Tuesday, March 30, 2010

October 2010 State Elections on the anvil

Bihar Assembly passed three bills on March 29, 2010. Bihar Agriculture (Amendment) Bill 2010 for opening a new Agriculture University at Sabaur in Bhagalpur district, Registration (Bihar Amendment) 2010 and Bihar Finance Bill, 2010 has been cleared.

While power is one of the most key requirements for industrial investment and per capita power consumption remains the lowest in Bihar (76 units compared to 612 units for all-India (2005 figure)), the power struggle for Bihar assembly election 2010 has commenced. The election is due in October 2010. Only 10.3% houses are electrified in Bihar as against the national proportion of 55.8%.

Even as the election draws nearer, the JD(U) has raised the issue of special state category status to Bihar for ensuring its all-round development. There is no denying the fact that there is merit in the demand for special state category status but all through the tenure of the JD (U)led government there wasn't much effort made to press for the same. The resolution to launch the campaign was adopted at a state council meeting attended by Chief Minister Nitish Kumar and state party chief Vijay Kumar Choudhary.

The ruling JD(U) also resolved to wage a struggle against the Centre for its "gross injustice" being meted out to the state in providing central assistance and clearance of projects for manufacturing ethanol out of sugarcane juice, hindering the progress of the state to a great extent. The meeting also criticised the Centre for not giving coal linkages for setting up thermal power plants in Bihar.

As per new CII-KPMG study, Bihar's Educational Development Index (EDI) remains the lowest in the country.

At a recent meeting of Bihar Chamber of Commerce (BCC) and the state’s top police officers in Patna, the Economic Times reported that instead of law and order Patna’s worsening traffic situation was discussed unlike five years ago.

OP Shah, a former chief of BCC, is today a franchisee partner in Bihar for Hindustan Unilever (HUL). Shah says he wouldn’t have taken up this partnership and opened a Rs 30-crore detergent plant in Hajipur if it was not for the restoration of law and order. HUL was scouting for a local entrepreneur for a detergent plant in Bihar since 1993.

Chief minister Nitish Kumar says that statistics on his side. In December 2009, Bihar topped the chart for cement consumption in the country with an annual growth of 36%.

The state economic survey shows that the construction sector grew by 83.58% in 2006-07 and 43.85% in 2008-09.

The new infrastructure being built, including roads, bridges and other public works, contributed 13.4% of the state GDP against 4.2% in 2003-04.

Truck sales grew by 150% in the seven months till October 2009 on a Y-o-Y basis.

Bihar government finally rescinded the contract with Reliance Industries Limited (RIL) for reopening the closed sugar mill at Motipur in Muzaffarpur district. This was announced in the state assembly by Gautam Singh, the Industry Minister. RIL was awarded the contract for reopening the sugar mill through competitive bidding. RIL deposited 10 per cent of the bid amount and the state government later issued a letter of intent to it. The repeated requests of the state government to RIL for starting the work failed to yield any response. Singh said that the government had cancelled the contract and would be floating fresh tenders for reopening of the mill. The state government had acquired 266 acre land for the Motipur sugar mill.

It has been reported that Reliance is not the first industry to back out from Bihar. Solanika Tractors, Gujarat Ambuja and several other industries came and went without making any investment.
Some say it is because of law and order situation requires further improvement.

Nitish Kumar had promised to carry out land reforms. In pursuance of the same he set up a Land Reforms Commission (LRC) under the Chairmanship of D. Bandyopadhyay. Bandyopadhyay is credited as a key architect of land reforms in West Bengal. The full report of the Commission was submitted to the Chief Minister in April 2008. The report was not made public.

When demands arose for immediate implementation of the Commission’s recommendations, another committee was set up to study the recommendations of the Commission.

The Commission has recommended “assignment of at least 10 decimals of land to shelter less household of 5.84 lac non-farm rural workers each who are in the state of semi-bondedness as they live on the land of other landowners”. But the government informed the Bihar Assembly that the government, only 3 decimal plots is being planned for the shelter-less people.

Ninty percent of the state’s population lives in villages and 74% workforce employed in agriculture. Agriculture accounts for only 33% of the state’s domestic product.

Marginal and small farmers constitute some 96.5% of total landowners own about 66% of the total land while medium and large farmers constituting only 3.5% of the landowning community own roughly 33% of the total land.

As per NSSO figures, the LRC report points to a reverse trend of land concentration: between 1992 and 2003, the proportion of large landowners has gone down from 0.2 per cent to 0.1 per cent, yet their share in total land area has increased from 4.44 per cent to 4.63 per cent over the same period!

The proportion of the landless or the near landless among the rural poor is steadily increasing – from 67% in 1993-94 to 75% by the turn of the century.

Between 1991 and 2001, outmigration from Bihar increased by over 200 per cent, whereas the average increase for all the Indian states stood at just 21.5 per cent.

Between 1991-92 and 1995-96, agriculture in Bihar grew at the negative rate of (-)2 per cent per annum, followed by a very sluggish 0.8 per cent rate of annual recovery for the next six years (when nationally agriculture grew at 3% per annum).

Inspite of “perhaps the most fertile soil in the world and copious water resources”, LRC finds it “evident that there is a structural bottleneck in Bihar agriculture due to a very queer pattern of land ownership and very extortionate system of tenancy at will which are causing great impediment to accelerated rate of agricultural growth.”

“As a predominantly agricultural state, Bihar would have no option but to take to effective land reforms to burst asunder the fetters and shackles which had been preventing its many splendoured advancement,” notes the LRC report.

The key recommendations of the LRC are threefold:

(i) to do away with the present system of classification of land into six categories with ceilings varying from 15 acres to 45 acres and enforce the uniform ceiling of 15 acres for all kinds of land,

(ii) to allot between 1 acre and 0.66 acre of ceiling surplus land to the lowest quintile of agricultural labourers consisting of 16.68 lac household each and assignment of at least 10 decimals of land to shelter less household of 5.84 lac non-farm rural workers each,

(iii) to enact a Bataidari Act to ensure secure and heritable right of cultivation to all tenants/share-croppers with 60% share of the produce (if the landowner bears the cost of production) or 70 to 75 per cent of the produce (if the bataidar bears the cost of production).

Land reforms are required and is possible provided villagers of all ilk are made aware of the full report and its implications. Following which the valid concerns of the affected land owners can be addressed as well. Currently, an atmosphere is being created without the perusal of the report as if all hell will break loose if Commission's recommendations are implemented.