Bihar: Exporter of Human Resources !!

—A Critical Study—

Pramod Rai
Ex-IRS; B.Tech (IITK); Advocate

We know that high quality human resources are essential and critical for any service or manufacturing industry. To raise productivity levels skilled manpower is of paramount importance. All goods and services of desire can be created and brought with skilled human resources. Few countries like China have excelled in exporting goods, and few others like India have excelled in exporting services. However, it is Bihar, the most powerful state in India’s history, that has realized that ‘Human Resources’ are of the paramount importance and an item of export to earn revenue. The state of Bihar and the people of Bihar have understood it ahead of its competitors, and has become leader in exporting human resources.

Be it bureaucracy of India or technocracy of India or the labour force working in factories or autowalas or rickshawalas in major cities, it is dominated by ‘Human Resources’ from Bihar. Each and every sector of employment across the length and breadth of India is populated by human resources exported by Bihar. Today, Bihar is much ahead of all other states of India in its share in export of human resources.

This position of strength in exporting human resources has been achieved by the state of Bihar with a lot of hard work! Till 1955 or so, though Bihar was better administered compared to other states, but it was one among the backward states of India with a net human resources exchange deficit. Bihar was actually an importer of human resources as it was a center for education and trade. A number of students and business community used to flock to Bihar in search of greener pastures. The agricultural yield was better in Bihar than other states of India and Biharis did not migrate to other states in search of employment.

With the gradual withdrawal of government from education, infrastructure, law and order, etc., and putting its faith in the progressive economic theory of Laissez-Faire, Bihar was able to push its population for out-migration from Bihar. The quality of life deteriorated so much in the state that Biharis have to go to outside the state for every purpose, be it education, health services, investment, job opportunities, among others. To achieve the distinction of a net exporter of human resources, the existing irrigation system of canals were made non- functional and no new infrastructures were developed in the agriculture sector. This drove away the farmers from Bihar to become agricultural labour force in the states like Haryana and Punjab. A conducive environment was provided for accelerating the closure of existing manufacturing units in the state and it was ensured that no new unit is set up so that higher pace of export of human esources can be maintained.

There are several colonies in NCR Delhi today, which are dominated by people from Bihar. With the constant support from successive governments of Bihar, Biharis not only elect the government in Bihar, rather they are a forced to be reckoned with in Delhi State elections as well. Biharis neither prefer to study in Bihar nor do they prefer to take up jobs in Bihar. Even more importantly, and definitely a lot more strongly, they do not wish to invest any money in Bihar. I fact, there has been a growing trend where out-migrants sell their ancestral properties in Bihar for buying properties in metro cities of India.

The ground realities today are such that even if Biharis want to return to Bihar, they cannot do so. This is not because of the absence of a vibrant manufacturing or services sector in Bihar, which can provide employment to them, but because their return will paralyze the vibrant manufacturing and services sector of the other states! Even with its feudal set up, Bihar was one of the early states to pass the Land Ceiling Act, but it was never implemented. Bihar never implemented the land reforms like consolidation of land holdings and prevention of fragmentation Act 1956. Throughout India,agriculture is in distress and hardly there is any margin of profit in this field. Due to the high population density, the land holding per person in Bihar is very small, and thus getting employed in the agricultural sector is the last priority for a Bihari. Manufacturing sector and services sector are not developed in Bihar at all. All these contributing factors are present even today and they make Biharis highly motivated towards the export of human resources out of the state.

The current state of affairs in Bihar is such that Bihar will continue to be a massive exporter of human resources and no other state of India can beat it in this regard! Bihar will never allow the development of its manufacturing sector, which is evident from the current industrial polices of the government of Bihar. Bihar Industrial Area Development Authority (BIADA) does not have more than 100 acres of land in the entire state, which can be allotted to any industry seeking an investment in the state. Furthermore, the size of land holdings under BIADA is quite small and, in most cases, it is less than 2 acres. As per the industrial policy of the state, the entity desirous of starting an industry in the state has to acquire land on its own by negotiating with private land owners.

For political reasons also, governments of popular states like Bihar and West Bengal are not ready to acquire farmers’ land for potential industrialization. We have seen the recent example of Tata Nano Plant in Singur, West Bengal, where Tatas were unceremoniously driven away from West Bengal. But, they were welcomed with open arms and 1100 acres of land by the government of Gujarat at Sanand.

