Why Covid-19 poses a great challenge for Bihar | Analysis – analysis
As globalization has grown, local epidemics tend to spread more rapidly worldwide. We are seeing this in the case of coronavirus disease (Covid-19). Although the poor are generally the most affected, this time the developed countries are the most affected. In India, the poorest states have not been affected as much as initially believed. The spread of the virus, while not insignificant, has been relatively minor in Bihar. Bihar also faces periodic challenges from other infectious diseases such as tuberculosis, kala-azar and encephalitis. Given this, it must deal with the current pandemic on five levels: historical, financial, and infrastructure issues, related to migrant labor and the revival of the economy.
Historically, Bihar was part of the Bengal presidency. The quality of governance in this region was poor due to the inefficient zamindari system. A memorandum submitted by the state government to the Simon Commission in 1930 lamented the fact that per capita spending on health was much lower in the Bengal presidency compared to the Bombay and Madras presidencies. Even within the Bengal presidency, health spending was the lowest in Bihar, compared to other regions. Unfortunately, even after Independence, this trend continued.
Total public spending on health in Bihar is budgeted at Rs 8,788 crore (2020-21), which is 4.1% of the total budget. In per capita terms, public spending on health in Bihar is only Rs 690. In contrast, the corresponding figure in Kerala is three times higher, at Rs 2,092. Bihar’s healthcare infrastructure is only a fifth of the national average, measured in terms of hospital beds per 1,000 people. Bihar has not received a large amount of funds to create the necessary health infrastructure for almost two decades.
Since the corporate sector is almost absent in Bihar, the responsibility for infrastructure development lies primarily with the state government. But the state government can do little if its finances are chronically weak.
During the shutdown, there has been virtually no economic activity in Bihar, and the state government has been unable to generate enough tax revenue. In addition, the state government has a limited indebtedness space, thanks to the 3% restriction on the State’s Gross Domestic Product (GSDP), as provided in the Fiscal Responsibility and Budget Management Act (FRBM), 2003. Participation The state’s central tax package has been routinely reduced.This reduction amounted to Rs 14,796 crore in 2019-20. Under such severe financial constraints, the only source of funds is the Consolidated Sinking Fund (CSF) that was created in 2008. Due to the financial stress caused by the blockade, the state government has had to withdraw Rs 1 billion rupees from the fund. The current financial capacity of the state government is too limited to allocate adequate funds to strengthen infrastructure.
Another important aspect of Covid-19 is the problems faced by its migrant workers. An estimated three million workers have gone to other states to work. The pandemic has left them stranded, without work or the means to return to their homes. After a considerable delay, the central government has now organized special trains, helping them to return to their homes. But once the lockout is over, employing these migrant workers, either in their homes or in their previous migration locations, will be a serious challenge for the state government.
Finally, to meet the challenges posed by the virus, the state government has to revive its economy. Although the economy has recorded steady growth in the recent past, it is still weak due to the absence of a corporate or industrial sector, on the one hand, and the dependence of a large majority of its workers on the low-productivity agricultural sector. other.
The state government has to take the lead role to bring the economy back to normal. The first component will be to provide purchasing power to people, particularly the poor. Employment-oriented social assistance programs, such as Mahatma Gandhi’s National Rural Employment Guarantee System, are an obvious choice here, but other programs may also exist. Second, the state government must provide substantial relief to launch the Bihar micro, small and medium-sized business sector, which has been severely affected by the shutdown.
In addition to tax concessions, such relief could also include input subsidies. This will put pressure on the finances of the state government. But the state government should not hesitate to borrow, even if it involves crossing the 3% limit of the GSDP, as prescribed by the FRBM Act. Countries like Japan, South Korea and Thailand, which share a cultural link with Bihar due to Gaya and the Buddhist legacy, should be encouraged.
The economy is facing an unprecedented situation and as such demands an unprecedented response. Bihar can meet this challenge, but he will need all the support he can get from the central government.
Shaibal Gupta is Secretary Member, Asian Institute for Development Research (ADRI), Patna
The opinions expressed are personal.