Bihar Special: Economy of Bihar

By BYJU'S Exam Prep

Updated on: September 13th, 2023

Present Composition of economy of Bihar

  • Primary Sector – 23%
  • Secondary Sector – 17%
  • Service sector – 60%
  • GDP – ₹32 lakh crore (USD 99 billion)
  • GDP per capita – ₹ 26,801 (USD 420)
  • Bihar has lowest GDP per capita but has pockets of higher per capita income like the capital Patna.
  • In June 2009 World Bank report, Patna was ranked as the second best city to start a business in India after Delhi.
  • According to Central Statistical Organization, between 2004-05 and 2008-09 Bihar was the 2nd fastest (11%) growing state after Gujarat.

Post-independence economy of Bihar

  • Until mid-1950s, 25% of India’s sugar output, 50% of horticulture and 30% of rice and wheat was from Bihar
  • Dalmianagar was a large agro-industrial town
  • In the 1950s Bihar had the reputation of being one of the best administered state with annual growth rate of 4% much higher than national average of 3.3%.
  • Between 1950-80 attempts were made to industrialize the northern Bihar
    • Oil Refinery at Barauni
    • Motor Scooter plant at Fatuha
    • Power Plant at Muzaffarpur
  • However till 2000, major thrust was given to industrialize the southern Bihar which became the prime reason for lack of industrialization of present bifurcated Bihar.
  • The north remained the agricultural heart of the undivided Bihar.
  • Jharkhand region provided for 60% of the output of Bihar.
  • Important cities that developed in undivided Bihar are – Bokaro, Jamshedpur, Dhanbad and Ranchi.
  • In 2006, New Industrial Policy was launched along with many other policy initiatives to promote industrialization in Bihar
  • During the 2008 global financial crisis also, automobile sales in Bihar grew by 45%. Negligible impact of the crisis on Bihar was due to
    • Small industrial base
    • Employment generally in public sector or self
    • Small amount of loan coverage
  • Indian railways has announced to set up manufacturing plant for electric locomotives in Madhepura.
  • Diesel Locomotives will be manufactured at Marora.
  • Food Production in Bihar
    • 71% of India’s Litchi production.
    • 10% of India’s Maize production
    • 85% of India’s Makhana production
    • 13% of Mango production
    • 14% of Honey production
  • Sudha Cooperative
    • It was founded by I.A.S. officer Ram Chandra Sinha
    • It also sells its products to other states like Uttar Pradesh, West Bengal, Jharkhand and Delhi.
  • Husk Power Systems
    • It is a company that provides power to rural areas by converting husk into electricity.
    • It was founded by Gyanesh Pandey, Manoj Sinha and Ratnesh Yadav.
    • It was established in the village Tamkuha in West Champaran district in 2007
  • Although agriculture is the backbone of Bihar, HYV seeds have not been adequately utilized here.
  • Because of high density of population and illiteracy, unemployment is very high in Bihar. Migration is a regular phenomenon here. It has the highest out migration after UP.
  • Land ownership rights are highly skewed. 97% of the farmers are marginal and small.
  • Hertz Biotech
    • It is a MNC which opened a unit in Imamganj of Gaya district
    • It is a pharmaceutical company which manufactures tables, capsules, injectables, ointments and food supplements.
  • Kapilansh Dhatu Udhyog
    • It manufactures and exports high quality Cast Iron Earthing Electrodes.
    • It has been set up in Rajpur in Buxar district

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