GOVERNANCE & INSTITUTIONS IN BIHAR

If Bihar as an Indian state is not in the forefront of development, the reasons must be sought in its political and social background since Independence. A state steeped in history which in modern times produced some of the finest civil servants in the country is today at the nadir of governance—it is facing a crisis of governability. Yet its political and social consciousness is perhaps the highest in India [1] . Such crises do occur in other states in the country. In the state of Bihar however they appear to be prolonged and virtually insurmountable leading one to after various solutions to put it back on track.

Nevertheless, it is generally agreed that there is an imperative need for government at all levels to reinvent themselves, redefine their institutional arrangement, laws and structure of authority and citizenship [2] in order to suit the present socio-economic claims. This shift implies reconfiguring the complex set of institutions and actors within and beyond the present formal understanding of the government.

The Problem

Bihar like the rest of the country, adopted a state-centric [3] model for socio-economic development. The basic design of course was formulated by the Planning Commission and was implemented by the Central and State governments. The agent of change for this development vision [4] was a centralised bureaucracy working under the political executives. As the development process unfolded, the state found itself in the clutches of a developmental gap emanating from the crisis of institutions. Some of these are Bihar specific while others are more general in nature but they contribute to the crisis of governability in a much more acute form than in other states. The crises in various institutions interact with each other and result in the crisis of governability.

Crisis of Institutions

1. Political Institutions:

a) Governance Priorities Vs Entrenched Interests

There has been a welcome political change in the state that has seen the mobilization and consolidation of hitherto socially and economically deprived classes. Political power as a result has shifted mostly from the traditional elites to middle peasants and cthe middle lass. Their priorities in governance in general and development in particular do not necessarily coincide with those of the traditional power holding class. This mis-match is straining the system of governance and the pace and pattern of development. Most of the clashes between the economic haves and have-nots, for example, the landed and the landless class, flow from this. Political institutions have yet to acquire a new equilibrium which is consistent with the unfolding developmental imperatives.

b) Politicisation of Newer Social Groups and Pressure on Resources

The logic of the democratic political process in Bihar mobilised newer and newer social groups. However the corresponding political and social institutions that can distribute the available resources judiciously and equitably are still to be formed. The state has found itself unable to meet successfully the conflicting political and economic demands of various social groups. This has diminished the economic surplus required for the growth of a modern economy in Bihar.

c) Disjunction between Political and Economic Empowerment

Bihar has given birth to various political and social movements, which have repeatedly questioned the social and economic status quo. The intense political mobilisation has resulted in (a) a horizontal caste solidarity and (b) a vertical class division among the castes. This mobilisation translated itself into caste based political empowerment but at the same time it has hampered empowerment on the basis of economic interest. The disjunction between political and economic empowerment plays an important role in contributing to the developmental gap and consequent crisis of governabilty.

d) Politics and Bureaucracy

Political mobilisation in Bihar has resulted in a curious interface between the political regime and the bureaucracy. Many present and former senior bureaucrats of the Bihar Cadre as well as academicians, development practitioners and social activists have pointed out that appointments and transfers in the state are increasingly being governed by the ‘logic’ suiting political empowerment rather than the developmental needs of the state. Politics and politicians have become dependent on bureaucratic structures for supplying patronage and meeting personal ends through ‘committed bureaucracy’ [5] . This kind of ‘commitment’ of the bureaucracy to political goals often stands in opposition to developmental goals. In such a scenario few sincere officers heading the districts embark on a development agenda which is least for instance, education. This is termed as ‘soft approach to development’ since it does not involve any institutionalised intervention for equitably distributing state resources [6] .

e) Lack of Desired Linkages between Micro, Meso and Macro Institutions

Political institutions of relevance to development are located at the central, state as well as local levels. There is much to be desired in terms of their concern for development at each level. For reasons historical as well as current, their functioning lacks coherence and a constructive agenda with a development perspective and accountability. The political power shared by different political formation at the centre, on the one hand, and the state on the other, is bringing severe adverse pressure on the basic development agenda [7] . The recent emergence of Panchayat Raj Institutions has put in place a new set of political institutions with grassroots contacts. Their own functioning and in tandem with the centre and state is still evolving and has yet to acquire a desirable rhythm

2. Institutions of Development

a) Lack of Central Initiative

The development agenda and programme of successive regimes at the Centre whether by design or default has made Bihar perhaps a case of ‘benign neglect’ till the 1990s. Presently a fair number of professionals and developmental activists believe that the state is possibly under the spell of malign neglect.

