Economy of Bihar

             Bihar is among the least developed states of India and has a per capita income of $148 a year against India's average of $538. A total of 30.6% live below the poverty line against India's average of 22.15%. The blame for this stems from many factors: Freight equalisation scheme, lack of vision of the political classes, and inadequate investments in agriculture, infrastructure and education. Some people[citation needed] believe that mis-rule, caste-dominated politics and rampant corruption by politicians & bureaucrats have been the cause of the lack of development of the state. Saibal Gupta of Asian Development Research Institute has blamed the absence of a sub-national identity which has allowed the Central Government to get away with its neglect. Now the state Government has come to terms with the development of the state and top priority is being given for creating investment opportunities for big industrial houses. Mohan Guruswamy of Centre of Policy Alternatives has done a detailed study of the continued neglect of Bihar by the central government and how it has resulted in its downslide.

The economy is mainly based on agricultural and trading activities. The vast swath of extremely fertile land makes it ideal for agriculture. Despite a number of rivers and good fertile soil, investment in irrigation and other agriculture facilities has been grossly inadequate. Agriculture is mainly dependent upon the vagaries of the nature.

Previously, there were a few half hearted attempts to industrialize the state: an oil refinery in Barauni, a motor scooter plant at Fatuha, and a power plant at Muzaffarpur. However, no sustained effort had been made in this direction, and there was little success in its industrialization. Historically, sugar and vegetable oil were flourishing industries of Bihar. Until the mid fifties, 25% of India's sugar output was from Bihar. Dalmianagar was a large agro - industrial town. However, these were forced to shut down due to faulty central policy which neutralized the strategic advantages of Bihar.

Recently the dairy industry has picked up very well in Bihar. Sugar industry is another one which has started to show up with 25 new sugar factories committed in Bihar between 2006 and 2007. Since 2005, the state government has taken a major task of creating business friendly environment for investment opportunities and leverage the resources there for all big and small industrial houses.

Bihar's gross state domestic product for 2004 is estimated at $19 billion[citation needed] in current prices. There was a division of Bihar in 2000, when the industrially advanced and mineral-rich southern-half of the state was carved out to form the separate state of Jharkhand. Since then, the main economic activity of Bihar has been agriculture. The new Bihar state produces about 60% of the output of the old Bihar state.