BELLWETHER PROJECT: BIHAR IS MORE THAN JUST CROPS

C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 001458

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/26/2017
TAGS: PGOV PINR PREL PHUM ECON SOCI KDEM KISL IN
SUBJECT: BELLWETHER PROJECT: BIHAR IS MORE THAN JUST CROPS
AND ROBBERS - PART II

REF: A. NEW DELHI 1446

B. KOLKATA 36

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Classified By: Political Counselor Ted Osius for reasons 1.4 (b and d)


1. (SBU) Summary: For the last two decades, Bihar was ruled
by a kleptocratic and corrupt government, suffered from
discriminatory central government policies, and was mired in
caste and class-ridden social divides. Despite its Buddhist
sacred sites, bountiful rivers and fertile soil, Bihar has
failed to become one of India's most abundant breadbaskets or
generate a significant tourism economy. Education and health
care are grossly inadequate. Bihar is commonly asserted to
be one of the most backward, least developed and most
hopeless Indian state. The third biggest in terms of
population, it fares poorly on almost every scale of human
development. However, the a new Janata Dal (United) (JDU) of
Chief Minister Nitish Kumar has initiated much-needed
changes. His administration is fixing the roads and
extending railway networks - the most visible symbols of
Bihar's efforts to move forward - seeking investment,
developing public-private partnerships and working to improve
schools and health care. Most critically, development now
figures as a key issue in the political discourse. Biharis,
for the first time in decades, look to the future with hope.
End Summary.


2. (U) This is Part II of three Bellwether Project reports
on Bihar. Part I (reftel A) focuses on the current political
environment and new development in Bihar. Part III will deal
with agriculture and the problem of trafficking in persons,
including migrant labor. These cables reflect the
collaboration between Delhi and Kolkata.

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Attracting Investment: A PR Struggle
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3. (SBU) Although Bihar's new roads will not fix everything,
they will help ensure produce is more likely to reach their
intended markets instead of rotting along the way. Hindustan
Times Resident Editor Mammen Mathew underscored that "real
money must come in from developed countries. We have a huge
man-made disaster (that needs fixing)." To that end, the
World Bank prepared its "Bihar: Towards Development Strategy"
roadmap and has expressed its willingness to put the State on
the path of accelerated growth and development by extending
active cooperation to the new government.


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4. (C) The Bihar Government's Approach Paper to the Eleventh
Five Year Plan, prepared by the State Planning and
Development Department, provides some clues about what to
expect in years ahead. Bihar's growth in recent years has
significantly lagged behind India's overall GDP growth of 7-9
percent. The Eleventh Plan seeks to correct this by
targeting a growth rate of 8.5 per cent per annum, from less
than 4 percent in 2003-04. The targeted investment,
corresponding to the targeted rate of growth of 8.5 percent
of Gross State Domestic Product, is about 24 percent of the
State's receipts, up from about 18.5 percent in 2003-04.


5. (C) The most striking feature of the plan is the sharp
shift in emphasis to private investment as the prime mover of
the economy. In 2003-04, private investment accounted for
about 54 percent of overall investment; this is projected to
increase to 65 percent during the Eleventh Plan period. In
effect, the strategy adopted by the Bihar government appears
to reduce state intervention in the economy in order to
facilitate private investment. Whether private investment
will respond is, of course, another matter.


6. (C) This has important consequences for Bihar's economy
and society - indeed, for the direction the Nitish Kumar
government will take in years ahead. A "Bihar Calling" ad
recently ran on BBC World to woo investors. The ad showed
then newly-elected Nitish Kumar trying to lure back
estranged, rich Biharis staying abroad, to the land of their
birth. Seeing Kumar singing paeans in praise of
"metamorphasized Bihar," one could believe that he would turn
the "land of carnage" into one of plenty and that he simply
needed some investment to nurture this "land of eternal peace
and prosperity". (Note: In sharp and sobering anecdotal
contrast, during the time the ad was being prepared, smeone
set six people on fire in a dispute over a stolen buffalo.
End Note.)


7. (SBU) The power situation is highly problematic for
investors. With the exception of Patna, almost all districts
experience severe power cuts and generally have access to
power for only a few hours a day. Kumar understands that
power will bring in industry, and is preparing a new Power
Policy to woo private investment in generation and
distribution. There are also proposals for new thermal power
projects that could generate 5,750 megawatts on an investment
of Rs. 23,350 crore (approximately 230 million USD). A
nuclear power project is being considered. The Kumar
government is also contracting private players for
electricity repair, billing and collection.

