Nitish Kumar did not create the mess Bihar finds itself in. The gap between the per capita income of Bihar and the national per capita income has kept widening since 1950-51, when the planning exercise started.
For Bihar, acceleration of the rate of growth of around 11 percent during the Eleventh Plan to around 13 percent during the Twelfth Plan will require a massive increase in total investment (public and private)—from around 29.9% in Eleventh Plan to around 45% during the Twelfth Plan period. This has got to be financed by domestic and government savings.
The 70:30 loans-to-grants ratio that the Bihar chief minister seeks to overturn would imply that more grants to Bihar would automatically lead to faster development.
Presently, 11 states have the special-status tag: the seven North-eastern States, Sikkim, Uttarakhand, Jammu and Kashmir and Himachal Pradesh. The special-state status governs Centre-state finances. It entails a state getting a bigger share of the Centre’s resource pie and significant excise duty concessions to help industrial development.
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