Bihar’s Plea to the 15th Finance Commission: Class Aspect Remains Central Despite the Unanimous Joint Memorandum

A meeting of the visiting 15th Finance Commission chaired by N.K. Singh was held in Patna on 3rd October. This meeting included representatives of various political parties, representatives of various educational institutions, including Chanakya National Law University, Patna University, Asian Development Research Institute (ADRI) and trade bodies such as Bihar Chamber of Commerce and Industries (BCCI), Bihar Industries Association (BIA), Confederation of Indian Industries (CII) and PHD Chamber of Commerce and Industry.

The representatives of the political parties included Neeraj Kumar of the JDU, Nitish Mishra and Mithilesh Tiwary of the BJP, Arun Mishra of the CPI (M), Abdul Bari Siddiqui and Ram Chandra Purbey of the RJD, Ram Babu Kumar from the CPI and Danish Rizwan of the Hindustani Awam Morcha Secular (HAMS).

This meeting was phenomenal because political parties of the state unanimously submitted a charter of demand (prepared by the ADRI). The joint memorandum points out that Bihar has been maintaining high economic growth over the past two decades despite suffering historically from low fiscal capacity vis-à-vis other states. For instance, in terms of per capita income Bihar lags far behind Haryana (the richest state in India). Bihar has not advanced at all in terms of equalization during 2004-05 to 2016-17.

Pointing out that the share of Bihar in the Union taxes (excluding service tax) has been declining from 11.028 per cent in the 12th Finance Commission, to 9.665 per cent in 14th Finance Commission, the politicians, teachers and entrepreneurs asked the 15th Finance Commission to include cess and surcharge in the divisible pool of taxes. They also said the commission should make provision for Rs 1.54 lakh crore for agriculture roadmap–III, which is being implemented between 2017 and 2022. Apart from this the joint memorandum asks centre to take greater burden of the central schemes and also pay the state government for the losses incurred due to the implementation of the GST.

However, when it comes to the implementation of the policies or to put it more clearly the question of distribution of revenues is considered,  a clear demarcation was seen in this meeting between the communist parties and the parties of the ruling class. While the Communist parties argued that the unanimity on the need of looking out for ways and means of greater revenue generation should not sweep aside the crucial question of the distribution of this revenue. If this question is not resolved then it would lead only to siphoning of the revenues in the hands of the exploiting classes. While the Nitish Kumar government is tomtoming about high GDP growth, in the recently released report of the United Nations state performs poorly on almost every Human Development Indicator (HDI).


Bihar is a set case of the unequal development of Indian Capitalism. The formation of Jharkhand took away whatever limited industrial capital that the state had and apart from the Barauni Oil Refinery and few agro industries, the rate of capital accumulation in the state is at abysmal low levels. The failure to undertake any serious land reforms in the state is the biggest factor behind this poorly developed Capitalism in the state. Bihar’s land relations have an imprint of the permanent settlement which even the ‘Zamindari abolition’ couldn’t ‘settle permanently’.

A Land Reforms Commission (LRC) under the chairmanship of D. Bandhyopadhyay was formed in 2005 due to the consistent pressure of the communist parties. Nitish Kumar has followed the sad example of his predecessors (including Lalu Yadav) in not exhibiting the political courage to stand up to the pressure of the feudal elements of the state. Even after 13 years have passed since the formation of this commission and a decade having passed since the LRC submitted its report, the state government has failed to even show the courage to make the report public.

Everyone should be clear, Land reforms are central to any real battle against Bihar’s backwardness. With 90 per cent of the State’s population living in villages and 74 per cent workforce employed in agriculture, Bihar is still predominantly rural or agrarian. Yet agriculture accounts for only 33 per cent of the State’s domestic product and the land-holding pattern remains absolutely skewed. Marginal and small farmers constituting roughly 96.5 per cent of total landowners own about 66 per cent of the total land while medium and large farmers constituting only 3.5 per cent of the landowning community own roughly 33 per cent of the total land. Citing NSSO figures, the LRC report points to a reverse trend of land concentration: between 1992 and 2003, the proportion of large landowners has gone down from 0.2 per cent to 0.1 per cent, yet their share in total land area has increased from 4.44 per cent to 4.63 per cent over the same period!

The proportion of the landless or the near landless among the rural poor is steadily increasing—from 67 per cent in 1993-94 to 75 per cent by the turn of the century. Between 1991 and 2001, outmigration from Bihar increased by over 200 per cent, whereas the average increase for all the Indian States stood at just 21.5 per cent. Landlessness aggravates poverty and forces people to migrate out of the State; landlessness also retards the development of agriculture. Between 1991-92 and 1995-96, agriculture in Bihar grew at the negative rate of (-)2 per cent annum, followed by a very sluggish 0.8 per cent of annual recovery for the next six years (when nationally agriculture grew at three per cent per annum). If despite having “perhaps the most fertile soil in the world and copious water resources” agricultural growth remains so sluggish in Bihar, the LRC finds it “evident that there is a structural bottleneck in Bihar agriculture due to a very queer pattern of land ownership and very extortionate system of tenancy at will which are causing great impediment to accelerated rate of agricultural growth”.

The LRC sees land reforms as the key to reforming the relations of agricultural production and releasing “the forces of production dormant in the economy, which would propel the development of the State”. “As a predominantly agricultural State, Bihar would have no option but to take to effective land reforms to burst asunder the fetters and shackles which had been preventing its many splendoured advancement,” urges the LRC report.

The key recommendations of the LRC are threefold: (i) to do away with the present system of classification of land into six categories with ceilings varying from 15 acres for all kinds of land; (ii) to allot between one acre and 0.66 acre of ceiling surplus land to the lowest quintile of agricultural labourers consisting of 16.68 lakh households each and assignment of at least 10 decimals of land to shelter-less households of 5.48 lakh non-farm rural workers each; (iii) to enact a Bataidari Act to ensure secure and heritable right of cultivation to all tenants/sharecroppers with 60 per cent share of the produce (if the landowner bears the cost of production) or 70 to 75 per cent of the produce (if the bataidar bears the cost of production).


The schism between the ruling class parties and the communist parties should not surprise anyone. As, Arun Mishra, the Central Committee member of the CPI (M) says in a FB post : “ Only the Communists have the political and class will to push a pro-people alternate policy that can ensure Bihar’s development and put an end to its backwardness in any real sense”.




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