Bihar's economy on way to tertiarisation

By Staff
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Patna, Mar 7 (UNI) The economy of Bihar is witnessing a process of tertiarisation as the share of tertiary sector has increased from 41.3 per cent to 49 per cent in the last decade as per the Economic Survey report, 2007.

The Economic Survey tabled in the Assembly yesterday, by Deputy Chief Minister Sushil Kumar Modi, who also holds the Finance portfolio, stated that the increase in the share of the tertiary sector shows that the states economy is in the process of tertiarisation even before industrialisation. The growth in the three sectors is uneven as the share of the primary sector has fallen from 48.8 per cent to 42 per cent whereas the secondary sector has remained nearly unaltered at 9.0 per cent.

The growth rate of all the three sectors varied since 2000-01 to 2004-05 as per the report which says that the growth rate of the entire Bihar economy remained in between 5 to 6 per cent.

As per the report the growth rate in tertiary sector grew consistently at high rate between 6.5 to 7.5 per cent whereas it declined from 6.59 per cent to 4.17 per cent during the period. The growth rate of the primary sector remained between 3.5 to 4.5 per cent in this period.

The report further said that the Gross State Domestic Product (GSDP) for Bihar at 1993-94 prices relating to 2004-05 stands at Rs.39332.10 crore and the growth rate of GSDP varies due to dependency of states economy on its uncertainty prone agriculture sector.

A highly disadvantaged economy is a general phenonmenon of Bihar as per the report, but this disadvantage is not equally found in all districts as the per capita income varies widely between Rs. 6958 (Patna) to Rs.2219 (Sheohar).

Revealing the development expenditure, the report said more and more of the state' resources were being used for the general administration as non-developmental expenditure has been growing steadily and the less resources were left for developmental activities.

The report revealed that the development expenditure of Bihar has constituted an average of about 60 per cent of its total expenditure, but its share has declined from 67 per cent in 2001-02 to 56 per cent in 2006-07 budget. All these years, the non-development expenditure has been growing steadily and the government spent more on the establishment cost and maintenance as indicated by the fact that the government pays Rs 64 crore anually on salary payment of the staffs of the Animal Husbandry department alone.

According to the report the total debt of the state which was 60 per cent in 2002-03 now constitutes 71 per cent of its GSDP , which is clearly at a high level and needs to be reduced. Currently the state is reeling under a debt of Rs 42,000 crores.

The interest payments have been increasing steadily from Rs 2629 crore in 2001-02 to Rs 4210 crore in 2006-07. But, interest payments have constituted decreasing proportions of the revenue expenditue since 2003-04, the budget estimates of 2006-2007 reporting it to be 19.3 per cent.

The report said the revenue account in Bihar had deficit during the three years from 2001-2002 to 2003-04, implying that funds meant for capital purposes had to be diverted to the revenue account. However, this deficit has turned into surplus since 2004-05, the amount being substantial in the budget estimates of 2006-07.

The Gross Fiscal Deficit (GFD) of Bihar has been consistently high of late. In recent years, internal market borrowings of the State government mainly financed its GFD, apart from the Public Accounts receipts.

The survey report said that from 2002-03 onwards, the net loans from the Central government, an important source of funds, had a negative contribution to the financing of GFD.

Bihar remained financially vulnerable as it was absolutely dependent on the Centre to cater to its financial need. State's own revenue, tax and non-tax combined, barely meets 20 per cent of its total expenditure and the rest has to come from the Central government. The share of the state's own tax revenue has remained between 22 per cent and 28 per cent in 2001-07 period.

The own non-tax revenue of the state has also remained nearly constant in this period except for an increase in 2006-07 Budget estimates.

About Bihar's market size, the report gave some positive signals as it is estimated to be Rs.1,03,600 crore, or 4.8 per cent of the total market size of India which is more than that of Madhya Pradesh, Punjab, Haryana or Delhi and little less than that of Rajasthan, Karnataka or Gujarat. The Credit Deposit (CD) ratio of Bihar, however, is lower than the national average.

It further appreciated the steps initiated by the present government and stated that as Bihar's economy lagged behind the national average in terms of various growth indices, the present governments efforts, including the economic reforms, would certainly revive the state's financial status.

Talking to newspersons Mr Modi said in terms of Credit Deposit(CD) Ratio, agricultural production, Human Developmental Indexes and in other sectors Bihar remained at the lowest step. Mr Modi said the present government had taken all steps for the quantum jump Bihar has to take for an overall development.

He said the average growth rate remained at 5 per cent and the government has fixed a target for achieving 8 per cent growth rate in the coming fiscal.

He said it is for the first time in the annals of Bihar that an economic survey had been conducted adding that the report of the survey 2006-07 had been prepared by the Asian Developmental Research Institute (ADRI). The report would be considered as the base to assess the development of the state in future, he added.

UNI

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