Bihar Economic Survey 2022-23
Bihar Economy: An Overview
■Gross State Domestic Product(GSDP):
★•In 2021-22 the Gross State Domestic Product (GSDP) of Bihar, at Constant prices, is estimated to be ₹4,28,065 crore according to its Quick Estimates (Q.E), as against ₹3,85,728 crore according to its Provisional Estimates (P.E) in 2020-21.
★• This implies the GSDP of Bihar grew at 10.98 per cent in 2021-22, at Constant prices. This growth rate was the third highest among all the states in the country, after Andhra Pradesh (11.4 per cent) and Rajasthan (11.04 per cent).
• Though between 2019-20 and 2020-21, there was a negative growth of -3.2 per cent, but during the last five years (2017-18 to 2021-22), the GSDP at Constant prices grew at an annual rate of 4.6 per cent.
★ N.B.: In 2021-22, GDP at Constant prices in India had grown by 8.7 per cent. While the Global growth forecast according to International Monetary Fund (IMF) in its World Economic Outlook was 6.0 per cent. The growth rate of Bihar was 2.28 percentage points higher compared with India and 4.98 percentage points higher than the global growth rate.
(at Current prices)
• In 2021-22 the GSDP, of Bihar at Current prices is estimated to be ₹6,75,448 crore (Q.E), as against ₹587.15 thousand crore (P.E) in 2020-21, implying a growth of 15 per cent.
■ Per Capita GSDP in Bihar:
• In 2021-22, at Constant prices, the Per Capita GSDP in Bihar stood at ₹34,465 and it was 9.3 per cent higher than in 2020-21 which was at 31,522.
★• In 2021-22, at Current prices, the Per Capita GSDP in Bihar stood at ₹54,383 (Q.E) and it was 13.3 per cent higher than in 2020-21 which stood at ₹47,983 (P.E).
■ Net State Domestic Product (NSDP) & Per Capita NSDP
• The estimated NSDP of Bihar at Constant prices in 2021-22 is ₹ 382.27 thousand crore (Q.E), yielding a Per Capita NSDP of ₹ 30,779. The Per Capita NSDP of Bihar was 33.7 per cent of the national average (₹ 91,481). (Note: The Per Capita Income of a State is measured as the Per Capita NSDP)
★• The Per Capita NSDP at Constant prices of Bihar grew at an annual rate of 2.5 per cent between 2017-18 and 2021-22, whereas for India it was 0.1 per cent.
• The estimated NSDP at Current prices in 2021-22 is ₹ 614.43 thousand crore (Q.E), implying a Per Capita NSDP of ₹49,470.
(N.B.: In 2021-22, for India as a whole, the Per capita Net National Income at Current price stood at ₹1,50,007.)
■ Structural Composition of Bihar Economy
Among the three major sectors (Primary, Secondary and Tertiary), the share of each sector in the overall Gross State Value Added (GSVA) in the year 2021-2022 are as follows:
• Primary sector: The share of the primary sector has marginally declined from 21.6 per cent in 2017-18 to 21.2 per cent in 2021-22.
• Secondary sector: The share of the secondary sector has also recorded a small decline from 20.1 per cent in 2017-18 to 18.1 per cent in 2021-22.
• Tertiary sector: The share of the tertiary sector has recorded a noticeable increase from 58.3 per cent in 2017-18 to 60.7 per cent in 2021-22.
■ Sectoral Growth Rate:
The sectoral growth rates of an economy give an idea about the relative performance of the different sectors and the direction of structural changes in the overall economy. Further, it also facilitates the formulation of appropriate policies for all-around economic development.
In 2021-22, the Sectoral Growth Rate in Bihar was as follows:
• Primary sector:
In 2021-22, the primary sector in Bihar grew at 9.6 per cent, registering a higher growth rate compared with the national scenario of 4.1 per cent.
The two most important contributors to growth of GSDP have been 'Livestock' and 'Fishing and Aquaculture', registering growth rates of 9.5 and 6.7 per cent between 2017-18 and 2021-22. Although, 'Mining and Quarrying' has also registered a high growth of rate of 9.0 per cent.
During the last five years (2017-18 to 2021-22), the primary sector in Bihar had grown at 4.5 per cent.
