Six years down the line, Bihar today boasts of one of the highest economic growth rates in India.[break] And, optimism runs so high that even people in the remotest rural areas say their per capita income will improve significantly soon from less than US$ 300 of six years ago.
The Bihar government, under the leadership of Nitish Kumar, is showcasing to pundits how good leadership at the helm of the government and its commitment to reforms can transform a state.
What led to such a complete turnaround of the once-notorious Bihar?
"Fundamentally, the success came through committed implementation of reforms in just four key areas," said Blair Glencorse, a specialist at the Institute for State Effectiveness (IfSE), at a program in Kathmandu.
First, the Nitish Kumar-led government made extensive investment in bolstering security. He hired ex-army for security, started fast-track court trials and took tough stance against criminals.
Since 2005, the Bihar government has put 50,000 criminals behind bars and successfully eliminated dozens of criminal groups that existed in different forms.
In the state, where security remained a critical constraint, people in rural areas barely used to go out of the house after sunset. People in the cities too never bought expensive cars lest they draw the attention of extortion groups.
"But today, people feel safe to move around even till late night and are enjoying luxuries," said Glencorse, who studied dramatic turnaround of Bihar.
While that buoyed consumption, investors that once fled or shied away from investing their money in the state started returning to Bihar eagerly.
Secondly, the state government made extensive investment in public infrastructure, something that can launch Bihar on a high growth-trajectory. In just six years, it built 30,000 km of roads, instituted hundreds of schools, welcomed new telecom operators and has even started to build airports to increase connectivity.
As a result of these policy interventions, locals that in the past moved out in masses to other states and countries, including Nepal, for jobs are returning home with high optimism.
And, the rate of return is so high that other Indian states and Nepal that relied extensively on the workforce from Bihar to carry out construction, manufacturing and other unskilled to semi-skilled works have started facing labor scarcity.
Thirdly, it seriously enhanced service delivery. It raised education budget to 25 percent of total state budget and expanded health facilities, bringing basic services to people´s access.
Fourth, it committed itself to governance reforms. Under this, it introduced new benchmark for recruitment of civil servants, made sure that staff are hired through free competition and not patronaged. This competent workforce only added momentum to good works that the leadership initiated.
"It is not that Bihar has no crime or corruption. But those have gone down so dramatically that people tangibly feel the impact of reforms," said Glencorse.
As these visible changes lead the Bihar government to regain public trust, Glencorse advised the government and political leaders in Nepal to effectively disseminate positive changes happening in the country.
"This is critical to maintaining a sense of hope among the people," he said.
He also advised the Nepali government to enhance its capacity to boost public spending so that those could create catalytic impact in the market.
However, despite such rapid transformation, Glencorse who pressed the case of Bihar´s turnaround at a function in Kathmandu on Tuesday said that Bihar today is exposed to two paradoxes.
First, efforts of the state government raised standards with which Bihar is judged so high that it could face difficulty in sustaining it.
Secondly, the state is severely constrained by power crisis. "Deep rooted energy deficiency poses challenges in sustaining the growth," said Glencorse.
This is where, he feels Nepal can strategically step in and win benefits. "Transformation of Bihar has opened new opportunities for Nepal. It should not waste time now and jump instantly to foster economic symbiosis so that those opportunities can be tapped," he said.
Glencorse also stated that reforms in Bihar have created opportunity whereby Nepal can now effectively collaborate with Patna to control cross-border crime and plug social evils.
He also highlighted prudent water management and business opportunities as two other benefits that Nepal can tap with the emergence of a prosperous and well-governed Bihar.
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