As Jharkhand has been grappling with political uncertainty since its birth, its parent state Bihar is applauded by the World Bank for the Nitish Kumar government’s development initiatives.
The Bihar Development Policy Loan/Credit Initiative(BPDPLI)is provided with the budget support over 2008 and 2009 for a wide-ranging reform programme of the Government of Bihar, India’s poorest state, and in many ways its most lagging state, claims the latest World Bank journal.
The World Bank had begun an engagement with Bihar through its 205 report “Bihar: Towards a Development Strategy,” one of the first comprehensive analyses of Bihar’s developmental challenges and potential, according to the journal.
The table of the First Bihar Development Policy Loan/Credit (BDPLI) shows;
*Approval Date: 20 December 2007
*Closing Date: 31 December 2009
*Total Project cost: US-$-M 227.4
*Bank Financing: US-$-M227.4
*Implementing Agency: Government of Bihar
*Outcome: Satisfactory
*Risk to Development outcome: Satisfactory
*Overall Bank Performance: Moderately satisfactory
*Overall Borrower Performance: Satisfactory
During the two years leading up to this loan there were palpable signs of a turnaround, the result of wide-ranging reform that the new government was implementing with three areas seemed particularly notable, it says.
First, the law and order situation was improving with a declining incidence of violent crime and higher conviction rates.
Second, Bihar was markedly increasing the utilization of central funds, particularly on capital expenditure, and taking steps to increase their effectiveness under a new Fiscal Responsibiity and Budget Management Act passed in 2006.
Third, early evidence suggested that sector- and agency-specific reforms and the promotion of elected, local government, Panchayati Raj Institutions was slowly beginning to improve service delivery.
The Development Policy Loan offered the opportunity of a comprehensive policy dialogue anchored in Bihar’s 11th Five-year Plan, the journal says.
Outlining the Project Development Objectives, the journal says the overreaching objective of the operation was to support the implementation of critical structural reforms to attain sustainable and inclusive development over the medium term, while improving the delivery of key public services.
The policy areas agreed under the BDPL-I were;
Improving fiscal policy, public financial management, and governance.
Accelerating economic growth through reforms in agriculture, investment climate, and basic infrastructure, particularly roads; and improving public service delivery in education and in social protection, through Bihar’s anti-poverty programmes, according to the journal.
Bihar has made steady progress in fiscal consolidation with the fiscal deficit declining sharply from 4.7 per cent of GSDP in 2005-06 to 1.5 per cent in 2007-08, increasing to 1.9 per cent in 2008-09, still well within the 3.5 per cent target set.
Bihar sought to improve its own revenue performance by improving tax administration. The state’s tax to GSDP has increased from 4.4 per cent of GSDP in 2005-06 to an estimated 5.4 per cent of GSDP in 2009-10.
Bihar has adjusted VAT rates, reduced property registration and stamp duty rates to 8 per cent in urban and 6 per cent in rural areas, weeded out sales tax concessions, and aligned motor vehicle taxes with those in neighbouring states.
Expenditure on the social sectors (education, health, water supply and sanitation) increased nearly 40 per cent in 2007-08 and 60 per cent in 2008-09. Agriculture, irrigation and flood control, energy and roads now account more than 60 per cent of expenditure on economic service.
However, the negative part is school enrolment has improved dramatically, but attendance is lagging behind substantially, the journal said.
The gross elementary enrolment rate in Bihar has increased from 88 per cent in 2006-07 to 95 per cent in 2008-09 and is like to have risen further, it says.
Out-of-the-school 6 to 14-year children declined substantially between 2005 and 2009 from 17 per cent to 7 per cent.
“Are politicians from Jharkhand keeping track of Bihar’s development graph, which is no doubt much better than Jharkhand,” said a Jharkhand-based economist.