As Bihar prepares for yet another term under Chief Minister Nitish Kumar, one of India’s most influential policy economists, N K Singh, believes the state stands on the threshold of a significant economic shift — provided its government acts with urgency and precision.
In an interview with Moneycontrol, Singh , economist, veteran policymaker and former chair of the 15th Finance Commission — set out a detailed roadmap for the newly formed JDU–BJP government. His recommendations range from creating an empowered investment commission to building district-level skilling centres and fixing longstanding bottlenecks in private capital inflows.
According to Singh, if Bihar sustains growth rates of around 10–11 percent, its per capita income could double within a decade, narrowing long-standing gaps with richer states such as Karnataka — and lifting millions out of extreme poverty.
Asked what drove voters in a state widely known for having India’s lowest per capita income, Singh says the verdict reflected confidence in a long-standing political partnership.
“Bihar has voted decisively for continuity and trust,” he says, arguing that cooperation between Prime Minister Narendra Modi and Nitish Kumar has created a “multiplier effect” on infrastructure quality and macroeconomic stability.
Singh notes that Bihar’s population growth, once roughly 3 percent, has slowed to around 1.3–1.4 percent, meaning rapid GDP expansion is now translating into meaningful increases in individual income. This shift, he believes, is vital for Bihar’s path toward lower-middle-income status.
For the young electorate, job creation dominates concerns. Singh argues that Bihar’s top priority should be restoring investor confidence.
Despite perceptions of weak finances, Singh contends that Bihar’s fiscal management is stronger than believed. Its debt-to-GDP ratio is more sustainable than several better-off states, and the government has gradually shifted more expenditure toward capital investment.
Improvements in transport infrastructure — highways, railways and airports — are, he argues, already visible. Airports in Darbhanga, Purnea and Patna have expanded connectivity, a prerequisite for private capital inflows.
Singh acknowledges that migration remains central to Bihar’s labour landscape. But he says the reasons for moving out have shifted.
Earlier, migration was a desperate response to a lack of livelihood options. Today, he says, voluntary migration plays a larger role, tied to the rising flow of remittances. Roughly 52 percent of households receive about ₹40,000 a year from migrant workers.
Still, Singh stresses that Bihar must generate local employment to prevent economic dependence on external labour markets. Better skilling, pedagogy reform, and district-level training hubs will be essential.
Singh sees enormous promise in sectors that align with Bihar’s natural advantages:
Agro and agro-processing industries, especially corn, potato, millets, pulses
Fisheries, where the state has moved from being an importer to an exporter
Leather, footwear, toys and textiles, all labour-intensive industries
Bhagalpur silk, a historic asset with unexplored global potential
From Mauryan and Gupta heritage to Nalanda and Rajgir, Bihar possesses cultural and historical assets unmatched in India. But he warns that the state must urgently invest in hospitality infrastructure, particularly hotels, to convert heritage into economic opportunity.
The newly announced cash transfers , estimated at around ₹40,000 crore in FY26,are substantial, but Singh considers them feasible.
He notes that these transfers are not unconditional handouts and are expected to be backed in part by the World Bank’s rural livelihood programme.
“The financial outlay is lower than what the Mahagathbandhan had proposed,” he says, adding that sustainability ultimately hinges on Bihar maintaining growth rates higher than the interest burden.
Singh calls for district-level skilling centres, designed to meet the needs of labour-intensive industries and incorporate modern pedagogy, including AI and IoT-enabled learning.
He warns that despite wide educational access, high secondary-level dropout rates, highlighted repeatedly by ASER, remain a critical weakness.
If operationalised effectively, he believes these centres could reduce the need for youth to migrate for training and generate substantial multiplier effects.
For Singh, the opening months of the new government should be laser-focused on building systems that enforce accountability:
An empowered ministerial groupdedicated to attracting investment
An investment commissionchaired by the chief minister or deputy CM
Rigorous monitoring to ensure full utilisation of capital expenditure
A carefully managed rollout of district-level skilling centres
Tourism and hospitality targets with measurable benchmarks
Clear lines of responsibility, he insists, will determine the success of Bihar’s commitments.
He acknowledges revenue losses but argues that the benefits, particularly for women’s safety, cannot be dismissed.
Prohibition has had mixed global outcomes, he notes, but the government’s focus should lie elsewhere: growth, education, tourism and labour-intensive industries.
Bihar’s deep preference for government employment, Singh says, stems from job security and pension benefits. The only solution is to create private sector jobs that match or exceed government salaries.
He points to cities such as Jamshedpur and Dhanbad — where private-sector roles offer stability and prestige — as examples Bihar should aim to emulate.
For all of Bihar’s progress, Singh identifies three major structural challenges:
1. Maintaining high growth over sustained periods
2. Orderly urbanisation, by developing several major urban or semi-urban centres
3. Strengthening third-tier governance, including municipalities and panchayats
He notes that many local revenue streams were absorbed into the GST regime. He recommends allocating a portion of state GST collections to local bodies and expanding property tax, especially as land values rise.
Better-funded urban local governments, he argues, could eventually even raise market borrowing for development.
If Bihar sustains 10–11 percent annual growth in per capita income, he says, the gap with Karnataka could narrow considerably by 2030. The state had previously begun catching up with Uttar Pradesh, before slowing over the past decade.
With renewed political stability and focused economic policy, he believes Bihar can re-accelerate and meaningfully bridge regional disparities.
One of Singh’s most emphatic points concerns women. Bihar’s political empowerment of women — through reservations in government jobs and panchayats , has already altered the state’s landscape, he says.
Their economic empowerment will be even more transformative.
Women, he argues, will play central roles in:
Skilling and services
Agro-processing Agricultural modernisation
Governance and local leadership
“Bihar’s prosperity,” Singh concludes, “is essential for India’s prosperity.”