Today every manufacturing unit is a super specialized undertaking. It is only a part of the full production process, which is undertaken in a particular unit. With the exception of agricultural units, by and large, all other sectors adopt a decentralized production process where no unit manufactures the final item of consumption starting from the scratch. Industries do not get developed in isolation. They are often inter-dependent. They always get developed in clusters where the final product of one unit is required by the other as a raw material. In all the developed industrial sectors components and other critical ingredients are most often produced in units, which are in the vicinity of the mother unit. Any disturbance or interruption in the supply chain can disturb the entire value chain. Notwithstanding the initial costs and obstacles, even if an industrialist is really able to set up a manufacturing unit in Bihar, he will still have to deal with the supply chain logistics for his raw materials as well as the final manufactured product. His raw materials need to come from locations 1000 km away and his finished goods also need to travel over 1000 km to be at the hands of user industry or ultimate consumers. For the excessive cost of the logistics and transportation, the running cost for an isolated unit in Bihar will be so high that it cannot economically compete with other units manufacturing similar items elsewhere. The maintenance and support of isolated units also tend to be very difficult and expensive.

For example, for the service and support of a single crane installed in an isolated unit, say in the West Champaran district of Bihar, the service engineer has to be called from Patna. Crane Supply Company cannot afford to station service engineer permanently in the West Champaran district for a single crane. Therefore, in the event of a breakdown of the Crane in the West Champaran district (over 200 kms away from Patna), there will be a minimum shut down time of 2-3 days on account of distant location of the service engineer. During this downtime, the entire investment and the manpower will have to be kept idle escalating the cost of production. In industrialized states, where structured and planned industrial parks are established, such lengthy delays and the resultant cost escalation does not arise. An example is a small place named Jalna in the state of Maharashtra, where more than 200 cranes are installed in numerous industries. Multiple service engineers of the crane company are stationed permanently at Jalna. Whenever there is a breakdown of a crane, a service engineer reaches within an hour. For the Jalna units, the manpower and other machineries are kept idle only for few hours in the event of a crane breakdown. On the other hand, for industrial units in Bihar, the breakdowns of even small parts or a minor maintenance need necessitates that the entire manpower and the entire production line be kept idle for few days.

In 2007, union minister for steel Ram Vilas Paswan laid the foundation stone of Bihar’s first steel processing unit at Kumarbagh in West Champaran, to be set up by the Steel Authority of India (SAIL), a central government PSU, with the total investment of Rs 300 crore with an announcement of start of production by August 20081. The then secretary in the ministry of steel R S Pandey, who hails from the district and post-retirement got elected as MLA on a BJP ticket from the district in 2015 was instrumental in bringing the project to West Champaran. This project like other projects was also unviable on accounts of constraints discussed above, but the duo of Paswan and Pandey could convince and compel SAIL, a PSU under their charge to make this investment. Today the factory shed is standing tall at Kumarbagh with no commencement of production even in 2020!

Investors face several other hurdles in their undertakings in Bihar as well. The poor law and order situation combined with innovative corruption methods of Bihar have also kept the industrialists away from Bihar. For their own safety and the safety of their investments, they never venture into Bihar. They always prefer to import human resources from Bihar, rather than investing and utilizing human resources in Bihar itself. There are three types of government related corruption in India. In the first type, one feels the pinch of the government corruption only when he touches the government system. For example, somebody participating in government tenders has to pay a bribe for getting the tender. Somehow, this has become acceptable norm throughout the country. Another person, who is not participating in the tender, is unaffected by this model of corruption.

In the second type, even if one does not touch the government, he gets the pinch of the government apathy and he may have to pay bribe. For example, when someone’s vehicle is stopped on the road in the middle of nowhere while undertaking a road trip and, on some pretext or the other, he is not allowed to proceed unless he pays a bribe. When such instances go up, the governments become unpopular and lose elections.

