From Worst to Near First-How India's most desperate state transformed itself to become a model for the rest of the country.-NEWSWEEK-22/FEB/2010

From Worst to Near First

How India's most desperate state transformed itself to become a model for the rest of the country.

By Jason Overdorf | NEWSWEEK

Published Feb 12, 2010

From the magazine issue dated Feb 22, 2010


For centuries, it seems, the northern Indian state of Bihar has been plunging downhill. Once the seat of one of the world's most glorious empires, the state was first devastated by colonial policies that enshrined feudal landlords, then shunned by a succession of Indian governments, and finally riven and destroyed when the seeds of caste and class conflict matured into a small-scale civil war in the 1970s. As the militias of upper-caste landlords clashed with revolutionary guerrillas fighting for the oppressed, and caste-based political agitations threw up a series of incompetent and allegedly corrupt governments, state services ground to a halt, highways disintegrated, bridges crumbled, and career criminals ascended from the back rooms of party offices to take seats in the state legislative assembly, and even the Indian Parliament itself. By the 1990s, brazen and deadly highway robberies put an end to traveling after nightfall, and as business activity plummeted, kidnapping for ransom was declared the state's only growth industry. The so-called Republic of Bihar—viewed as a criminal fiefdom beyond the purview of the government of India—was effectively a failed state. "Institutions had collapsed," says Nand Kishore Singh, a member of the upper house of Parliament. "Law and order had come to a grinding halt."
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This January, however, Bihar posted some stunning statistics that go a long way toward confirming that, since taking office in 2005, Chief Minister Nitish Kumar has done the impossible. Despite the economic crisis and three years of droughts and floods, Bihar posted 11 percent average annual economic growth over Kumar's five years in office, making it the second-fastest-growing state in India, the second-hottest major economy in the world after China. In what were once impassable badlands, the administration laid 6,800 kilometers of roads, built 1,600 bridges and culverts, and cut journey time in half in many areas. Car sales eclipsed kidnappings, as crimes by roving bandits fell steadily from 1,297 to 640 and kidnappings for ransom dropped from 411 to 66 between 2004 and 2008. In a state that many Delhi residents once feared to visit—despite its allure as home to Bodh Gaya, the site where the Buddha attained his enlightenment—the number of foreign tourists shot up from 95,000 to 356,000 over the past two years.

These figures were so astounding that critics lost no time in belittling them. How could backward Bihar be growing nearly as rapidly as booming Gujarat, a longstanding leader in industries ranging from textiles to pharmaceuticals? The economic growth in Bihar stems from state spending, not investment, many pointed out. All Indian states collect and report their own economic figures to the Central Statistical Organization, and Kumar must have cooked the books in Bihar, others alleged. Those charges are almost certainly wrong. There's a small margin for error. But large-scale reporting fraud is unlikely, and things have indeed changed dramatically in Bihar. "We never had a functioning state—neither before independence nor after independence," says economist Shaibal Gupta, who heads the Asian Development Research Institute in Patna, the state capital. "Under Nitish Kumar, for the first time the state started functioning marginally. And with the improved functioning of the state, things have dramatically improved."

Kumar's nascent success represents more than just the light at the end of the tunnel for one failed state. It could be a guide for other states that are struggling with many of the same issues. Almost 20 years ago, after a visit to a site in Bihar where a guerrilla army of untouchables had slaughtered a village of landlords with harvesting sickles, the travel writer William Dalrymple bemoaned the collapse of Bihar. But he also suggested that the state was not so much backward, as India's newspapers often described it, as it was forward: a trendsetter for the rest of India that presaged ballot-rigging, caste-based social upheaval, and the criminalization of politics as national phenomena. This dismal view appeared to be correct, as India's vaunted democracy descended into simple caste-based gerrymandering, knee-jerk -"anti--incumbency" made mockery of the accountability that free elections are meant to enshrine, and an ever-increasing number of alleged gangsters made their way into the national legislature. "In the '80s and '90s, there was a wave of caste-related politics, where development didn't seem to matter," says Baijayant "Jay" Panda, a member of Parliament from Orissa, a state that has faced similar problems. "But I think that was a phase. We have matured as a democracy. Voters today are going beyond those concerns and looking at issues like good governance and development and electoral promises being kept."

Like his main rivals, Kumar, 58, is a career politician, who served three terms as a minister in the central government since the late 1980s. A teetotaler known for his simple lifestyle, he has a reputation for probity that propelled him to the helm of Bihar's government in 2005. Because he did not appear to have amassed any fortune or to have used his position to bring any family members into the usually lucrative business of politics, voters perceived him as outside the established patronage system. In a state that had been dominated by politicians catering to an alliance of the Muslim and middle-caste Yadav vote, Kumar set out to build a "coalition of extremes" that includes the high-priest and warrior castes and voters from among the erstwhile untouchables. Even as he did so, however, he sent voters a message that he was more committed to developing the state than protecting his caste fellows, and that he would end the 15 years of increasingly hostile class war under Lalu Prasad Yadav, a charismatic demagogue who as chief minister exploited lower-caste hatred for the state's unreformed feudal landlords. With a brio worthy of Falstaff, Yadav had enshrined his relatives and caste fellows in positions of power, and observers blamed him for his cronies' excesses. His brothers-in-law, Sadhu Yadav and Subhash Yadav, for instance, have figured in police investigations of the alleged embezzlement of millions of dollars in flood-relief funds and the alleged abduction and torture of an official of one of India's state-owned banks. Neither has been convicted of any crime. Lalu himself was accused of complicity in the embezzlement of millions of dollars in state funds intended for fodder, livestock, and farm equipment, for which he was in and out of jail several times before he was acquitted of amassing "disproportionate assets" for a man of his position in 2006.

