Complete Notes on “Post-Bifurcation Challenges of Bihar (Post-2000)” for BPSC and Other Competitive Exams in 2025
Economics- 9
Post-Bifurcation Challenges of Bihar (Post-2000)
On 15 November 2000, the State of Jharkhand was carved out of Bihar. This led to several economic and administrative challenges for Bihar, as the newly formed Jharkhand retained most of the industrial and mineral-rich regions, while Bihar was left with a largely agrarian and underdeveloped base. Let us understand the challenges of Bihar after the bifurcation of Bihar in 2000.
1. Loss of Mineral-Rich Areas to Jharkhand
Before Bifurcation:
- Bihar had access to rich mineral resources like coal, iron ore, bauxite, mica, uranium, etc.
- Regions like Dhanbad, Bokaro, Jamshedpur, Ranchi, and Hazaribagh were industrial hubs.
- Major industries: Steel, coal mining, heavy engineering, fertilizer, etc.
Impact of Bifurcation:
- Jharkhand retained ~80% of mineral resources.
- Bihar lost heavy industries and PSU investments based in mineral zones.
- Drastic fall in state GDP, employment avenues, and royalty earnings from mining activities.
Consequences:
- Reduced capacity to attract capital-intensive industries.
- Higher dependence on central transfers for fiscal sustainability.
- Shifted focus to agriculture and small-scale sectors.
2. Fiscal Crisis and Lack of Industrial Base
Fiscal Challenges:
- Loss of industrial tax base (Jharkhand had industries and mining).
- Decline in own tax revenue (OTR) as % of GSDP.
- Rising fiscal deficit and public debt.
- Heavy dependence on Central Assistance and grants-in-aid.
Industrial Backwardness:
- Post-bifurcation Bihar had limited infrastructure: poor roads, erratic power supply, lack of industrial parks.
- Industrial policy reforms initiated (2006, 2011, 2016, 2020), but private investment remained low.
- Land acquisition, law and order, and ease of doing business issues.
- No major industrial clusters emerged post-2000.
Key Steps Taken:
- Bihar Industrial Investment Promotion Policy (2020)
- Development of food processing, leather, textile, handicrafts, and MSME sectors.
- Promotion of startup ecosystem.
3. Migration and Low Urbanisation
High Out-Migration:
- Large-scale migration to Delhi, Maharashtra, Punjab, Gujarat, and southern states for work.
- Migrants mostly belong to rural areas and low-income groups.
- Migration driven by:
- Lack of local employment
- Low wages in agriculture
- Poor industrialization
Types of Migration:
- Seasonal migration
- Semi-permanent migration of youth
- Labour migration (construction, hospitality, security)
Impact:
- Urban slums and poor working conditions for migrants.
- Loss of young productive workforce from the state.
- High remittances help rural households but don’t generate long-term development.
Low Urbanisation:
- Urbanization rate in Bihar (2021): ~11.3% (lowest in India; national average ~35%)
- Reasons:
- Absence of industrial towns and urban centers
- Poor infrastructure in small towns
- Administrative focus remained rural-centric
- Slow growth of cities like Patna, Gaya, Muzaffarpur, Bhagalpur.
Consequences:
- Poor demand for high-end services.
- Strain on urban governance in few urban centers.
- Limited scope for urban-centric employment and innovation.
Summary Table: Post-2000 Challenges
| Area | Challenge |
| Minerals & Industry | Loss of industrial base to Jharkhand |
| Fiscal Health | Revenue loss, fiscal deficit, dependence on Centre |
| Employment | Agrarian overdependence, migration for jobs |
| Urbanization | Lowest in India, absence of urban industrial growth |
| Infrastructure | Power shortage, weak roads, poor logistics |
Objective Questions
1. In which year was Bihar bifurcated to form Jharkhand?
A) 1999
B) 2000
C) 2002
D) 2005
Answer: B
2. Which mineral-rich areas were lost to Jharkhand after bifurcation?
A) Patna and Gaya
B) Bhagalpur and Muzaffarpur
C) Ranchi, Dhanbad, and Bokaro
D) Purnia and Araria
Answer: C
3. Bihar’s urbanization rate is approximately:
A) 35%
B) 22%
C) 11%
D) 41%
Answer: C
4. A major consequence of industrial loss in Bihar post-2000 is:
A) Increase in per capita income
B) Rise in rural literacy
C) Fiscal surplus
D) Rising out-migration
Answer: D
5. Which policy aims to attract private investment in Bihar’s industry?
A) Start-up India
B) PMEGP
C) Bihar Industrial Investment Promotion Policy
D) PM-KISAN
Answer: C
National Parks