Lessons from Bihar

For us to better understand the development, or lack thereof, in Bihar, we need to understand the natural factors and institutions of the state. Natural factors and institutions are direct influencers of development in a region. Additionally, we need a systematic understanding of the behavioral psychology of people and the influence of culture on political and economic decisions.

If written from an economic perspective, there is no second doubt that Bihar will be categorized as a limited-resources setting. That one suffers from inadequate resources and mismatched demand and supply. This is evident from the prevalent joblessness, poverty, hidden unemployment, and mass migration. This lack of resources stems from historical and geographical antecedents. Bihar is also a land-locked state with no direct access to international trade and heavily reliant on agriculture that has not kept pace with modernization like in other parts of India.

Second to natural factors, institutions are the most potent factors of growth. Political institutions in Bihar though constitutionally same as the rest of India is still heavily influenced and divided by local factor of castes. Rather than fighting on causes of development, electoral leaders are driven by incentive-based and caste-based agendas. A focus on incentive-based and caste-based electoral processes has created very disparate incentives for people willing to represent the interests of the public. Key development factors like health and education often remain underrepresented in political manifestos and electoral demands. Decades of policy paralysis have also created an unattractive environment for business investments.

Almost all elected leaders, spanning political parties and political leaning, once in office tend to grow complacent and inattentive towards development agendas or their constituencies. Subsequently, it has led to decades of policy paralysis. Where policies are designed and implemented, they lack evidence or are unrealistic with the needs of representative stakeholders. On most occasions, policies are cut-and-paste copies from national policies or other state policies with wholly different agendas.

Residents have poor access and worse awareness of many public amenities. Roads connecting towns and villages are either in poor shape or heavily overwhelmed with traffic. Policies and development have not kept pace with the economic rise of the lower and middle class. Law and order, though significantly improved from its shameful past, is still in a state of neglect and lack of supervision. Entrepreneurship is a risky business that involves, but is not limited to, daylight robbery, harassment by the public and administration, red tape, and the inability to find enough skilled human resources. The public has to live with government apathy, institutional ineptitude, and political corruption every day of their life.

Institutions and policies have not kept pace with the rapid rise in population and economic growth of the middle class. Low resources per capita mean there is extremely high competition for education and jobs. Ripple effects amount to lower quality education, incomplete or outdated skillset, and a high rate of unemployment. Not surprisingly, most migrate out of state in search of better opportunities and lifestyles. The migrants are not a homogenous group. It includes both unskilled and poor labor migrants and just as well highly educated and highly skilled white-collar professionals. Human resources could have been a strong point of Bihar if it knew how to leverage that. Though heavily dense, Bihar holds a large section of youth in its demography. However, due to a lack of education, resources, and opportunities, most end up untrained, unskilled, or unguided.

There is also a huge collective behavioral psychology at play. Humans have an insurmountable power to adapt to their natural and local environment. Owing to decades of government apathy and institutional ineptitude, the public has also developed a collective culture of listlessness, pessimism, unprofessionalism, loss of ethics, and lack of empathy to their fellow citizens.

But all is not lost. There are sporadic flashes of optimism. There are also potential solutions and a lot can be done with the changing climate of better political accountability and citizen awareness. More on the pieces of optimism in the next blog.