Good governance to push Bihar GDP up Rs. 2,60,000 cr. by 2020: ASSOCHAM


Possibilities and prospects of industrial revival of Bihar seems to be brightening as its Gross Domestic Produce (GDP) is expected to grow at modest CAGR of 8% during the next decade to reach at Rs. 2,64,781 crore from current levels of Rs. 1,05,148 crore, mainly due to good governance factor.

In a Bihar Vision 2020 : brought out by The Associated Chambers of Commerce and Industry of India (ASSOCHAM), it is also stated that by 2015, State Gross Domestic Produce (SGDP) would be around Rs. 18,0205 crore.

Releasing its findings at a Seminar on ‘Invest Mart – Bihar 2009’, inaugurated by Deputy Chief Minister of Bihar, Sushil Kumar Modi, the ASSOCHAM Secretary General, D S Rawat said that since Bihar has acquired a reputation for good governance, its SGDP is projected to consistently grow at 8% CAGR. Rawat, however, clarified that between 2000-2006, the State GDP grew at CAGR of around 6.6%.

The ASSOCHAM has expressed a concern that manufacturing will remain a challenge for state of Bihar as it contributes only 0.38% to State Gross Domestic Produce, the lowest in the country. Manufacturing remained a neglected area in Bihar as it failed to provide security to industry which halted flow of investments towards Bihar. Agriculture contributes 35% to Bihar’s SGDP against 9% of industry and 55% of services.


According to ASSOCHAM, in view of changed circumstances in the State, Bihar has reassured its investment potential especially in areas of food processing, steel and non-ferrous metals, chemical products, pharmaceuticals and automobiles. Food processing, thermal, bio-gas and solar power plant, steel and cement, education, tourism, health and infrastructure would emerge epicenter for investments in Bihar.

Rawat pointed out that in fiscal 2008-09, Bihar received investment proposals over worth Rs. 40,000 crore but still has to raise resources through public-private partnership to execute such investments. These investment proposals number 115 and already approved by State Investment Promotion Board and majority of them are in the above identified areas.

The poverty levels of State of Bihar is measured at 42.6% and if manufacturing is encouraged by ensuring law and order situation in the State with suitable infrastructure, especially those of roads, ports, power, it would remove poverty from state with creating bundle of employment opportunities and thereby enhancing contribution of manufacturing to State GDP.

The ASSOCHAM Paper has recommended that in order to achieve prescribed vision of 2020 for Bihar, its industrialization has to be based on location specific agri-resource endowment which is in abundance but scattered with less value addition. The two major advantages for industrialization process would be product value addition and local employment creation.


With a focus on skill development of Bihar’s vast labour force, which is intelligent, Bihar can move beyond agro-processing and penetrate into such products as metals, drugs and pharmaceutical, leather, electronics, as well as electrical goods industries.

Varieties of fruits, such as mango, litchi, guava, makhana, lemon, jack fruit, pineapple etc. and vegetables like potato, tomatoes, cauliflowers, garlic, chilies, peas, turmeric etc. are grown in Bihar in a very large quantity. But neither the farmers are able to harness due benefit, nor does it help generation of employment potential. It is all because of poor pre and post harvest management and lack of availability of appropriate fruit and vegetable processing industries.

The huge annual loss, amounting to 25 to 40% of the total fruits and vegetables produced, occurs on account of poor methods of harvesting and transport facilities.

The State has a strong agricultural base for setting up Agro Based Industries like Food Processing, Sugar, Jute, Tea etc. By promoting small scale, tiny, artisan units, poverty and unemployment can be removed. Characteristic of this sector is low capital investment with larger employment.

To develop leather industry, State has to develop local Footwear manufacturing units. Most of these units are facing problems relating to working capital, and some of them tried individually to get the bank loans and could not succeed due to procedural wrangles. Hence, it may be advisable to form Self Help Groups in each town and provide necessary financial aid and also marketing support and establishment of a dedicated Leather Complex, which can house tanneries, leather products manufacturing units.

By its less capital intensive and high labour absorption nature, SSI sector has made significant contributions to employment generation and also to rural industrialization of Bihar. This sector is ideally suited to build on the strengths of States traditional skills and knowledge, by infusion of technologies, capital and innovative marketing practices.