Bleak business: The Patliputra industrial area

The investor confidence that Nitish Kumar’s ascension as chief minister in 2005 generated in this once-forbidden state seems to be sliding downwards since last year’s political turmoil.

Nitish’s relentless efforts to woo investors, after improving the state’s law and order condition, paid off in the form of investors. But all that changed after the JDU broke off from the BJP, faced a humiliating defeat in the Lok Sabha polls, Nitish stepped down as chief minister and, most importantly, Nitish found an ally in Lalu Prasad. All these factors pulled the industries sector to a new low.

The past year has not been good for the industry vis-a-vis investments, especially from outside the state.

If state-based industrialists are to be believed, investments from outside the state was always weak, but the current political scenario has hit it further. Moreover, some perennial problems have remained and the state government’s efforts to solve them have proved futile.

‘Political’ problem

Land availability, a basic requirement for setting up industry, has suddenly become secondary. Before beginning search for land or planning a project in any state, investors first want to know about the state, its political scenario and whether it is safe to do business in.

“It can be called the case of the creator slowly turning into a destroyer when it comes to the industries sector. Investments were never skyrocketing, but Nitish, as Bihar chief minister, had succeeded in gaining the confidence of, at least, local investor,” said Sameer Kumar Rai, an entrepreneur in the food-processing sector.

Satyajeet Kumar Singh, a prominent businessman in Bihar, was more elaborate. “The last year was a perfect example of the glorious fall for the sector. The first blow to investors came last year when Nitish broke the alliance with the BJP. Both these factors have suddenly disappeared. But the worst came when after the JDU’s loss in the elections, Nitish, who had been the face of change in Bihar, resigned. The JDU joining hands with the RJD for by-polls in 10 constituencies this year was nothing less than a nightmare for many. That is when investors realised that the eight-year-old stable government was in tatters,” Singh said.

‘New’ investments

Last year, when cracks in the JDU-BJP alliance were still emerging, then chief minister Nitish, had, during a meeting with Bihar-based bankers, accepted for the first time that the state was not getting big-ticket investments. He had, however, cloaked it by saying Bihar was apt for small investments only.

“This was the first time the state government actually went on record to say so. And now current chief minister Jitan Ram Manjhi, too, has said it a few times,” said an industrialist on condition of anonymity.

If one talks of investments from outside Bihar in the past year, the industrialist further said, only the Hero Cycles manufacturing plant comes to mind. But then the company had announced the project a year ago and had invested Rs 45 crore. The unit came into operation this August. Two projects that got state government approval this year include the UB Group’s brewery at Naubatpur on the outskirts of Patna and the ITC’s dairy project. Together, these would garner investments worth Rs 320 crore, says the state government.

Everything on paper

The state government has been trying to fix the land availability problem for three years now, failingly.

After initiatives like Exit Policy and revival of Aao Bihar failed this year, the state gave its nod for creation of Private Industrial Areas.

The Exit Policy was a request to those having land with BIADA (Bihar Industries Area Development Authority) but not using them to return the plots and Aao Bihar asked landowners to come to the forefront and give land for industrial use.

“The creation of Private Industrial Area (PIA) was a good step, but it is marred by flaws. It has been almost 11 months since three private industrial areas were formed, but they are still waiting for investors,” said Amarjeet Kumar Singh, another state-based industrialist.

Also, according to Amarjeet, the state government had, way back in January last year, said an agency would be appointed for each industrial area to plan out things and attract investors. These agencies were appointed only recently, after a delay of over six months.

Future uncertain

Chief minister Jitan Ram Manjhi chaired the first Udyami Cabinet, which he had announced in July this year, earlier this month. “They talked about being strict towards SIPB approvals and delisted 33 projects which had been approved but did not come to the ground.

The total cost of these projects, coal-based power plants, is worth Rs, 2,25,300 crore. The state government has also talked about delisting 50 proposals for setting up solar power plants. The proposed investment was Rs. 17,373 crore.

As per records with the department, 1,881 projects worth around Rs 2.84 lakh crore had been approved by SIPB. If one subtracts the proposed investment in coal-based power plants (Rs. 2,25,300), the investment stands at around Rs 60,000 crore, a very dismal figure.

This shows that the state is not witnessing investments in the real sense of the term,” a member of the Bihar Chamber of Commerce and Industries, said on condition of anonymity.