The prime agents of change under the state-centric model of development were the central intervention that triggered off growth through investment in public sector enterprises. In the case of Bihar, there was no central investment in any modern industry, except coal and steel, which in any case did not substantially benefit the erstwhile Bihar [8] . It is widely felt that there was never sufficient consideration shown for the unique and special needs of Bihar. The resources of Bihar (for instance coal and steel) were made available for national use but the polices and programmes that can improve basic infrastructure such as roads [9] and power remain neglected. The few industries that came up dried up for lack of funds and contracts [10] . None of the major public sector undertakings except Barauni refinery and Khalegoan thermal plant are located in Bihar. This has prevented the direct gain that location can offer by opening up the area for fresh private investment or for providing employment. As regards social infrastructure there is not even a single educational institution or a health care facility supported by the central government. Further, even a sketchy review of access to bank funds would reveal that most banks have extended resource support to economic activities in closer proximity to their headquarter location as seen in the investment pattern in the South and Western Indian States (Maharashtra, Karnataka, Gujarat). Bihar has neither the headquarter of any major bank nor its proportionate share of bank branches as per the share of its population. Even for developmental institutions such as IDBI, SIDBI, NABARD, Bihar falls beyond the priority attention. Moreover, the potential in agricultural growth was never tapped because the central government did not support big irrigation projects on the lines of Punjab and Haryana thereby triggering off green revolution in the state. The crisis of Indo-Nepal relationship leaves the North Bihar totally devastated every year from the perils of man-made floods thereby forcing the diversion of substantial resources and administrative machinery at the expense of the long term requirements of Bihar.

b) Failure of Plans

A state-centric model banks on centralised data generation for evolving a plan of action for socio-economic development. It was not realised that information is not always readily available and at times unevenly shared among different socio-economic layers and actors. Further, this model of centralised planning takes into account the objective realities and often ignores the local subjective preferences. Most of the Central Government schemes fall in the same category. Because of this even the well-framed plan foundered. There is hardly any planning and professional institution in the state that has the institutional capacity to visualise the dis-aggregated planned agenda.

c) Incapacity of Delivery Institutions

The government institutions responsible for implementing development schemes have continuously failed to achieve their projected targets.

· The Planning Commission's estimates point out that Bihar’s capacity to plan and absorb plan funds is the lowest among 14 major states of the country. In the year 1997-98 the state spent only 75.45 per cent the actual plan outlay. This same figure stood at 56.02 per cent in the year 2000-01.

· The Mid Term Appraisal of the Ninth Five Year Plan (1997-2000) by the Planning Commission, points out that in the years 1997-98 and 1998-99 nearly 25 per cent and 38 per cent of the funds respectively, covering around 10 [11] departments, were left unutilised. The average expenditure for 14 major states for the same years stands at 91.49 per cent and 87.36 per cent respectively.

· The financial statements in the plans of the Rural Development Department which covers 11 schemes [12] reveal that 32 per cent and 40 per cent of the funds for the years 1998-99 & 1999-00 respectively were unutilised and hence were allowed to lapse.

· In the Department of Health, Medical Education and Family Welfare, 20 per cent of the budget provision was left unutilised under the three major heads of account, namely, medical and public health, family welfare, and capital outlay on medical and public health.

· Not a single rupee was sanctioned by the Ministry of Rural Development for Drinking Water Schemes in the year 1998, because the Bihar government was not able to finalise the procedures for buying pipes.

There are several such examples indicating substantial gaps between the plan outlay and the actual expenditure in almost every department of the state.

There are two interrelated reasons for this shortfall in expenditure.

· State’s inability to raise its own revenue earnings: The state government fails in providing matching grants for central schemes, nor can it carry out its own developmental schemes satisfactorily because of its incapacity to generate surplus resources. Most of the state resources are tied up in loss making public corporations, the state electricity board and in the maintenance of a bloated bureaucracy. Additionally the returns from the sales tax regime are sub-optimal (see relevant chapters).

· Ineffective delivery institutions: The single chain of command in all the departments and the consequent centralised decision making ensures crucial delays. A lot of time and resources are wasted on the approval of already sanctioned projects. Often by the time clearance is given, the time period for implementing the sanctioned scheme(s) lapses and the money is left unutilised. One of the important reasons for the time overrun is the inability of the existing institutions to absorb the available developmental funds. In the case of schemes that do get implemented, it is the dominant social groups that capture all the benefits. For instance, a study on the implementation of the Rural Development programme in Chapra district of Bihar attributes its failure to the lack of a receptive environment and the decline of political and social institutions. It found that the delivery institutions were dominated by caste and class elites, who blocked the effective participation of the target population (Planning Commission, 2000). The problem is not limited to the state government. Many of the approved planned projects routed through the central government departments and /or central government institutions also fall into the same category (for instance, NABARD, SIDBI, etc.).

