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Bihar growing at a faster speed than Gujarat: ASSOCHAM

Amidst debate on comparative quality of governance among Gujarat and Bihar, an ASSOCHAM study found that Nitish Kumar-ruled state is fast catching up in terms of fresh investment in the crucial sectors like power even though it has a huge disadvantage of the past baggage of laggard development.

Measured in different growth parameters, Bihar is growing at a faster speed than Gujarat but the base numbers –whether relating to investment or per capita income remains much lower than the western state.

"Bihar logged in a compounded average growth rate (CAGR) of 20 percent in public investment between March 2003 and March 2013 while this was 14.1 percent in the case of Gujarat.  Likewise the CAGR of private investment in the same period was 104.5 percent in Bihar as compared to 31.9 percent in Gujarat," according to a study by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

However,  the  outstanding investment Gujarat at Rs 13,74,244 crore  was more than four times than  Rs  3,11,527 crore in Bihar, thanks to legacy of the western state being  among the forward ones and Bihar being clubbed in the past among the so-called 'Bimaru' states.

All the same, Bihar is doing a catching up fast even if its per capita income again because of historical reasons is much lower than Gujarat.

"The established progressive states of Maharashtra, Gujarat, Haryana and Tamil Nadu have been joined by Uttarakhand, Bihar and Andhra Pradesh in the last several years. The notion was that in the post - 1991 era, rich states got richer while the poor states turned poorer. However, the rise of some erstwhile poor performing states to figure among growth leaders dilutes this notion," a comprehensive study done by ASSOCHAM team of researchers found.

It is the public investment which is bringing the growth trajectory in the NDA-ruled Bihar where the BJP is a junior partner. On the other hand, in the BJP-ruled Gujarat, the private sector takes the lead making it among the most industrialised state in the country as the a diversified set of industries –textiles, petrochemicals and  pharmaceuticals has come up.

The share of public investment in Bihar as on March 2013 was 50.3 percent while it was 27 percent in Gujarat. On the other hand, the share of private sector in Gujarat was way ahead at 72.3 percent while it was 49.7 percent in Bihar, though it is catching up fast in terms of growth but only on low absolute base.

Certainly in absolute numbers, Bihar is almost at a stage where Gujarat was about a decade ago. For instance Gujarat's per capita investment in March 2003 was Rs 31,890 which has now gone upto a huge Rs 2,27,586. On the other hand, the per capita investment in Bihar in March 2013 is Rs 30,011 from a measly 3 074 ten years ago.

But Bihar did a catching up fast and its CAGR per capita grew by 25.6 percent in a decade as against 23.9 percent in Gujarat.

While Gujarat is almost self-sufficient in electricity, Bihar is investing in now investing in electricity and irrigation. Over 70 percent of Bihar's total investment now goes to electricity.

In terms of progress on implementation, the track record of Bihar is shade  better than Gujarat.