In 2009-10, Bihar presented a downward trend in respect of mining/ quarrying and manufacturing sector, both registered and unregistered, but the construction sector proved to be the key driver in the growth trajectory of the state, whose share increased to almost twice in 2009-10 (11.18 percent) compared to 2004-05 (5.52 percent).
The state's share in the total value of output of non -agro based industries was almost double (0.99 percent) the share of agro-based industries (0.51 percent). However, the share in the total net value added was four times higher in agro-based compared to non-agro based industries. Food products/ beverages / tobacco group contributed over 76 percent of the total net value added by all the factories in operation in Bihar.
On account of lack of well developed infrastructural facilities and flight of capital, the state has only 4 units under food and beverages group in the large scale sector, one each in the districts of Banka, Begusarai, East Champaran and Rohtas. Besides, there are four more large scale units under private sector which include ITC, KCC and Gangotri Iron. Under the central sector, there are 6 large units, of which 4 are NTPC units, one is Indian Oil Corporation and one Ordinance Factory.
Out of a total number of 71,435 enterprises surveyed in Bihar, around 73 percent or 52,188 units were working. Around 69 percent of these enterprises were manufacturing units and 31 percent services units. The per unit employment was higher in manufacturing sector (3.64 persons) compared to the services (1.92 persons).
In the MSME Sector, the annual growth rate in total number of units during the last decade varied between 2.88 percent in 2009-10 to 5.27 percent in 2001-02. However, the annual increase in case of artisan units was in the range of 5 to 7 percent, though no unit was reportedly established in 2008-09, 2009-10 and 2010-11 (upto October). The SSI sector grew much slower, ranging between 1.42 percent in 2006-07 to 2.93 percent in the following year. During the decade, investment increased by over 185 percent and employment by about 38 percent.
Out of 9 divisions in the state, while Patna division showed higher concentration (22
percent) of MSME units, the divisions of Koshi and Bhagalpur reported only around 3 percent each. A similar trend was noticeable in different sub-sectors of MSME, except Tirhut, which reported higher proportion of establishments of small units (47 percent). Of the 9 divisions, small scale units were not established during the year (2010-11, upto October 2010) in as many as 5 divisions, viz., Bhagalpur, Purnea, Magadh, Koshi and Saran.
Of the total MSME units, around 81 percent were owned by general category, 13 percent by SC/ST and remaining 6 percent by minority community entrepreneurs. The investment and employment generation too were observed to be relatively less in the micro units started by SC/ST and minority communities, compared to those started by general category entrepreneurs. All the units under small and medium scale were reportedly owned by general categories entrepreneurs.
Bihar is fast becoming a large and growing market for food products. Of the total private consumer expenditure in the state, around 65 percent account for the expenditure on food only. According to a rough estimate, the present food market in Bihar is worth around Rs. 40,000 crore, of which processed food market, including beverages, is around Rs. 18,000 crore. Based on the estimated all India food consumption growth rate of 7 percent, the food consumption market of Bihar would be around Rs. 83,000 crore in the year 2015.
Agro-based industries already enjoy the place of prominence in the state's industrial scenario. As per the ASI report 2007-08, the agro-based industries accounted for 88 percent of the total value added of Rs. 1159 crore of all industrial units. If the remaining small and micro units are included, the share of agro-based industries will be even larger, though its substantial potential still remains unutilized. Obviously, the state does not enjoy resource or input advantage for all agro-based industries, and therefore, the share of Bihar to all India is far less than what is economically feasible.
With around 2 lakh tonnes of litchi production, Bihar accounts for almost 75 percent of national production. The brand Muzaffarpur Litchi commands a special respect in the fresh as well as processed fruit segments. Similarly, about 14 lakh tonnes of banana, produced in about 31 thousand hectares of land, offers significant opportunities for both fresh and processed food market. Processed banana is picking up fast with the South Indian market and new markets are emerging in the Middle East. Banana fibre also has a scope as one of the diversified textile fibres. This provides an added advantage of setting up fibre extraction and yarning units in the state.
