Bihar recorded a growth rate of 10.5% (at constant rates) in 2019-20, higher than India’s economic growth rate (approximately 5%), according to the Bihar Economic Survey 2020-21.
Normal prices are a measure of economic change in a year considered a base year. In this case, it is 2011-12. It provides real growth for Gross State Domestic Product (GSDP).
Deputy Prime Minister Tarkishore Prasad, who also holds the position of finance minister, presented the 15th Bihar Economic Survey to the Legislature on Friday, ahead of the Budget, for the first time. Later, industry minister Shahnawaz Hussain also presented a report prepared by the Center for Policy and Public Finance to the Legislature.
Prasad also introduced the Bihar Settlement of Taxation Disputes (Second) Ordinance, 2020, when Parliamentary Affairs Minister Vijay Kumar Choudhary introduced the Bihar State Higher Education Council (2nd Amendment) Ordinance, 2020.
Of the three major sectors, says the Economic Survey report, the higher education sector (services including retail, financial services, hospitality, housing and real estate, etc.) has recorded a significant increase in its share – from 57.3% in 2013-14 to 2013 60.2% in 2019-20, mainly due to the increase in road transport and other services. The sector structure was beginning to see a shift from 2011 to 12 with a shift from the primary to tertiary sector.
The main sector includes all economic activities that use natural resources directly, viz. mines, forests, fishing, etc. The second category involves manufacturing and processing to add value to natural resources, viz. cotton turned into a cloth. The tertiary sector assists in building primary and secondary sectors, transport or other services.
The report shows that public financial management was within the limits of the Financial Management and Financial Management Act (FRBMA), 2006, with an overdue deficit such as 2% GSDP and a surplus account for 2019-20, less than 2.7. % in 2018-19.
Bihar has been claiming to be the richest province since 2004-05. The cash account remains in the stock market for 2018-19 and, according to the report, despite borrowing from the government as part of the GSDP has seen an increase from 3.6% in 2018-19 to 4.8% in 2019-20.
Economists say, however, that in a poor situation like Bihar, which is heavily dependent on medium-sized and low-cost transfers, it shows that more money could hurt, as it would lose the gross income of many of the best provinces, according to the 15th Finance Commission’s recommendation.
Apart from that, they say, it has been a matter of concern for the state that it was already under the influence of the recession, as is the case elsewhere in the country, and before the Covid-19 epidemic, as shows the fall in revenue and spending in 2019-20, compared to 2018- 19. While spending decreased from ₹ 1,24,897 crore to 23 1,23,533 crore, expenditure decreased from ₹ 29,759 crore to, 20,080 crore.
The report, however, points to a small increase in government tax and tax-free income from, 5 33,539 crore in 2018-19 to, 33,858 crore in 2019-20. According to the report, budget expenditure has increased over the past year from 74.4% in 2015-16 to 86% in 2019-20, while budget expenditure on the main account has dropped from 25.6% to 14. % at the same time.
“More than 70% of state revenue comes from moderate transfers. Since Bihar saves a lot of revenue, it’s a bad thing, because it can’t get an income grant, ”said Sudhanshu Kumar, an economist at the Center for Policy and Public Finance.