· Perils of Centralised Planing

Some of the money remains unutilised because of the centralised nature of the schemes. Most of the central schemes are justified on a uniform all India basis and as a consequence they do not reflect the revenue raising capability (whether for economic or non-economic reasons) of the state nor the social requirements of the social groups in Bihar. Further some of the central government supported schemes demand progressive increase in the state’s contribution. There are many instances where the state government is unable to maintain the existing infrastructure created for the implementation of the scheme because of the progressive increase of the state’s share.

d) Institution of Bureaucracy

As discussed before, the centralised bureaucracy was visualised as an agent of change. Each department was organised into staff and line functions. It was to be development oriented [13] in goal and neutral in approach working under a single chain of command. This brought up certain unexpected problems:

i) Biased Bureaucracy:

The state bureaucracy that was expected to implement plans and policies for equity and growth failed to deliver, among other things, also because of its own class location. This class affiliation of the bureaucrats made them prone to the influence of dominant actors in the economy and polity. The most well known example of this is the subversion of the land reform process in Bihar in particular and in India in general, cornering of the state subsidy and distribution of loans in favour of the dominant and entrenched castes/class.

ii) Non Plan Expenditure, Non-Performing Assets and Large Bureaucracy:

The overwhelming presence of the state government in all facets of development has created a large bureaucracy. The bureaucracy in certain sectors is overstretched and in others overextended. Many departments have overlapping functions and duties. This leads to delay in decision making, a heavy non-revenue expenditure in general and a large salary burden on the state exchequer in particular. For instance, the non-plan expenditure (both revenue and capital) [14] of the state government is continuously rising and it constituted around 82 per cent of the total expenditure in the year 1997-98. This indicates that most of the resources of the state government are exhausted in meeting the expenditure on non-plan heads, comprising salaries, travel, office expenses, minor construction maintenance of huge non-performing assets in the name of public sector corporations etc (See Annexure 1 for details). While the plan expenditure between the years 1990-91 and 1997-98 has increased by little more than 6 per cent, the non-plan expenditure has almost doubled (NIPFP).

iii) Corruption:

Over dependence on the bureaucracy for the clearance of each and every governmental and non-governmental economic and developmental activity has prompted corrupt practices amongst the bureaucracy at all levels. These malpractices and consequent non-accountability of the bureaucrats in the state of Bihar are often - as reported by a cross section of the informed citizenry- the manifestation of the alleged nexus between politicians and bureaucrats.

The state, over the years, has witnessed numerous leakages of funds manifested in numerous scams. The following examples just reflect the tip of the iceberg as most of the departments are embroiled in some scam or the other.

The rules for managing finances are not followed due to vested interest. This has been clearly pointed out by the ‘Report of the Comptroller and Auditor General of India’ for the Government of Bihar as follows.

1) Cashbooks were not maintained in the manner prescribed under Rule 86 of the Bihar Treasury Code Vol. I. It was found that 21 cash book entries were not attested by the Head of the Office; in 4 cash books, daily closing was not done in 39 cases totalling of cash books was not verified by the District Disbursing Offices (DDO) as required under the rules. Thus, DDO/ heads of offices totally disregard rules to adopt prescribed measures to prevent fraud and defalcations of public money.

2) Similarly, Government instructions were not followed by 13 offices, in the purchase of medicines valued at 1.96 crores during 1996-99.

The examples of flouting of the rules and regulations in the absence of any mechanism for transparency and political will to contain it can always be multiplied.

e) Crisis in the Institution Promoting Human Development

In the absence of political priority to promote institutions responsible for human development, they have more or less become dysfunctional. Educational institutions—primary, secondary as well as higher—have repeatedly failed to meet the required standards. In fact, Bihar has the highest illiteracy rate as per the 2001 census report. The same is the case with the health services, especially primary health care. The primary health sector is performing far below its optimum capacity owing to poor maintenance, critical gaps in human resources, lack of essential drugs and leakage of funds. Primary education has suffered in Bihar because of lack of infrastructure, absenteeism of teachers and a large gap between the required and available resources. Similarly institutions of higher learning are marred by political interference, no regular resource commitment from the state government and large non-revenue expenditure. University results are inordinately delayed with loss of years for students. The once acclaimed higher educational institutions of the state are in shambles.

The manifestations of all this are the large numbers of ‘nowhere’ children, low health status and large-scale migration of students to other parts of the country which can provide quality education and forced admission of patients to ever expanding private nursing homes.

