Bihar grew at 10.5% in 2019-20

PATNA: Bihar recorded 10.5% growth rate (at constant prices) in 2019-20, higher than the growth rate of the Indian economy, says the Bihar Economic Survey 2020-21.

Continuing with the tradition started by the Nitish Kumar-led NDA government, deputy chief minister Tar Kishore Prasad, who also holds the finance portfolio, tabled the 15th Bihar Economic Survey on the floor of the Legislative Assembly on Friday, ahead of the Budget to be presented on February 22.

Later, industry minister Shahnawaz Hussain also tabled the report, which is prepared by the Centre for Policy and Public Finance (CPPF), in the Legislative Council.

Prasad, who got a call from union finance minister Nirmala Sitharaman in the morning, also tabled the Bihar Settlement of Taxation Disputes (second) Ordinance, 2020, while parliamentary affairs minister Vijay Kumar Choudhary tabled the Bihar State Higher Education Council (2nd amendment) Ordinance, 2020.

Among the three major sectors, says the Economic Survey report, the tertiary sector recorded a noticeable increase in its share of Gross State Domestic Product (GSDP), up from 57.3% in 2013-14 to 60.2% in 2019-20, largely due to growth in road transport and other services. The sectoral composition had started witnessing change since 2011-12 with shift from primary

to tertiary sector.

The report shows the financial management in the state was within the prescribed limits of the Fiscal Responsibility and Budget Management Act (FRBMA), 2006, with gross fiscal deficit as percentage of the Gross State Domestic Product (GSDP) at 2% and the revenue account in surplus during 2019-20, lower than 2.7% in 2018-19.

Bihar has consistently claimed to be revenue surplus state since 2004-05.

The revenue account remained in surplus during 2018-19 also, says the report, though borrowing by the state as a share of the GSDP witnessed a jump from 3.6% in 2018-19 to

4.8% in 2019-20.

Economic experts, however, say that for a poor state like Bihar, which depends so heavily on central transfers and has low expenditure, showing revenue surplus could hurt, as it would lose revenue deficit grant that many of the relatively better-off states avail, as per the recommendations of the 15th Finance Commission.

Besides, they said, another matter of concern for the state is that it was already under the impact of economic slowdown, as was the case elsewhere in the country, before the advent of Covid-19 pandemic, as reflected in fall in revenue and capital

expenditure in 2019-20, compared to 2018-19. While revenue expenditure dropped from Rs 1,24,897 crore to Rs 1,23,533 crore, the capital expenditure fell from Rs 29,759 crore to Rs 20,080 crore.

The Economic Survey report, however, points to slight increase in state’s own tax and non-tax revenue from Rs 33,539 crore in 2018-19 to Rs 33,858 crore in 2019-20.

According to the report, the share of revenue expenditure in the total expenditure has increased over the years from 74.4% in 2015-16 to 86% in 2019-20, while the share of expenditure in the capital account has declined from 25.6% to 14% during the same period.

“Over 70% of the state revenue comes from the central transfers. With Bihar maintaining revenue surplus status, it is certainly disadvantageous for it, as it cannot avail of revenue deficit grant,” said Sudhanshu Kumar, economist at the Centre for Policy and Public Finance.