In the third type of corruption, one does not need to approach the government and the government also does not reach him, but still he needs to spend money for his survival. This type of corruption usually occurs due to the government apathy and inaction, and many times have a tacit government’s approval. On account of inaction by the government, a private person can approach anyone or any enterprise seeking money. For example, doctors with a good practice, shop keepers, contractors, etc., were all paying regular ransoms to private parties in 1990s and 2000s to keep their business running in Bihar. During the Laloo-Rabri rule, this was rampant, but it is present even today in one form or another. When a private person approaches for money, there is no limit to what he can demand.

Bihar has seen the kidnapping of NHPC (erstwhile National Hydroelectric Power Corporation) engineers while constructing bridge over the Gandak River in West Champaran district in the year 20042. Similarly, immediately after the swearing in ceremony of the RJD-JDU government in 2015, two engineers of a road construction company were shot dead in Darbhanga district due to the non- payment of ransom by the construction company3. These are just two examples, otherwise Bihar is flooded with such cases. Private party extortionists were not sparing even the government entities like NHPC.

For any geographical region, there are three agents of development. The first and the most important agent of development is the government, which has to develop basic infrastructure like roads, supply of electricity, health facilities, education, etc. We can see a marked difference in these facilities in the undeveloped countries as compared to the developed countries on account of difference in government’s approach. The second agent of development is technology. Riding on the progression and advancement of technology, people see lot of development with the passage of time. For example, telecom facilities are, by and large, equally available today in the developed countries as well as the backward countries. Within India, telecom facilities are equally accessible in poor states like Bihar and developed states like Gujarat. Due to new inventions, the cost of telecom services has also gone down drastically and now these facilities are now equally accessible to richer section of society and poorer section of society. This development is not on account of any government effort, but on account of progression of technology. Private telecom companies have made it available in every part of the country at affordable prices. Affordability and accessibility of data/internet has connected remote locations with the rest of the world via internet messaging services (WhatsApp, Facebook Messenger, etc.) and VoIP (Voice over Internet Protocol). Such connectivity has proved to be extremely useful for official works, student classes, court hearings as well as social interactions during the current pandemic of COVID-19 when physical movement is highly restricted. Such opportunities were simply not there even in developed countries few decades ago as these developments are technology driven.

The third agent of development are the people belonging to an undeveloped area, who make a decent money elsewhere and want to give it back to their native place. They earn good money away from their native area, but are emotionally attached to their native place. Therefore, they bring private investment to their native place. For example, a rich Bihari working in the USA may start industries in Bihar or construct shopping malls. Both activities will create employment opportunities for the locals and lead to some development in the state. The third agents of development will invest and try to develop their native area as long as there is no threat to their investment and their own physical safety and security. The moment the third type of corruption surfaces, where a private party starts demanding ransom from a private party, the third agents of development stop doing anything at their native place. Nobody is willing to risk his life and money. Threats to personal safety and ransom demands drive away even the strongest investors. Anil Agarwal, the chairman of Vedanta Group of Companies, is a proud Bihari. He has invested a lot of money in India as well abroad, but he is reluctant to invest anything in Bihar primarily because of the third type of corruption and the trust deficit with the law- and-order situation in the state. Biharis, in general, who are well off outside Bihar, have stayed away from investing in Bihar on account of this third type of corruption. Even middle-class families of Bihar are selling off their ancestral properties in Bihar and bringing that money to cities like Delhi and Mumbai to buy properties. Even they are not investing any part of the money earned in Delhi and Mumbai in Bihar at all.

A friend of mine grew up in Bihar, but his family has since then moved out of the state. My friend did MBA from a very high ranked university of the USA, and he is now employed at General Electric. A few years ago, he was in a position to take a few investment decisions for the company running in to millions of US dollars each. Bihar was always on his mind. Bihar was his first priority. He flew to Patna and camped in Patna for a week. Each day, he tried to meet the bureaucrats and ministers including the Chief Minister, but was unable to meet any decision-maker. In one week, all he could achieve was a few meetings with lower babus who cannot decide anything but were hinting their help for a fee. His next stop was Ahmedabad. At the end of 48 hours, he signed a Memorandum of Understanding with Government of Gujarat.

With such harsh realities of life prevalent everywhere in the state, Bihar has no option but to keep on exporting its human resources to other states and keep on boasting that it always has been a land of intellectuals! Bihar has produced ascetics like Buddha and Mahavir in its glorious past and now it is supplying students to premier engineering colleges, medical colleges, law schools, and civil services!