• Secondary sector:
In 2021-22, the secondary sector grew at 3.8 per cent, registering a slower growth rate in Bihar in recent years, compared with India at 10.2 per cent. This pattern is true in both 2020-21 and 2021-22, with the 2019-20 growth rate showing an opposite pattern.
Within the secondary sector, it was EGWUS (Electricity, Gas, Water Supply and Other Utility Services) which was growing at a high rate of 14.5 per cent from 2017-18 to 2021-22.
During the last five years (2017-18 to 2021-22), the secondary sector in Bihar had grown at 1.4 per cent.
• Tertiary sector:
In 2021-22, the tertiary sector grew at 13.3 per cent, registering a higher growth rate compared with India at 8.4 per cent. The growth rate is seen higher in Bihar in two years (2020-21 and 2021-22) and, here again, the pattern is opposite in 2019-20.
(Note: 2019-20 was a typical year due to the COVID-19 pandemic.)
In the tertiary sector, fastest growing sectors were Air Transport (10.5 per cent), Storage (21.3 per cent), Financial Services (12.6 per cent) and Public Administration (9.3 per cent) from 2017-18 to 2021-22.
■ Gross Fixed Capital Formation:
The Gross Fixed Capital Formation (GFCF) in Bihar, as a proportion of GSDP, increased from 1.6 per cent in 2019-20 to 3.0 per cent in 2020-21. In 2020-21 GFCF at current price stood at ₹17,534 crore.
■ Regional Disparity:
Most Prosperous:
1. Patna (Highest Per Capita GDDP of ₹1.15 lakh)2. Begusarai (₹0.45 lakh)3. Munger (0.43 lakh)
Least developed:
1. Sheohar (0.19 lakh)2. Araria (0.20 lakh)3. Sitamarhi (0.21 lakh)
The Per Capita GDDP of Patna is nearly six times the Per Capita GDDP of Sheohar.
The economic disparity across the districts may also be considered through the Consumption of Petroleum Products (Petrol, Diesel and LPG) and Per Capita Small Savings. Based on this, the relatively prosperous and impoverished districts of Bihar are as follows:
■ Inflation:
The annual Inflation Rate for Consumer Price Index (CPI) base 2012, for the year 2021-22 is as follows:
Rural: 9.3%Urban: 12.2%Combined (Rural & Urban): 9.7%
The price rise in September 2022 over September 2021 for rural Bihar has been slower than for India as a whole.
Compared to an inflation rate of 12.0 per cent for rural India, it has been much lower at 9.3 per cent for rural Bihar.
If we consider inflation rate for urban areas, it is the same for Bihar and all-India at 12.2 per cent.
The Combined (rural and urban) estimate for Bihar has been lower at 9.7 per cent, with all-Inida at 12.1 per cent.
It may be noted here that since, in Bihar, close to 90 per cent of the population live in rural areas, it's the CPI for rural areas that's more relevant for the people of Bihar.
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■ Few Definitions:
■ Gross State Domestic Product (GSDP): GSDP is defined as a measure, in monetary terms, of the volume of all final goods and services produced within the boundaries of the State during a given period of time.
■ Gross State Value Added (GSVA): The value of output minus the cost of inputs is the value added by a production unit. GSVA is the sum of value added for all final goods and services.
GSDP is GSVA plus subsidies, minus taxes.
■ Provisional Estimate (PE): The Provisional Estimate is the first full-year (i.e whole financial year) estimate which is based on 12 months of data on all sectoral indicators.
■ Quick Estimate (QE): Quick Estimate which is also called as First Revised Estimate is based on the detailed information budget of the Government, financial statements of public and private corporations, 42 crops, horticulture, animal husbandry and forestry.
■Gross Fixed Capital Formation (GFCF): The Gross Fixed Capital Formation is measured by the total value of a producer's acquisition, less disposal of fixed assets during the accounting period, plus certain additions to the value of non-produced assets, realized by the productive activity of institutional units. Estimates of GFCF are compiled only for the Government sector and departmental commercial undertaking.
■ Per Capita Income (PCI): PCI or average income measures the average income earned per person in a given area in a specified year. It's calculated by dividing the area's total income by its total population.
