Monday, May 30, 2011

WILL BIHAR FOLLOW MAMTA OR MODI?

The search for new destination by entrepreneurs is leading them to Bihar, an unexpected idea five years ago. Adani to Britania all are looking for the opportunities in the state provided the Nitish government is willing to lay land carpet to them.

Land acquisition is the burning issue. Success of Mamta in West Bengal is seen as the out fall of Singur agitation. So many would like to copy the act of opposition. Unfortunately, national political parties too are trying to push their political agenda via this short cut. Can Nitish take risk and assist Industrialists in setting up the projects and accelerate the growth of one of the most laggard state – Bihar?

Mamta CM via Singur
Nitish and his team understands the risk. Bihar state cabinet in January approved new rules relating to the conversion of agricultural land into non-agricultural, which effectively absolves the government of responsibility in getting land for industry. These rules leave buyers free to purchase agricultural and other land directly from farmers at market rates and use it for industrial purposes, after paying a conversion fee.

But this decision is not making industry happy, because Bihar is not a state where required infrastructure for business is is available all around. Infrastructure is still in its nascent stage in Bihar. New projects are eyeing the locations like Hajipur, Bhagalpur, Muzaffarpur and Gaya where some industrial estates exist. The state is power deficient with a gap of over 2,400 MW, but nearby Chhatisgarh has sufficient excess power to fill the gap.
Ruchi Soya Products

Look at the list of companies eager to exploit the early bird advantage - Godrej Agrovet , Ruchi Soya, JP Associates, Bangur Group and Britannia. Adani group is also willing to participate in power and agro based industry.

Godrej Agrovat is setting up a Rs 70-crore cattle and poultry feed mill at Hajipur, across the Ganga river from Patna. Ruchi Soya is setting up agro-processing centres at Kaimur with an investment of Rs 200 crore. JP Group wants to put up a cement plant in Muzaffarpur district. Biscuit major Britannia, which is setting up a 50,000-tonne bakery at Hajipur.

If the transformation takes place Bihar will emerge as the next growth engine for eastern India. This part of the country has cheap labour and high growth potential. But the road is not so smooth. Political agenda always marches ahead of the development. In this democracy sensualism wins votes, sales the news and gets the headlines.

Narendra Modi is finding difficult to take forward the development agenda in Gujarat, facing tough opposition of NGOs and media. Chndrababu Naidu in Andhra could not take it through for long. Trying to walk on industrialisation road Buddhdev lost in Bengal How tactfully, Nitish can walk on this road would decide the destiny of Bihar.