The war of packages

By Anand Mishra
In Economy
October 15, 2015
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Hopefully development agenda will trump caste politics in polls

The elections in India are a complex exercise, literally and figuratively. And when a state as complex as Bihar goes to polls, it attracts attention, from academicians and social watchers to economists and stock analysts. This is because electoral politics of Bihar is simultaneously a case study in social reengineering and electoral alliances, and most often sets the tone for broader political deliberation at the national level. The upcoming election in the state is no different. Not just is it a test of political parties to get their caste combinations right, but it is also crucial for relative power relation among major political formations at the center. In that, it is widely seen as a huge battle for both big coalitions, namely BJP led National Democratic Alliance (NDA) and JDU led Mahagathbandhan (literally meaning grand coalition).

Even though both camps have spent enormous efforts in putting in place right caste based equations which the media has debated ad-nauseam, discussion on development has somewhat taken a backseat, and wrongly so, because both camps have put in place economic packages that they claim would transform the state over the next few years. When PM Narendra Modi unleashed a huge Rs 1.25 lakh crore package for the state, the CM of the state, Nitish Kumar branded it an eyewash and derided it as a repackaging of old programs. A few days later, he put forth his own vision of spending Rs 2.7 lakh crore for the development of the state. These packages should form the terra firma on which the electoral debate should build, instead of appealing to voters on caste lines.

The Rs 1,25,003 crore package that PM Modi announced is focused on big ticket infrastructure development. The package provides Rs 54,713 crore for highways, Rs 21,476 crore for petroleum and gas, Rs 16,130 crore for electricity, Rs 13,820 crore for rural roads, Rs 8,870 crore for doubling and electrification of railway lines, Rs 3,094 crore for farmers’ welfare and Rs 2,700 crore for airports, including construction of a new airport in Patna. Major roads and highways projects include four-laning and widening of 2,775 kms of National Highways, Construction of Bridges across Ganga, Sone, Kosi and Construction of 12 Rail overbridges. Also 22,500 kms of Rural Roads are to be built. In oil and gas sector, a substantial part of the package relates to the expansion of Indian Oil Corporation’s 51-year oil refinery at Barauni Refinery. These projects, in addition to Rs 40,000 crore of ongoing projects, are expected to provide Bihar a major infrastructural push. These are also supposed to provide a boost to the NDA’s chances in polls.

While the package has been touted a game changer by the BJP and its allies, opponents feel the reality is very different. Experts too feel that the major component of the package is old projects which have been announced and as such, cannot be considered a new package. The CM Nitish Kumar, writing for a national daily wrote that “At the very best, the so-called Rs 1.25 lakh crore package will not provide anything more than Rs 10,368 crore as incremental resource to the state of Bihar. This Rs 10,368 crore, too, in the absence of a defined timeline or disbursement modalities, hardly means anything to the state.” Thus, in addition to the amount of the package, he has raised the questions about when the money would be actually reach the ground and also about who will bear the cost.

Nitish Kumar is not alone is raising doubts about the package. Many experts have raised questions about the specifics of the package. For example, there are concerns about the highways projects which are dependent on land acquisition are known to be delay prone. Further, many experts say that the highways are to be built by NHAI or large contractors, which may mostly be outsiders to the state. As such, benefit to the state would be only secondary and may not go beyond creating low paying jobs. Similarly, on the issue of expansion of Barauni refinery, which is another big component of the package, it has been said that because the project is financially unviable, the Cabinet had earlier decided not to go ahead with the expansion, but later on, the government decided to press ahead with the project. Most experts also feel that the projects that account for the bulk of the package, would take close to a decade to materialize and as such benefits to the state may be quite back loaded.

Not to be left behind in the development discourse, Bihar CM Nitish Kumar unleashed a package of his own for the state in a vision statement which amounted to Rs 2.7 lakh crore. Unlike the package announced by the PM, which focused on big infrastructure projects, the one released by Nitish Kumar focused on basic amenities such as sanitation, drinking water and electricity. The vision statement, consisting of seven keys to the development of the state, lays heavy emphasis on empowering of youth; a sum of Rs 49,800 crore is earmarked for youth-centric schemes. Rs 55,600 crore are to be spent to ensure that every household in the state gets 24-hour electricity in the next two years, whereas 1.95 crore households in rural areas and 16 lakh households in urban areas will be given drinking water connection at a cost of Rs 47,700 crore in five years. Also, concrete sewage will reach to all houses in rural and urban areas at an estimated cost of Rs 78,000 crore.

These two packages differ in style and tenor. They depict the two competing visions of development for the state and characterize the difference in personalities of the two prominent leaders in this battle of Bihar, namely Narendra Modi and Nitish Kumar. Prime Minister Narendra Modi comes across as a person who believes in creating a conducive environment in which enterprise can thrive which results in wealth generation. On the other hand, Bihar CM Nitish Kumar is for bottoms up development which starts with creation of basic infrastructure and eventually leads to business facilitation and wealth generation.

The economy and development have never been the cornerstone of electoral discussion in Bihar elections. While there have been charges in every election, of step motherly treatment to Bihar by the center, to which there is substance, unfortunately, development has always been relegated to backseat as caste and secular-communal diatribe dominates the agenda. We hope that in the weeks running up to poll, both camps would fight more on the specifics of the Bihar package and the vision statement that two sides have thrown up. It will only enrich the debate, educate electorates on issues on which they should vote and reduce the viciousness of the electoral environment.

COMPETING VISIONS

Bihar Package

  1. Highways: Amount: Rs 54,713 crore
  • 2,775 kms of National Highways (four-laning & widening)
  • Construction of 12 Rail overbridges
  • Construction of Bridges across Ganga, Sone and Kosi rivers
  1. Oil and Gas: Amount: Rs 21,476 crore
  • Expansion of Barauni Refinery and seting up of new Petrochemical Plant
  • Construction of Gas pipelines, new LPG plants and expansion in domestic LPG connections
  • Petrol-Diesel pipeline from Raxaul to Nepal
  1. Rural Roads: Amount: Rs 13,820 crore
  2. Electricity: Amount: Rs 16,130 crore
  3. Farmer’s Welfare: Amount: Rs 3,094 crore
  4. Education and Skill development: Amount: Rs 3,150 crore
  5. Railways: Amount: Rs 8,870 crore
  6. Airports: Amount: 2,700 crore

Vision Statement

  1. Youth centered schemes: Amount: Rs 49,800 crore
  • Rs 1,000 monthly benefit to unemployed in 20-25 years age group
  • Education loan up to Rs. 4 lakh for students passing Std 12 grade
  • Rs. 500 crore venture capital fund for development of self-employment
  1. Electrification: Amount: Rs 55,600 crore
  • All homes to be provided electricity
  1. Water: Amount: Rs 47,700 crore
  • Piped drinking water for 1.95 crore households
  1. Roads: Amount: Rs 78,000 crore
  • All housing settlements to be connected with roads
  1. Sanitation: Amount: Rs 28,700 crore
  • 1.72 crore houses to be provided with toilets
  1. Education: Amount: Rs 10,300 crore
  • Five new medical colleges
  • Every district to have an engineering college and a women’s college
  1. Reservation
  • 35 per cent reservation for women in all government jobs