Tuesday, January 15, 2008

Micro finance: Need of the Hour for Bihar

Bihar is on the path of economic recovery. The big picture looks assuring. Roads, health and education have improved tremendously. Though same cannot be said about certain areas like people’s need for credit. Biharis are talented and hard working people and need the state and infrastructural support. For lack of finance they are not able to open businesses, improve agricultural/manufacturing practices and generally better their productivity. Banks have woefully lagged behind in providing credit facilities to people of Bihar. There is a PIL in Patna High Court about abysmally bad credit-deposit ratio (CD Ratio) alleging that banks have not honoured the RBI mandated CD ratio. The banks prefer to dole out personal loans /car loans and housing loans more than real agricultural loans if it is not The Punjab!
Bangladesh has shown that poor and the poorest can be trusted for loan servicing more than rich. They need small amounts to manage small needs and most certainly return the loan as they associate pride with that. That’s why the micro finance experiment was such a success in that poor country. Same can be replicated in Bihar. There would be little adjustment here and there.
Bihar is rich in alluvium and has the largest fertile land tract in the country. Anybody who has a bigha or two of land will never go hungry. You must have noticed that unlike AP and Orissa, there were no hunger deaths in the state. And yet millions of Biharis are migrating despite owning some land and opportunity to live a dignified life. Given some cheaper and reliable credit most would have lived in the state and earned. But that was not to be. To buy some agricultural implement or buy a cart to sell goods or buy a pair of oxen to till the land or take the vegetables to the local market or may be tide over a medical emergency. The banks will never tender loan for these things as they consider them unreliable customers. That’s the thing that SHGs and microfinance will solve for all.
Government must evolve and encourage ways to promote this. Most Biharis are skilled as they migrate outside Bihar to work in mechanized fields and factories and have acquired some skill. This should be made use of. If they are given financial help then they do wonders. Government must adequately advertise the scheme and provide and we shall see scores of Biharis returning and making Bihar a success story.

Sunday, January 13, 2008

Economic Recovery of Bihar

There are good news now. And about Bihar. It never happened earlier. Bihar meant all nasty things, negative happenings, criminal gangs, kidnappings, lawlessness, migrations and abject poverty. Being part of BIMARU states had become a habit. Media loved to bash the state in almost every field. No one gave you a second thought if you were from Bihar. Being called a Bihari had become an insult (like Pakis in UK) and a back handed compliment like ‘you don’t look like a Bihari’ was Delhi’s (and perhaps the entire India’s) way of ridiculing all that was Bihar.
But no longer. The change of government from Lalu-Rabari dispensation to Nitish Kumar has brought about the change that one could only dream of a few years ago. People talk of roads and flyovers being built all over the state, prime minister’s road project is on time wiping out the delay of four years, the hospitals and even health centres are functioning and it has resulted in drastic reduction of flight of patients outside Bihar. The higher education, which was causing the biggest drain in Bihar because of the rot set in the state’s colleges and universities, has already made a remarkable revival. Naturally the outflow of students from Bihar has come down heavily.
And now the Indian Express (“Bihar takes first steps to take-off”, 1/1/2008) has reported that the first baby steps that the new government was taking have taken deep roots. Independent agencies like universities and World Bank and Japan are lauding the strident steps that the state is taking. Sample this:
4.4 % growth in agriculture, fastest in the country, reports Punjab Agricultural University;
265 % rise in the corporate tax collection in the Patna circle alone, reports CBDT;
World Bank sanctions a $225 loan to Bihar for economic growth;
Rs.18000 crores being earmarked for road construction alone in the state;
Tata and Reliance along with PSUs showing interest in state’s sugar mills for possible blending of ethanol blended fossil fuel.
The list may be unending but the news report is spectacular in a sense that it was put on the front page by the paper which had made a life time business of running down the state( and not wrongly so). Instead of a corruption case being highlighted here was a serious, investigative paper going hammer and tongs for the state is really soothing to frayed nerves of an average Bihari. We have grown to become middle aged young men thinking and believing that the state was a failed state like Bangladesh and Pakistan. Caste and poverty had punctured forever and then Lalu-Rabari regimes had made Bihar a straight script for films like Apharan (Abduction) and Gangajal (Water of Ganga) or may be even Shool (Pain). But now we have a vibrant Bhojpuri film industry successfully taking on Hindi film industry. Things have turned so well that today even Tare Zameen Par (Stars on the Earth) and Cheeni Kum ( Sugar Free) may not find a screen for a full scale release. They all run Bhojpuri potboilers full of dance and drama where Bihar is being enjoyed on its own terms and not simply lampooned. The super success story of Bhojpuri films is a sign of firm recovery of the state.
Economically and state is on the path of recovery. Fruits and vegetables from the state are finding market outside the state. More and more farmers are growing herbs and making good money. While the Hajipur-Muzaffarpur belt are making their millions from banana and litchi plantations, the Purnea and Katihar districts are reaping the new found prosperity in tea gardens, mind you without any state support and not even a single tea processing factory in Bihar! The state is one of the biggest exporters of mangoes. Earlier the white revolution ushered in by milk cooperatives had shown that Bihar was ready for change and come out of economic backwardness.
The IE report has acted as a balm. Nitish Kumar has meant business. He wants to rule for development. And that is such a rare phenomenon in a third world country. And we thought they only rule for power. Nitish has singlehandedly proved that one man can make the difference. When he took over the reign of the state, Bihar was on the brink of collapse. There was no hope. Poor people could only migrate to earn meager income. And they did. With little rustic management skills and his sharp administrative acumen Nitish changed all that. We must remember that despite loud suggestions, he did not change even one officer. All were known to be loyal to Lalu-Rabari regime. From chief Secretary to DGP to police station chief to BDO- none were removed. And the same very tainted lot delivered. Law and order improved over time. The one-time bahubalis were put behind the bars. The Naxalite problem notwithstanding, He was able to reserve 33% seats in panchayats for women and hold elections to all panchayats and local bodies and evade the mandatory punishment for not holding local, level elections. Today a confident deputy chief Minister of Bihar Sushil Modi can happily give credit of economic development to state’s successful decentralization of power!
The road to recovery is well paved. The reverse migration has started. People serving as security guards in wintery nights in Delhi are returning to Bihar to earn a living and live in familiar surroundings. Trains to Punjab are still full of migrant labour, but then despite Indian success story in IT and exports, the cue outside USA,UK, Italy and gulf countries have not vanished. They, in fact, have lengthened! The footloose will migrate and they should. But the opening of IIT, IIM and Central universities, Engineering and medical colleges and colleges in each district will open the gates of reverse migration in the state. Of all the educated and trained are the most selfish lot. And when they start coming in you can well say cheers! With Nalanda International University, IIT, IIM and such institutions opening their shops in the state that might happen sooner than we can imagine. Amen!