■ Constant prices are a way of measuring economic change considering a year as base year as in this case, it is 2011-12. It gives the real Gross State Domestic Product (GSDP) growth.
Constant prices adjust for the effects of inflation, while computing GSDP. Use of constant prices enables measurement of the actual change in output, correcting for the effects of inflation.
■ Current prices are a way of measuring economic change considering price prevailing in the same year. It gives the nominal Gross State Domestic Product (GSDP) growth.
■ Factor cost: It is the total cost of all the factors of production (Land, Labour, Capital and Entrepreneur) consumed or used in producing a good or service.
■ Basic Price: It’s the amount receivable by the producer from the purchaser for a unit of a good or service produced as output minus any tax payable, and plus any subsidy receivable, by the producer as a consequence of its production or sale. It excludes any transport charges invoiced separately by the producer.
Basic prices exclude any taxes on products the producer receives from the purchaser and passes on to government but include any subsidies the producer receives from government and uses to lower the prices charged to purchasers.
Factor Cost
+ Production taxes
– Production subsidy
↓
= Basic prices
+ Taxes on products excluding invoiced VAT
- Subsidies on products
↓
= Producers’ prices
+ VAT not deductible by the purchaser
+Separately invoiced transport charges
+Wholesalers’ and retailers’ margins
↓
=Purchasers’ prices (or the price at which that product is being sold in the Market)
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■ Production taxes or subsidies: These are paid or received with relation to production and are independent of the volume of actual production.
Examples of production taxes: Stamp duty, Registration Fee, Land Revenues etc.
Examples of production subsidies: Interest subsidies, Farm subsidies etc.
■ Product taxes or subsidies: These are paid or received on per unit product hence it is dependent on volume of production.
Examples of Product taxes: Indirect taxes like Sales Tax, GST etc
It is designed to measure the changes over time in general level of retail prices of selected goods and services (basket of commodities) that households purchase for the purpose of consumption.
CPI measures price changes by comparing, through time, the cost of a fixed basket of commodities. The basket is based on the expenditures of a target population in a certain reference period. Since the basket contains commodities of unchanging or equivalent quantity and quality, the index reflects only pure price.
Uses:
- as a macroeconomic indicator of inflation.
- as a tool by Government and Central Bank for targeting inflation and monitoring price stability.
- as deflators in the National Accounts.
Given the many uses of CPIs, it is unlikely that one index can perform equally satisfactory in all applications. Therefore, there is a practice of compiling several CPI variants for specific purpose. These are:
- CPI for Industrial Workers (IW) - Base Year 2016;
- CPI for Agricultural Labourers (AL)- Base Year 1986-87
- CPI for Rural Labourers (RL) - Base Year 1986-87;
- CPI (Rural/Urban/combined) - Base Year 2012.
N.B.: The first three are compiled and released by the Labour Bureau in the Ministry of Labour, while the fourth one is released by the National Statistical Office (NSO) in the MoSPI.
The all-India linked CPI for Urban Non-Manual Employees (UNME) has been discontinued w.e.f Jan 2011.
■ Wholesale Price Index (WPI):
It’s a measure to monitor the dynamic movement of prices at the wholesale level.
It comprises all possible transactions at first point of bulk sale in the domestic market.
WPI tracks prices at the factory gate level, but it's only for Goods and does not include Services.
It is compiled and released on monthly basis by the Office of Economic Adviser, Department of Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry.
The base year of All-India WPI is 2011-12 and it uses 697 items in the basket.
Uses:
- Track the supply and demand dynamics in industry, manufacturing and construction.
- Used as a deflator of various nominal macroeconomic variables including GDP.
- Serve as an important determinant, in formulation of trade, fiscal and other economic policies by the Government.
- Also used for the purpose of indexation/escalation clauses in the supply of raw materials, machinery and construction work.
Components of WPI:
- Primary articles (Weight 22.62%).
- Fuel & Power (Weight 13.15%)
- Manufactured Goods (Weight 64.23%)
- WPI Food Index (Weight 24.38%)
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■ References:
• Bihar Economic Survey (2022-23)
• Directorate of Economics and Statistics, Government of Bihar
• Economic Survey of India
• National Statistical Office
• Ministry of Statistics and Programme Implementation, Government of India
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