Bihar in numbers: Growth without private investment and the price of development

As Bihar heads into another election season, political slogans about development and growth will once again echo across its towns and villages. But beneath the rhetoric lies a quieter story told by numbers-one that speaks of progress, paradoxes, and persistent challenges. To grasp Bihar’s economic paradox, one number says it all. In 2024-25, Bihar’s per capita income is estimated at around Rs69,321 (MOSPI); roughly what India’s average income was in 2012-13. Put simply, the average Bihari today is as prosperous as the average Indian was over a decade ago. Bihar, in 2011-12, had a per capita income of Rs28,671. Even though it grew 142 per cent by 2024-25, faster than India at 137 per cent, the low base meant the State is sprinting hard just to stay in place within India’s growth story.

The Numbers Story

Bihar’s per capita Net State Domestic Product (NSDP) at current prices for 2024-25 is estimated at Rs69,321 (MOSPI), trailing far behind India’s national average of Rs2,05,324 for FY 2024-25. Patna, the State capital, remains Bihar’s economic engine, with an estimated per capita income of over Rs1,85,000-nearly triple the State average and far higher than lagging districts like Sheohar, Araria, and Sitamarhi, where per capita incomes barely cross Rs20,000-Rs30,000.

Growth of Bihar

Bihar’s 13 per cent growth in FY 2024-25, above the national 10 per cent, looks impressive but stems largely from a low base. Despite a decade-long 11 per cent growth, the State’s per capita income is only 34 per cent of India’s average. Though home to 9.1 per cent of India’s population, Bihar contributes just 3.2 per cent of national GVA. Its dependency ratio is 70 per cent, 15 points above the national average, and 88 per cent of its people live in rural areas, underscoring an economy that remains agrarian, young, and heavily burdened.

Structure of the Economy

The primary sector contributes 23 per cent of Bihar’s GVA, with crops forming half of it. The secondary sector adds another 23 per cent, but manufacturing is just 7 per cent, while construction dominates at 13 per cent. Services lead with 54 per cent, a structure largely unchanged since 2011-12. Employment reflects this imbalance: in 2022-23, half of Bihar’s workers were in the primary sector, 29 per cent in services, 18.4 per cent in construction, and only 5.7 per cent in manufacturing. The 4.3 per cent unemployment rate masks low labour participation, especially among women (23.9 per cent vs 39.8 per cent nationally). Job quality is weak: only 9 per cent of workers hold regular salaried jobs, 29 per cent are casual labourers, and 62 per cent are self-employed (India: 23 per cent, 23 per cent, 54 per cent). In urban Bihar (12 per cent of the population), just 29 per cent have regular jobs, compared to 48 per cent nationally direct consequence of limited industrialisation that restricts upward mobility.

Industries and Productivity in Bihar

The decline in registered factories highlights Bihar’s industrial stagnation. As per the Annual Survey of Industries (ASI), the number of factories fell from 3,623 in 2015-16 to 3,307 in 2022-23, even as the rest of India saw steady growth. Productivity gaps in the unincorporated sector remain wide, with poor infrastructure, low capital investment, and limited market access restricting the workforce’s potential. Chronic underinvestment by the private sector has left Bihar dependent on construction and public expenditure, limiting job creation and forcing successive Governments to rely on fiscal expansion and populist spending to sustain growth.

Fiscal Statistics

These fiscal pressures stem from Bihar’s weak private sector base. With limited industrial investment, the Government has increasingly relied on public spending to drive growth. In FY 2023-24, the fiscal deficit, budgeted at 3 per cent of GSDP, rose to 9.2 per cent; the revenue deficit climbed from 0.1 to 4.1 per cent, and the primary deficit from 0.9 to 6.9 per cent. The CAG’s 2021-22 audit flagged these gaps, urging reforms in budgeting and revenue systems.

With 42 per cent of revenue expenditure spent on wages and pensions, fiscal space for capital investment is minimal. Bihar leads in multidimensional poverty reduction, yet challenges persist. The share of the poor fell from 51.89 per cent in 2015-16 to 33.76 per cent in 2019-21, with NITI Aayog projecting 26.6 per cent by 2022-23. Over 2.25 crore people exited poverty between 2015 and 2023, second only to Uttar Pradesh. However, with national poverty now in single digits, Bihar’s level remains high. Monthly per capita consumption in 2023-24 rose to Rs3,670 in rural and Rs5,080 in urban areas, but the State still ranks among the bottom five in household consumption.

Human Development and Schooling

Bihar’s overall literacy rate trails national averages (81 per cent for India, much lower in Bihar). The Annual Status of Education Report (ASER) 2022 showed only 43 per cent of rural children in Std V can read Std II texts; basic numeracy is even lower. Districts like Gaya and Bhagalpur demonstrate innovative school improvement projects (eg, digital classrooms, toilet construction), but physical and digital infrastructure remains patchy in flood-exposed villages and urban slums.

A Policy Roadmap 

The next Government, irrespective of its political colour, must move beyond populist freebies and focus on a transformative economic agenda. Four priorities stand out:

• From Agrarian Dependence to Agri-Prosperity: Bihar must move from subsistence farming to value-added agribusiness. With fertile land and water, policies should promote food processing, cold chains, and organised retail. The White and Blue Revolutions hold vast potential but need private investment and better market access.
• Human Capital Mission: A ten-year Bihar Education and Health Mission is essential, with major investment in school infrastructure, teacher training, and learning outcomes. Reducing stunting and IMR through integrated nutrition and health programmes is equally critical-a healthy, educated workforce drives growth.
• Governance and Ease of Doing Business: The single-window system must move from slogan to practice. Simplifying regulations, enforcing contracts, and ensuring transparent administration are key. Bihar should actively attract investors by highlighting its large, trainable, low-cost workforce.
• Urban Renaissance: With one of India’s lowest urbanisation rates, Bihar needs a planned urban strategy focused on transport, sanitation, environmental sustainability, and affordable housing to spur growth and enhance living standards.

What Bihar Needs Now

As Bihar prepares for a political transition, the real test will be whether the next Government can shift from fiscal dependence to productive investment. Development must be built from the districts upward: enabling industrial clusters around local strengths, improving infrastructure, and attracting private enterprise to create durable jobs.

The author is a Research Associate at Pahle India Foundation