In Bihar, the loss in cereals is estimated at Rs. 4500 crore. The food processing industries can minimize the losses through establishment of more units and marketing channels. Most of the food processing units are in unorganized sector and has very few success stories. However, the state has a large potential for milling and processing of food grains like rice, wheat, maize and pulses.
Presently, there remains only 28 sugar mills, of which 18 mills under public sector are closed. Of the remaining 10 mills under private sector, Bagaha and Motihari are almost sick and closed. Of the 18 closed public sector mills, 15 are under Bihar State Sugar Corporation and 3 under central PSUs. However, some positive steps have been taken by the state government in recent years for their revival.
According to a rough estimate, on an average, daily three truck loads of raw material consisting of 7000 to 8000 pieces of goat skins and 2000-3000 of cow hides are transported from Muzaffarpur to different destinations. Some of the well known Tamilnadu tanners have their own collection agents for hides and skins in all important markets in Bihar. The local tanning industries are confined to a few working tanneries in Muzaffarpur and BATA tannery at Mokamaghat. As a result, most of the raw materials find their ways to Kolkata, Kanpur, Chennai and other places.
The handloom sector in the state has seen a gradual decline over time and today the sector remains largely a story of impoverished weavers. Only around 10,850 handlooms are operating under 1090 weavers cooperative societies. Out of 38 districts in the state, the handloom units are concentrated in 14 districts, important among them being Patna, Gaya, Madhubani, Siwan, Bhagalpur and Nalanda. The study conducted by IL & FS reiterates that most of the weavers were still operating on a very small scale and do not have a commercially sustainable size of operation. There is a necessity to federate the weavers and bring their operations to a viable scale.
According to Fourth Census of MSME sector in 2006-07, there were slightly more than 21 percent closed units and around 6 percent non-traceable. Most of the units were operational on a low profit range in spite of easy access to labour and raw materials. It might be due to the lack of market opportunity or absence of infrastructural support to transport the goods to right markets. Of the closed units, 40.6 percent industrial units are in rural areas, and 59.4 percent of the units are in urban areas. Patna, Gaya, Aurangabad, Sitamarhi, Begusarai and Jehanabad districts had comparatively higher number of units closed.
The support institutions of Bihar, instead of becoming assets, are themselves becoming liabilities. The Bihar State Financial Corporation (BSFC) and Bihar State Credit and Investment Corporation (BICICO), who were responsible to provide financial support to industries, are sick primarily due to poor recovery and are waiting for revival.
Upto October, 2010, State Investment Promotion Board (SIPB) approved as many as 398 project proposals with proposed investment of Rs. 1.81 lakh crore and employment potential of 1.55 lakh. As many as 180 of the proposals are for food processing and 44 for power plants. Of the total 398 proposals, 45 have started working, 104 are at an advanced stage and 249 at different stages of implementation, involving an investment of Rs. 1102.5 crore so far.
The Bihar government has accorded the status of industry to the tourism sector. There are two types of activities going on in the Department of Tourism, viz., developmental and commercial. While commercial activities are being undertaken by the Bihar State Tourism Development Corporation, the developmental activities are executed by different agencies like Central Public Works Department, Bihar State Tourism Development Corporation, Building Construction Department, Water Resources Department and the concerned District Magistrates.
The approved plan budget of the Tourism Department has increased from Rs. 7.43 crore in 2005-06 to Rs. 18.30 crore in 2006-07 and Rs. 30.44 crore in 2010-11. The quantum jump in the plan outlay over the years is indicative of the state government's concern for improving tourism in the state.
The endeavors made by the state government in capacity addition in key infrastructure sectors like power and roads would yield the results and it is expected that, with the completion of large number of projects, the situation will ease and targets fulfilled. On one hand, growth in infrastructure removes the supply side constraints in production and, on the other, it stimulates additional domestic demand.
