs. 6,017 as per capita credit disbursed by Indian banks compared to Rs. 5,48,951 for people of Chandigarh and Rs. 5,04,031 for people living in Delhi.  People of Bihar have right to ask the RBI why Tamil Nadu is drawing 122% of their deposits as Credits when Bihar is getting merely 33% of their deposits as credits.

With 10.19% of total Indian Muslim population Bihar is positioned third in India. Uttar Pradesh with 22.34% and West Bengal with 14.31% of total Indian Muslims positioned first and second. According to Census 2011, total 1,75,57,809 Muslims in Bihar constitute 16.87% share in State’s total population of 10,40,99,452 persons. Thus at state level politics Muslims plays crucial role. That’s why Lalu and Nitish have been successfully capitalizing Muslim votes through Muslim Yadav equations. But this time Mr. Asaduddin Owaisi put threat for them by declaring to contest AIMIM candidates in four selected districts of Seemancha (Katihar, Purnea, Araria and Kishanganj) for contesting assembly election in Bihar. These four districts collectively constitute 10.41% of total Bihar population, but as far Muslim population in Bihar is concerned Owaisi by identifying four highest Muslim populated districts out of 38 districts in Bihar, has targeted 28.35% of total Muslim voters in Bihar.

Muslim Percentage in four districts of Seemanchal, Bihar

Districts under Seemachal		Total Population	Muslims Population	% Muslims
1	Katihar	30,71,029	13,65,645	44.47%
2	Purnea	32,64,619	12,55,641	38.46%
3	Araria	28,11,569	12,07,442	42.95%
4	Kishanganj	16,90,400	11,49,095	67.98%
Total Population		1,08,37,617	49,77,823	28.35%

Considerably these districts need special plan for economic betterment of people. In Bihar recording lowest Per Capita Income of Rs. Rs. 15,506, the four districts in Seemanchal gets even poorer than state average.  The positions of these four districts in terms of per capita income further fell down during 2007-08 to 2011-12.

Per Capita Income in Four Districts of Seemanchal, Bihar

Districts Name	Year 2007-08		Year 2011-12
	Per Capita Income (in Rs.)	Position in Bihar	Per Capita Income (in Rs.)	Position in Bihar
Purnea	7,419	25	10,099	26
Kishanganj	7,312	27	9,928	28
Araria	6,635	32	8,776	35
Katihar	8,267	13	11,278	16

Araira with per capita income of Rs. 8,775 in 2011-12 counted as second poorest district in Bihar falling from district position of 32 during 2007-08 to 35 by 2011-12.  Similarly other districts in Seemanchal fallen down in terms of their position in the state to count per capita income. People in these districts certainly need specific plan for improving their livelihood. Would AIMIM be able to present sound development plan for improving income of people in these districts or just count the voters taken for granted on the name of community in Muslim concentrated districts?

If we talk about MSMEs in four districts of Seemanchal, total registered EM-II has reduced by 72% during 2010-11 (with 525) to 2014-15 (145). In Araria registered EM-II reduced to 25 from 145. Similarly in Kathihar it reduced to 34 from 134; and in Purnea 53 from 170. Similarly in Kishanganj there were 73 EM-II during 201-11 which increased to 116 during 2012-13 but again sharply fell down to 27 by 2014-15.  During 2010-11 to 2014-15 while at India level the micro level EM-II registered 69% growth, we observed sharp decline of 82% in four districts of Seemanchal.

Registered EM-II in selected districts of Bihar during 2010-11 and 2014-15

	EM-II during 2010-11				EM-II during 2014-15
Districts	Micro	Small	Med.	Total	Micro	Small	Med.	Total
Bihar Total	4,267	33	2	4,302	1,851	137	21	2,009
Araia	145	–	–	145	25	1	–	26
Kathihar	134	–	–	134	34	2	–	36
Kishanganj	73	–	–	73	27	1	–	28
Purnea	170	3	–	173	53	2	–	55
Seemanchal Total	522	3	–	525	139	6	–	145

The credit deposit ratios maintained by Scheduled Commercial banks in four districts of Seemanchal also reflect how people are deprived of affordable finance for sustainable livelihood. In terms of achieving the target under Cooperative Credit Disbursement in Bihar, these four districts fall much below the expectations.

District-wise Cooperative Credit Distribution in Bihar during 2013-14

Districts under Seemanchal	Target in Rs. Lakhs	Disbursement in Rs. Lakhs	Percentage of Target Achieved
Purnea	2,873	254.9	(0.8)
Kishanganj	3,067	89.6	(0.3)
Araria	1,744	86.0	(0.3)
Katihar	1,774	384.3	(1.2)

We see how MSMEs are closing down in Seemanchal with appropriate policy and suitable financial support. Cooperatives are unable to achieve even 02% of their target credits; and the Per capita credit disbursed by Indian Banks is found lowest for people of Bihar, so the MSMEs are closing down at undesired rate in Bihar.

There is strong need that political parties come up with sound development plan for Bihar addressing the challenges of manpower drainage to other states and lowest per capita credit disbursement in Bihar compared to other states in India. If Bihar has to develop, people of Bihar should be provided opportunity and facilities to develop micro and small level enterprises in Bihar. This is just not possible unless we design policies and products suitable for landless labourers in Bihar. Landless labourers cannot access finance form banks or Cooperatives as they cannot provide collateral. They also cannot afford the financial risks associated with interest bearing loans. They exactly need micro equity finance along with institutional and managerial support to develop micro and small level enterprises. If poor landless worlers of Bihar can work for MSMEs in states like Punjab, Haryana and Maharashtra, they can better perform in Bihar if duly supported by Government initiatives to provide micro equity along with technical support for managing their enterprises.

Any political party really serious to help poor people of Bihar should announce launching of Micro Equity Fund to empower micro and smaller enterprises allowing them feel equality in financial terms compared to corporate who avail equity from stock markets. If such entrepreneurs are supported with micro equity along with skill development in accounting and management, Bihar can organize their unorganized enterprises. Micro equity funds may allow micro and smaller enterprises boost their entrepreneurship; ultimately boosting the state economy.

After announcement in the Union Budget 2014-15, a Committee to examine the financial architecture of the MSME sector was set up by the Department of Financial Services, Ministry of Finance vide notification dated September 26, 2014. This committee held detailed deliberations over three meetings and over e-mail during November 2014 – January 2015 and submitted its report by February 2015. Though this committee’s report carries specific chapter (No.9) on Equity Financing, but there is not anything specific about how micro and small level MSMEs would get equity funds. There were lot of technical barriers in providing equity funds to such MSMEs. Its better if they could have suggested Equity based MFI as alternative institution to deliver such funds to targeted MSMEs. Hope the Government would take lead in initializing such institutional framework with appropriate policies and financial products to support micro and small level MSMEs.

Now who will let the people of Bihar visualize a developed Bihar? Truly speaking it depends on people of Bihar who have to cast their votes for assuring development of Bihar and not for the sake political prestige. Useless to condemn political parties; people of Bihar should apply their minds while casting votes for Bihar election. Muslims of Bihar also need to ensure they cast votes to elect better candidate irrespective of parties and religion or caste basis. Their blind support to any party on the name of countering communalism with no incentive for development of Bihar may further add on economic adversities in Bihar along with political conflicts on the name of religion and caste.

Are voters of Bihar including Muslims eager this time to cast their votes rationally and avoiding waste of their power to develop politicians at the cost of Bihar’s development? Bihar’s election result shall once again reflect their wisdom.

(Mr. Zahid can be reached at  economicinitiatives@gmail.com)