Kumar changed the rules. He reversed Bihar's plunge into chaos by doing something that was highly unusual in the state—and indeed in all of India: he focused on competence over patronage. To improve delivery of government services, Kumar broke the long trend of overcentralizing state powers, and delegated more financial and administrative powers to officials in the field. He updated archaic rules that made civil engineers seek minister-level approval to spend absurdly low amounts of money. These moves eliminated the huge backlogs of simple matters piled up on senior officials' desks. He also reestablished the cabinet meeting as a weekly event, held every Tuesday, where in years past the cabinet sometimes did not meet for months.

Kumar then redefined the basic functions of institutions, essentially requiring offices to do the work they'd been assigned. He ended the widespread "transfer industry," which sold coveted bureaucratic posts to the highest bidders, and handpicked bureaucrats known for their competence. He ensured them that he would honor the set three-year tenure of postings rather than shuffling them around before they could deliver. One such official built 259 bridges and turned around a loss-making state-owned infrastructure firm during his three-year watch; as a reward, he's been charged with building the state's new roads and hospitals. To speedily fill thousands of vacancies in the police force that had left the state at the mercy of criminals, he tapped already trained personnel from among the state's ex-soldiers—who in India retire in their 40s. He publicly supported the police after they made high-profile arrests of criminals who had previously enjoyed political protection. Those jailed included not only a member of Parliament from the state's main rival political faction (who had dared the state police chief to arrest him on live television) but also an assemblyman from Kumar's own party who had made his own TV spectacle, threatening to have a group of reporters killed for filming his drunken altercation with the staff of a local hotel. Kumar managed to redress the state courts' abysmal conviction rate by instituting fast-track courts and working with the judiciary to focus on career criminals' most easily prosecuted offenses to ensure that they swiftly found themselves behind bars. The moves resulted in nearly 39,000 convictions between 2006 and 2009, compared with an average of less than 10,000 in previous decades. Those convicted included a dozen state legislators and members of Parliament like Mohammad Shahabuddin, Pappu Yadav, and Munna Shukla, all three of whom are now serving life sentences for crimes including kidnapping, intended murder, and murder.



Rebuilding the police and courts has reaped clear economic benefits. Now rickshaw drivers say they earn more money because people are traveling after 8 p.m. Shopkeepers say their take has increased because they no longer have to bribe the police or pay off local thugs. By retooling the bureaucracy in charge of implementing state projects, Kumar has been able to boost spending on government programs. Bihar's outlays on projects ranging from building roads to training new primary-school teachers rose from $320 million in 2001 to $3.5 billion last year, significantly outpacing the growth in central government funding for Bihar. "Earlier, the funds were not even reaching to the district level," says Manoj Rai, Delhi director of the Society for Participatory Research in Asia. "If you take the old quote that out of one rupee, only 15 paise reaches to the people, in Bihar, it was not even reaching to the district [administrators] from the state." Among other things, that increase meant more -teachers—more than 100,000 added in the primary schools since Kumar took office—and better oversight of doctors and staff working at rural health centers. Primary-care centers that used to see 30 patients a month now see 3,600—because people have a reasonable expectation that the doctors have shown up for work.
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Still, Bihar continues to rank dismally on every major social indicator, and there are few signs that the poorest of the poor have benefited much from the new economic growth. More than half of Bihar's 82 million people live below the poverty line, compared with about 40 percent for the rest of India; both the infant-mortality rate and -maternal-mortality rate are higher than the national average; and some 70 percent of the state's inhabited areas are not linked by motorable roads.

Bihar's course correction may well mark a watershed moment for India. At a time when coalition politics limits centralized control, the nation needs competent, accountable provincial governments to continue its emergence as a global power. There are similarly encouraging signs from other local and regional leaders. Delhi's Sheila Dikshit has staved off her opponents by successfully tackling pollution and improving city infrastructure; Gujarat's Narendra Modi has retained power by attracting investment and creating jobs, despite his alleged role in deadly Hindu-Muslim riots in 2002; and Orissa's Naveen Patnaik has won an unprecedented third term in one of India's laggard states by improving law and order, stimulating industry, and cracking down on corruption. The common thread is that political leaders are realizing that anti-incumbency and gerry-man-der-ing aren't insurmountable: they can win reelection by delivering economic development and ousting the corrupt or incompetent from their parties' dockets.

Because of his state's longstanding reputation as a basket case, Kumar, perhaps more than any other, has shown that even India's darkest corners can make progress against crime, corruption, and caste- and creed-based demagoguery. In recent days, Kumar faced a rebellion from within his own party that may illustrate one of the costs of dismantling the patronage system. But if he can hold onto power in the state elections this fall, and perhaps even if he can't, the trendsetter state will confirm that India's democracy and its voters have reached a new stage of evolution.

"Whether he wins or loses, the signal has gone out very clearly," says PRIA's Rai. Kumar's predecessor, Lalu Yadav, "used to say development does not help you to win elections. Now the same man has started using development jargon." Whoever takes office next term will have to do it on the promise of electricity, roads, and jobs, and they'll be accountable for their promises now that Kumar has broken the perception that all politicians are the same and change is impossible. "Politically, Kumar has won," says Rai. "Electorally, he may lose. But that's not important." What's vital is that India's most backward state is now finally moving forward.

© 2010