Bihar and Jharkhand Blog



In the Part I of this discussion, I had tried to point out that the corruption in governance was increasing every passing year as reflected by CAG report in treasury withdrawals. Acting on the report, the government reportedly asked its officers and staff to clear the pending bills within a time frame under the threat of stopping the salary. Later the order to stop salary was withdrawn. Now, everything is perhaps moving as smoothly as ever.

I have tried to focus primarily on CAG report on financial irregularities, even though the courruption seems to be widespread in every domain of our life. What I am trying to understand is - how the state has achieved a high rate of economic growth even when widespread corruption is said to be prevalent. There are only two ways in which we can seek justification for the economic growth - (1) charges or perceptions about prevalence of widespread corruption are not correct OR (2) there is a scientific economic model to explain the phenomenon.

In a recent social gathering, I put the question - what is the source of revenue in Bihar fueling the economic growth. One suggestion that captured my attention was - the revenue from real estate and construction industry. It is suggested that in Nitish’s regime, the real estate propertires are being duly registered and it is generating lots of revenue for the government through registration fees. Where from the money is coming to people to buy real estate properties? Pat comes the reply - “black money”.

In an earlier post on “Bihar Govt to Confiscate Properties of the Corrupt” in this blog, I had quoted some relevant points from R Jagannathan’s article. Sushasan usually means better governance in terms of improved law and order and lower corruption. The correlation between improved law and order and higher growth is understandable, but at the same time there is no evidence that corruption impedes growth. When corruption is democratised and widespread, it may even be lubricating growth.

What does it mean? The widespread corruption generates lots of black money making the people richer and richer which in turn is recycled into the economic activities resulting in higher economic growth.

I do not know to what extent such arguments are tenable, but no government will perhaps plan and frame its policies based on this model of economics of corruption.

Dr P R Prasad, Patna





Many people believe that Bihar has undergone unprecedented transformation from Lalu’s “Jungle Raj” to Nitish’s “Sushasan” meaning good governance. In support of this belief it is cited that the rule of law has been now established, criminal activities have been restrained, girls education and health support system have received tremendous boost, potholed roads are now a history, and the overall increased economic activity has catapulted Bihar’s growth rate to over 11% (2nd highest in the country) in the backdrop of no mineral deposits, no industries, loss of agricultural output due to successive floods and a history of bad governance. The “Sushasan” has brought several accolades and awards to Nitish Kumar.

However, the recent findings in the report of Comptroller and Auditor General of India (CAG) relating to irregularities in treasury withdrawals are shocking. CAG has pointed out that during the financial years 2002-03 to 2007-08, the expenditure details of only Rs.511.90 crore have been submitted whereas the total treasury withdrawal amounts to Rs.11924.44 crore. This means there is no trace of remaining Rs.11412.54 crore. Another CAG report has pointed out that an additional sum of Rs 2,384.04 crore was withdrawn from Bihar treasuries during financial year 2008-09, but bills worth only Rs 77.27 crore were submitted to the Accountant General-Bihar. This leaves a sum of Rs.2306.77 crore unaccounted. The CAG report has also pointed out several irregularities in the expenditures shown. Sample it: (1) foodgrains meant for flood victims were transported by trucks of given registration numbers - payments were made to the transporters - on enquiry it was found that the registration numbers given were not of trucks but of scooters, motor-cycles and jeeps. (2) 298 women in Bihar have delivered two to five children in a span of 60 days during 2008-09 for which they have been paid Rs.1000 each time under Janani Suraksha Yojana. (3) and so on …

Hearing a PIL, Patna High Court has ordered CBI inquiry for these financial lapses. Opposition parties like RJD, LJP, Congress and Left Parties have called it a big “scam” and have agitated within the assembly and on the streets supporting CBI inquiry and demanding resignation of Nitish Kumar and Sushil Modi. The government, however, have defended it saying that there is no “scam” or “financial irregularity”. It is simply a matter of delay in submission of vouchers for details expenditures made. This is not unique to Bihar and it happens in all the states and the central government. Hearing on government’s plea, the Patna High Court has deferred its order on CBI inquiry till the final judgement is pronounced.

Meanwhile, Bihar government is working on war footing to prepare and submit the detailed bills and vouchers for Rs.11412.54 crore unaccounted treasury withdrawals to Accountant General, Bihar. What is unfortunate is the TV coverage showing how large scale fake bills are being prepared by the Govt Staff in collusion with suppliers, contractors, shopkeepers etc. The comments on this state of affairs by ruling party politicians given to various TV channels are equally shocking. Instead of their commitment to immediately stop the mass scale preparation of fake bills, they simply say — “all the bills and vouchers submitted will be examined by the Accountant General and if anything is found wrong in the bills, government will take action“. Inspite of being shown explicitly by TV channels, the honourable politicians of ruling party have categorily denied anything wrong being done in the preparation of bills and vouchers.

It should be noted that the CAG report on the financial irregularities dates back from 2002 to 2009 spanning both the governing regimes referred to as “Jungle Raj” and “Sushasan”. So, whatever be the quality of governance, the reported financial irregularities should be taken for granted as normal.

Now, look at the published data of unaccounted money drawn from treasuries: 2002-03 (324.20cr), 2003-04 (513.28cr), 2004-05 (864.17cr), 2005-06 (2181.77cr), 2006-07 (3718.28cr) and 2007-08 (3810.84cr). The total for these six financial years comes to Rs.11412.54 crore.

The data clearly shows that year-by-year more-and-more financial irregularities are being committed. Does it not mean that this practice amounts to corruption? If so, then how is the state of Bihar growing economically?

—- to be continued in Part II

Dr P R Prasad, Patna