World Bank in Bihar


The World Banks has been recently showing a keen interest in Bihar, the third largest State in India. It has brought out a report, Bihar: Towards A development Strategy, running into more than a hundred pages, prepared by a team led by Mark Sund and Mandakini Kaul. This report formed the basis of a daylong workshop in Patna on June 18, organized by the Bank, in collaboration with the Planning Commission and the Government of Bihar.   While Buta Singh inaugurated it, Michael Carter, the country director of the Bank in India set the tone and direction for the deliberations by the 180 participants, representing selected NGOs, private sector companies and the State government. It is intriguing that no political party or economist of repute from the academia was invited. At the end of the workshop, a seven-page Partnership Matrix For the Development of Bihar was adopted. Obviously, the World Bank thinks that the salvation of Bihar lies in the strategy of economic development fashioned by it and to be implemented under its active guidance. The Planning Commission and the State government are to be only its implementing agencies.

Surprisingly, no political party except the CPI (ML) has taken note of this venture by the World Bank, especially when there is no popular government in power. Going through the proceedings of the workshop, it is abundantly clear that no participant gathered courage to differ with the World Bank thinking and none looked into the historical factors responsible for the present plight of the people in Bihar. Not a single participant talked of the failure to implement land reform measures and the sabotage by the nexus of landed interests, bureaucracy and politicians. This nexus is not only intact but also more powerful and fierce by the entry of criminals in the ranks of political parties.  

The real design of the World Bank and its agents and collaborators in the country is clear and it is that by the time a popular government is installed, the blueprint, prepared by it becomes a fait accompli and has to be carried out because the new government will have no alternative. Obviously, the Bank has projected itself as a divine authority, overruling the need to consult the true representatives of the State.

The World Bank document at the very outset states: “The challenge of development in Bihar is enormous,” but what it underlines as the factors behind this challenge are mere symptoms. It says, the challenge is “due to persistent poverty, complex social stratification, unsatisfactory infrastructure, and weak governance”. Besides, the image of the State, in spite of its rich past, has nose-dived in recent years.

The Bank has not bothered to go into the past to dig out the factors responsible for the present plight of Bihar notwithstanding its fertile land, abundant irrigation potential, hardworking, innovative and talented people, and immense possibilities for agro-industries and the service sector. It is a matter of research that till now no indigenous industrial entrepreneurial class has emerged in the State. A number of industrial ventures came up in the first part of the last century but all of them sooner or later withered away. Why? The root cause lay in the agrarian relations—Permanent Settlement– imposed by Lord Cornwallis in the last years of the eighteenth century. Studies show that it stunted the growth of agriculture, wasted the surplus from agriculture on conspicuous consumption resulting in non-accumulation of industrial capital and non-emergence of an indigenous industrial entrepreneurial class and pandered to a large parasitic class. One may point out that no worthwhile land reform measures have been successfully initiated since Independence to bring in agrarian relation that that can help agriculture grow and create conditions for industrial development. West Bengal where the same system prevailed more than 150 years has marched on the path of economic development after implementing meaningful and pro-cultivator reforms. In the adjoining U.P., too, land reforms were successfully accomplished. Why did not it happen in Bihar? In the answer to this vital question lie all the problems of Bihar ranging from criminalisation, corruption, the lack of infrastructure facilities, the collapse of health and education services, to the flight of Bihari talents and the mass migration of labour elsewhere. The World Bank and its chief collaborator, the Planning Commission, are simply not interested in this. One may recall “the Washington Consensus” was imposed in the beginning of the 1990s on the developing countries without consulting them. The World Bank had an important role in this. So it has the habit of acting on its own, without taking the people to be affected into confidence.

It is no denying the fact that Bihar’s economy and society have been fast sliding downhill and with the role of the state fast shrinking and market forces dominating, its relative position of Bihar vis-à-vis other States is going to be worse and worse. No investment is being undertaken in the State. In fact, the existing companies are shifting their activities and offices from here because growing criminalisation. Rangdari extortions, kidnappings and murders have become the order of the day. In view of the shrinking job opportunities and avenues for earning, casteism as the most important ideology for the mobilization of political support and for the distribution of patronage has come to stay. All political parties and ideologies have to fine-tune themselves accordingly.

Bihar is no ordinary region even after the formation of Jharkhand. It is the third most populated State with 83 million people. Since around 40 per cent of the population is below the poverty line, which is the highest in the country, its share in the national market is only around 4 per cent. “Rural poverty incidence (41.1%) is substantially higher than the urban level (24.7%); with a low urbanization rate, poverty is predominantly rural. Rural poverty is associated with limited access to land and livestock, poor education and health care, as also well-paid occupations and social status. The rural poor tend to depend on agricultural wages or casual non-farm jobs for income, a large percentage being landless or near-landless, owning lower quality livestock, and likely to be poorly educated (80% of the bottom quintile household heads have no education). Social or caste characteristics are also strongly associated with a lack of opportunities: scheduled tribes are thrice as likely to be poor as compared with upper castes, and significantly so in relation to Muslims and backward castes.”

This is the appraisal of the Bihar situation by the World Bank. And this situation must change so that the State’s share in the national market increases significantly and abundant possibilities are created for investment, both Indian and foreign, besides creating enormous market for goods and services. This will benefit both Indian and foreign capital. How to go about the task is underlined in Partnership Matrix For The Development of Bihar, prepared, de facto, by the World Bank but adopted by the workshop. It has as many as 11 development objectives, which include: (1) Improvement in monitoring of poverty reduction schemes and the better targeting for effective delivery, (2) Economically viable projects for income generation, (3) Agricultural development, (4) Water management, (5) Improving service delivery through local government in rural areas, (6) Improving public expenditure management, (7) Strengthening human development (health and education), (8) Improving infrastructure, (9) Improving investment climate, (10) Administrative reforms, and (11) Capacity building and training.
The World Bank wants the State to strive for these objectives under its direction and guidance. Michael F. Carter, country director for India, has stated without mincing words: “I would like to emphasize that Bihar and the lagging states are a high priority for the World Bank.” What is stated is obvious: entrust the affairs of the State to the Bank and it will bring prosperity. Let us see how Bihar’s people and political parties are going to take it.

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