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8. (SBU) There are other untapped potential industries in
Bihar, including tourism. In our Patna hotel, we saw a
busload of travel-weary Japanese tourists return from Bodh
Gaya, Buddha's birthplace. There are estimates that the
tourism industry has the potential to create four million
jobs and earn 10 USD million of revenue annually. Further,
the world has discovered Madhubani paintings. Now, anyone
can find Madhubani paintings on the Internet and eBay for
less than 100 USD, although the Bihari artists receive only a
fraction of the money.

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Education, as Usual, is the Key
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9. (SBU) Bihar's early lead on education was lost in the post
independence period. Modern Bihar has a grossly inadequate
educational infrastructure creating a huge mismatch between
demand and supply. Some stately Raj-era educational
buildings stand in a state of shabby disrepair, despite being
classified as heritage sites. The problem is compounded by
the growing aspirations of the people and increasing
population. The craving for higher education among the
general has contributed to massive migration of students out
of the state. It was a pleasant surprise to find that in
spite of the meager investment on education in Bihar,
especially compared to other Indian states, the children have
done very well. The percentage of Bihari students in India's
famed IITs, IIMs, and AIOMSs are usually higher than their
proportion although none of these institutions are located in
Bihar. The same holds true for the percentage of Biharis in
coveted civil service positions.


10. (SBU) Kumar is also looking at education and has promised
to hire over 236,000 elementary and secondary school teachers
to ensure that schools function. Earlier, Bihari teachers
only came to work on payday. Teachers and administrators at
the five educational institute we visited pleaded with us for
U.S. resources. They want books, American literature, an
American Corner, even an American Presence Post. They want
their students to have greater access to the Fulbright
program, PAS exchange programs and U.S. speakers. We
confirmed that, for the first time in many years, teachers
are being paid on time, attending class and preventing
students from cheating on exams.

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Health Sector is Unwell

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11. (SBU) The health sector has been long neglected in Bihar.
According to the media and national norms, Bihar should have
at least 533 primary health centers, but there are only 398.
Similarly, Bihar has fewer than 9,000 functional health
sub-centers, compared with at least 16,500 as per national
standards. There are only 70 referral hospitals, although
the norms stipulate there should be at least 619. This is
also reflected in the number of government medical officers -
the State has only 3,380 whereas the norms stipulate 8,500.
Hospitals are often non-existent, doctors move to neighboring
states and are not replaced and most primary health centers
are non-functional. HIV/AIDS is also a formidable concern.
UNDP TAHA (Trafficking And HIV/AIDS) told Poloff that Bihar
has critically low awareness and understanding of the risk of
AIDS. According to their statistics, only 64 percent of
Biharis have heard of HIV/AIDS (78 percent men and 46 percent
women.)


12. (SBU) Kumar is inviting private partnerships to upgrade
the health facilities and has spent 200 crore rupees
(approximately 2 billion USD) on construction and upgrades.
Kumar also told Frontline that the government is recruiting
doctors to serve in government hospitals. Indeed, at our
road side stops outside of the capital, villagers and Bihari
locals told us they are now finding doctors in the hospital
and we saw a Muslim village woman with her arm in a cast.
Further, X-ray services have been "outsourced" to private
parties. There has also been an increase in polio
immunizations to control the recently documented increase in
infection (reftel B). Indeed, we noticed that virtually
every empty wall, both within and beyond Patna, was plastered
with posters promoting polio immunization.

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Comment: Is a New Day Dawning?
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13. (C) The relative squeeze on public investment in the
Eleventh Plan may well jeopardize its newly inaugurated
welfare schemes, however. If its risk-laden strategy of
wooing private investment fails, the goodwill that Nitish
Kumar currently enjoys could quickly evaporate. Before
launching another "Bihar Calling" campaign, he must provide
sufficient reasons for non-resident Biharis to look back at
their land of origin. There is still no electricity for the
better part of the day in most small towns and villages. Law
and order, while improving, still has a long way to go.

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Significantly, we did not hear resistance to the idea of
investment by foreign companies. In fact, most Biharis
welcomed the idea. And while Indian industries are beginning
to think about investing in Bihar, that is not enough.
Biharis must resist the temptation to allow traditional caste
politics to preclude progress (easier said than done) and
change must continue unabated.

MULFORD