What the Bihar caste census says about India’s economy

After the Bihar Caste Census report, Chief Minister Nitish Kumar has brought a law to increase caste-based affirmative action quota from 50 to 65%, which will benefit the Other Backward Classes, or OBCs.

We know what this could mean for politics, but what will this mean for Bihar’s economy and the upliftment of its people?

Not much.

Only about two million people — 1.57% of the population — are employees of the Bihar state government. So now the government will hire a few more OBCs and a few less upper castes going forward. This will at best help a few thousand OBC youth in a state whose population according to the same report is 130 million.

The increase in quotas will also help OBC youth with better placements in Bihar’s government colleges — as if this is an issue in a state where only about 6% of the population has finished college.

The Bihar Caste Census report reveals less about caste and more about the economy of Bihar — and India. The gory details of the economic backwardness of one of India’s poorest states must be taken seriously. Bihar’s poverty, as revealed by this survey, should have been a matter of prime-time debate for weeks. Instead, all we care about is politics.

The report reveals every third family is poor, earning less than Rs6,000 ($72) a month. That’s less than Rs50 per person per day for Bihar’s 29.7 million families.

The political focus is mainly on OBCs but the differential in poverty is really with Dalits and tribals. While 25% upper caste families and 33% OBCs are poor, for Dalits and Adivasis the figure is 42%. 63% families earn less than Rs10,000 ($120) a month. Only 4% families (not individuals) earn more than Rs50,000 ($600) per month.

There’s little to divide

If every fourth family even among the privileged upper castes is poor, what does it say about the economy of Bihar and India? You can divide the small number of opportunities as equitably as you like — and no doubt data-driven caste justice is a laudable goal. But we must not lose sight of the bigger picture: there’s very little to divide.

There are very few jobs, a very small amount of resources, and there’s little wealth and even less wealth creation.

The lesson from the Bihar Caste Census that seems to elude Nitish Kumar is that his state needs an economic turnaround. Blaming the central government for not granting funds to the state through a “special status” is a cop-out.

Nitish Kumar has decided to grant a one-time aid of Rs2 lakh each to the poor families who earn less than Rs6,000 a month. This is bad policy. For one, this income is self-reported in a survey. People tend to report a lot less than they earn. Other indicators — such as living in a hut or not having a two-wheeler — are more reliable.

More importantly, it would have been better if Nitish Kumar’s government was giving these families the option of a small loan, or the option of a free resource-generating capital investment. For example, giving people free cattle would help them produce and sell dairy.

Giving women a free sewing machine would help them earn money at home. Giving students a free laptop would help them learn better in a state where the quality of education is pathetic and 98.63% people don’t have a laptop or computer.

Nitish Kumar’s lack of economic vision

The survey finds that almost 68% of the state’s population is dependent — they are either housewives or students. This points to two problems caste reservations and free cash won’t solve. Firstly, women need to work. It is easy to be populist and impress women by imposing prohibition. But the lost revenue is reducing the government’s ability to create economic opportunities within the state that would give women employment and financial freedom.

Secondly, Bihar continues to have a high population growth rate. The youth who can get some education sit and “prepare” for government jobs that are few and far between. Almost 17% of the population works as labourers, and around 5 million work outside the state. Roughly, every sixth family might have a family member working as a migrant outside the state.

Nitish Kumar’s big failure in Bihar has been a lack of economic vision. Running the state for 18 years now, he first focused on improving law and order, then on roads, and then on electricity. Full stop. These looked like big achievements at the time but when you look back at 18 years, and see the Bihar caste census report, you see what a lack of a coherent economic vision does to a state.

The failure to attract industry and manufacturing may be a problem plaguing north India and India as a whole, but even by north Indian standards Nitish Kumar has failed on this front. The easier goals — education and health — have been a non-starter. Better health services will help bring down population growth and better education will help people earn a better living, in Bihar or outside.

Nitish Kumar’s vision is sadly limited to juggling castes and reservations from one election to another.

Bihar shows the way

The report also holds out a lesson for India as a whole: while we chase dreams of becoming a ‘5 trillion dollar economy’, we should remember that 14% families in Bihar live in huts, in a country that was supposed to achieve ‘housing for all’ by 2022.

Much of the big economic data — the size of the economy, the growth figures, the digital transactions — hide how much the growth is actually trickling down to the poorest of the poor. An India that dominates the lists of Asia’s richest billionaires also has a state of 130 million people out of which only 0.44% own cars.

Bihar shows the way, as the old saying goes. The economic data from the Bihar caste census will give politicians and policymakers a lot to think about economic growth, redistribution of wealth, and better-targeting welfare policies. For this reason, we need such detailed censuses across India.