Overview of Bihar Economy


1. The economy of Bihar grew at an annual rate of 11.36 percent during the period 2004-05 to
2010-11. This growth process can be termed as ‘revival of a stagnant economy’. The growth
rate of the state economy in 2010-11 over 2009-10 was 14.8 percent. This was possible
because there was substantial increase in public investment. However, there is still a stress
on infrastructural development.
2. During the period 2004-05 to 2010-11, the sectors reporting a growth rate of more than 15
percent are — registered manufacturing (23.30 percent), construction (19.61 percent),
communications (27.23 percent) and trade, hotels and restaurant (20.22 percent).
3. Bihar is a densely populated region, with no less than 1102 persons living per sq. km. As per
the estimates of Tendulkar Committee, in 2004-05, 54.5 percent of the population lived
below poverty line in Bihar. For rural and urban areas, the poverty levels were 55.7 percent
and 43.7 percent respectively.
4. Agriculture would continue to play an integral part of the development process in the state as
around 90 percent of the population still live in villages and continue to depend an
agriculture as a prime source of their livelihood. In view of this, the state government is not
only stressing for a second Green Revolution based on bio-technological improvement, but
also putting forth a concept of ‘Rainbow Revolution’. The growth rate of agriculture and
animal husbandry during the last 5 years has been 3.20 percent, compared to 2.40 percent in
previous 5 years.
5. There has been noticeable increase in the rate of growth of Bihar’s economy, but this rate of
growth shows wide fluctuations. One source of this wide fluctuations is most likely the
vagaries of monsoon, which tend to cause upswing and downswing in the rate of growth of
agriculture and the remaining sectors of state economy. There is, therefore, a need to
stabilize the rate of growth of agriculture through introduction of modern techniques and
spread of irrigation.
6. Bihar continues to be at the bottom of the ranking of states with respect to Per Capita
Income. In 2006-07, the Per Capita Income in Bihar (Rs. 10,055) was 32.2 percent of the allIndia average (Rs. 31,198); however, in 2009-10, this ratio increased to 34.7 percent (Rs. xxi
16,119 for Bihar and Rs. 46,492 for India). It is obvious that the present momentum of
growth of Bihar economy has to be sustained for several years to close the gap between
Bihar and the all-India average.
7. Bihar economy has undergone some structural changes over the years. About a decade
earlier, the average share of different sectors in total GSDP stood at 36.4 percent (primary),
10.5 percent (secondary) and 53.1 percent (tertiary). Thereafter, the share of the primary
sector has been declining, and it came down to 22.1 percent for the triennium ending 2010-
11. Since secondary and tertiary sectors have recorded tremendous growth in the last decade,
their shares of outputs are now much higher than those in the triennium ending 2002-03.