3. Institutions Maintaining Law and Order

The law and order problem in Bihar has assumed unacceptable proportions. Murders, kidnapping for ransom, robbery, collection of protection money, unofficial toll tax collection, coerced contract grabbing and bloody caste conflicts have become a routine affair and even now do not capture the local newspaper headlines. It has already affected the investment climate as evident from the recent report of the Confederation of Indian Industries which prefers to call Bihar as the least investment friendly state. Moreover illegal and often criminal activities also stall the local small production process [15] .

The often-alleged nexus between certain politicians, bureaucrats and criminals could have provided the basis for nurturance and sustenance of these criminal activities. The changing profile of crime points to the vulnerability of unemployed youth to pick up illegal means in order to meet their livelihood needs.

Besides, there are also problems with the formal functioning of the police that are listed below.

i) Non- registration of the First Information Report in many genuine cases.

ii) Bihar has the lowest number of policemen per lakh (96 per lakh) population in comparison with all other states.

iii) Records reveal that a large number of recruited constables were not provided any training even 1-15 years after their recruitment.

iv) The CAG report states that nearly 29 per cent of the police stations including sensitive areas' police stations had no vehicles. Coupled with this in many police districts there are a number of vehicles excess the sanctioned posts of drivers, and, in few districts there is an excess of drivers posted without the corresponding number of vehicles.

v) Funds available for the modernisation of the police, in many instances are diverted for buying office inventories.

vi) Increasing number of police personnel are deployed to provide security to sub-political and economic elite thereby reflecting a different kind of political patronage.

4. Interface between Bureaucracy and Judiciary

The crises in institutions have inadvertently created space for the judiciary to become active on the basis of public interest litigations. Increasingly the common citizenry is resorting to judicial means to get their voices heard and force the concerned authorities to take action where executives (both political and administrative) have failed to deliver or have indulged in corrupt practices. A negative fallout of judicial activism is that honest and efficient administrative executives now delay their actions indefinitely for fear of contempt or being held accountable for the practices of others. The logic of the single chain of command thus contributes to this crisis where the department heads become responsible for all the omissions and commissions of their respective departments [16] .

The above discussion on the crisis of institutions is an elaboration of the points raised earlier that an unsound development vision diminishes the effectiveness of the structure of governance (institutions, policies and programmes). This leads to a large developmental gap and consequent crisis of governability. In order to plug these developmental gaps a new vision is urgently required which can satisfy the present social, political and economic claims.

II. Vision of Re-Structured Governance

The State of Bihar needs a strong political will to back a high rate of growth of the economy oriented towards equity through radical restructuring of the political and administrative governance structure [17] . However, here a note of caution is necessary [18] . Equity cannot be promoted by an exclusive market led growth as it excludes people who lack assets and capabilities. State nurtured and protected capitalist growth has its own problems as noted earlier. Therefore, the new vision of governance should be characterised by institutional pluralism. It has to achieve a synergy between state, market and aspirations of the people. This in turn demands a proactive role of the state for nurturing and sustaining new institutions, policies and programmes that have the capacity to include all social groups in the process of development. However, within the current realities, the state government can hardly deliver much in view of resource constraints and decay of relevant institutions. The Central government has to step in order to make up for the historical neglect and prioritise the needs of the state.

What Does Pro-Active Role of the State Entail?

Proactive role of the state entails

· Demonstrating a strong political will to restructure the governance regime.

· Encouraging a reform and development oriented image of the state.

· A cooperative federal institutionalised structure between the central and state governments that suits the specific socio-economic needs of Bihar.

· Preparing a feasible set of short and long term targets that can be translated into practice in a planned and phased manner through conscious and careful choice between alternative paths.

· Creating decentralised political and administrative institutions that can formulate and implement development policies and plans without interrupting the free play of social- political and economic forces [19] . Plans reflecting people's choices will be reflected the political will of elected representatives in their policy initiative necessary for smooth implementation.

· Fostering reforms in the bureaucracy that can provide a people friendly, rational and flexible structure of governance both from the standpoint of executing development policies and attracting investments.

· Providing a competitive market, honouring the rule of law, creating necessary infrastructure.

· Substantial restructuring and investment by the state government [20] in the agencies of human development.

· Managing strategic-centre state interface for promoting state’s requirement.

The vision can be translated into practice through functional and selective interventions.

Functional Interventions are designed to correct generic failures and distortions without favouring one activity over another, for instance the restructuring of political institutions that can respond to the present socio-economic claims. Selective interventions are directed at specific activities. In the context of Bihar, selective intervention entails restructuring of the macro level institutions of development to form a basis for equity oriented growth. Selective interventions form both an end as well as a means. For instance, primacy of the rule of law can be an end in itself but it is also a means to make the functional intervention successful.

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