If state budgets were indicators of self-sufficiency, Bihar’s 2025 budget would be a flashing red signal of dependence, stagnation, and missed opportunities. A state once known for its historical grandeur now stands as a textbook case of how governance can fail to transform potential into prosperity. With an expenditure outlay of ₹3.17 lakh crore, the latest budget is not so much a roadmap to growth as it is a desperate attempt to keep the engine running on central government handouts. Bihar, despite two decades of political stability, continues to generate a mere 20% of its own revenue, while Uttar Pradesh, its neighbor, manages 43% through its own resources. This glaring disparity underscores Bihar’s struggle to emerge from the shadows of economic irrelevance.
A State Bankrolled by the Centre
The numbers don’t lie, and in Bihar’s case, they tell a rather uninspiring story. The state’s revenue generation capacity remains abysmally low, making it one of the most financially dependent states in India. According to official estimates, over 80% of Bihar’s budget is funded through central assistance, whether in the form of tax devolution, grants-in-aid, or centrally sponsored schemes. In contrast, Uttar Pradesh—often derided for its own share of governance challenges—has found a way to fund almost half of its budget through state-generated resources, thanks to robust industrial zones, commercial taxation, and improved financial administration.
Bihar, on the other hand, lacks significant industrial infrastructure, suffers from one of the weakest tax collection mechanisms, and has a near-nonexistent private sector. The 2016 prohibition policy further drained the state of an estimated ₹4,500 crore in excise revenue per year, leaving it even more dependent on Delhi’s largesse. While other states have strategically built their financial independence, Bihar remains a perpetual ward of the Centre, with no clear plan to break free.
Two Decades of Political Stability: A Wasted Opportunity
Political continuity is often seen as a blessing for economic growth. States like Gujarat and Tamil Nadu have leveraged governance stability to attract investment and build robust economies. Bihar, under the leadership of Nitish Kumar, has had nearly two decades to script a turnaround. And yet, beyond surface-level improvements in law and order and some marginal development in road connectivity, the state remains trapped in a vicious cycle of underdevelopment.
From 2005 to 2024, Bihar’s governance has been a mixed bag of half-measures. There have been ambitious announcements—turning Patna into a smart city, attracting IT investments, improving health infrastructure—but most of these have remained on paper. The state’s per capita income, at ₹50,555, remains among the lowest in India, far behind even states with similar socio-economic challenges.
Experts argue that while Nitish Kumar’s initial tenure focused on governance reforms, subsequent years have seen little structural change in Bihar’s economy. “The biggest problem is the lack of an industrial ecosystem. Policies were framed, MoUs signed, but ground-level implementation never took off. Investors find Bihar too unpredictable,” says an economist from the Patna-based A N Sinha Institute of Social Studies.
Where Does the 2025 Budget Stand?
A closer look at the Bihar Budget 2025-26 reveals more of the same—populist schemes, heavy reliance on central transfers, and no substantial push for self-sustaining growth. Some key allocations include:
- Infrastructure: The government plans to develop 15 new airports. But in a state where even road networks remain underdeveloped, the feasibility of these projects is questionable.
- Healthcare: A new cancer hospital in Begusarai has been proposed, which is necessary but hardly sufficient given Bihar’s dismal healthcare rankings.
- Women’s Welfare: A host of schemes for women’s empowerment have been announced, but without job creation, these remain palliatives rather than transformative interventions.
Unlike Uttar Pradesh, which aggressively pursues industrial corridors, expressways, and investor summits to create jobs, Bihar’s economic strategy remains vague at best. “If the goal is to sustain a welfare state entirely on central grants, Bihar is succeeding. But if the goal is to become a self-sustaining economy, this budget does nothing to change that,” says an economic analyst from Delhi University.
The Curse of Outmigration
Bihar’s economic struggles are most visible in the mass exodus of its workforce. Each year, millions of Biharis migrate to Maharashtra, Punjab, and southern states in search of jobs. This brain drain, instead of being addressed, is almost institutionalized. The 2025 budget does little to create employment opportunities within Bihar. While agriculture remains a dominant sector, there is no concerted push for agro-industrialization that could add value to local produce.
The numbers paint a dire picture: over 10 lakh people leave Bihar annually in search of work. This migration not only weakens the state’s economic foundation but also leads to severe social consequences, as entire families are split across states, with younger generations growing up away from their homeland.
Can Bihar Ever Catch Up?
For Bihar to shed its image as the least developed state in India, it needs a fundamental shift in economic policy. Relying on central funds while maintaining policies that choke revenue streams (such as prohibition) is a self-defeating approach. States like Odisha and Chhattisgarh, despite similar challenges, have found ways to build independent economies through mining, tourism, and industrial investments. Bihar, too, has abundant resources—water, fertile land, a young workforce—but fails to capitalize on them.
“We need aggressive industrial policies, special economic zones, and a tax regime that encourages entrepreneurship. Without these, Bihar will always be running to the Centre with a begging bowl,” says a senior policy analyst from the Indian Institute of Public Finance.
A State Stuck in Time
Bihar’s 2025 budget is yet another chapter in its long history of economic inertia. Despite decades of political stability, the state has failed to create a self-reliant economy. With 80% of its budget funded by the Centre, Bihar remains a classic example of how policy failures, lack of industrialization, and poor governance can keep a state trapped in perpetual backwardness.
The contrast with Uttar Pradesh is stark—while UP has aggressively expanded its economic base, Bihar continues to rely on central handouts, unwilling or unable to change its trajectory. Unless Bihar fundamentally alters its approach, it risks remaining India’s poorest state—not just in per capita income, but in vision, ambition, and economic independence. And if the 2025 budget is any indication, that change isn’t happening anytime soon.