What can Bihar, with per-capita income 30% of national average, do to shed its low-income status?
Bihar's economy has grown faster than the national economy. Its annual growth rate averaged 7% during the 2000s, and 7.5% during the 2010s (until 2019-20). In comparison, the national economy grew at 6.3% and 6.6% annually during these periods, respectively.
Bihar has also made remarkable progress in closing the gap in education, health and basic amenities. Its gross enrolment ratio (GER), sex ratio at birth, life expectancy, infant mortality, and availability of electricity, drinking water and sanitation have improved significantly to levels only slightly below the national average.
Yet, in terms of per-capita income, it has remained India's poorest state. This is due to a very low level of initial income preceding the growth spurt and a high population growth rate, which inhibited conversion of higher GDP into the acceleration of per-capita income.
At 3 per woman, its fertility rate is the highest among states. Commensurately, its population growth rate (1.5% annually) is nearly 50% higher than the national average (0.9%).
As a result, Bihar's per-capita income has been only about 30% of what an average Indian earns. At less than $800 per-capita income, it is still a low-income economy as per the World Bank's threshold for income groups. Besides the high population growth rate, several other features of Bihar's economy are symptomatic of its low-income status:
Farm-focused: Dependence on agriculture, construction and non-tradable services, all low-productivity sectors, which account for the bulk of its GDP
