Bihar—once considered the intellectual, cultural and spiritual heritage of ancient India—is today counted among the most backward states in the country. The question arises that despite Tamil Nadu and Bihar being economically equal at the time of independence, how did Bihar lag behind so much? The major reason for this was the Freight Equalization Policy implemented in 1952, which broke the economic backbone of a mineral-rich state like Bihar. Under this policy, subsidies were given on transportation of minerals like coal, iron, bauxite so that it would be cheaper to set up industries in any corner of the country. The result was that instead of settling in mineral areas like Bihar or Jharkhand, industries were established in Mumbai, Gujarat and South India. This policy, which lasted till 1993, almost stalled the industrial development of Bihar. While the number of factories in Tamil Nadu increased by 520%, Bihar still has barely 3300 factories. This had a direct impact on employment and living standards — employment in the manufacturing sector here is only 5.7% compared to 17% in Tamil Nadu. Today, when Bihar is at the center of elections, there is a need that its real economic pain should also be discussed in political debates.
