The Rashtriya Janata Dal (RJD) and Janata Dal (United) coalition government in Bihar decided to provide financial aid of Rs 2 lakh each to over 90 lakh poor families in the state. On Tuesday (16th January), during the cabinet meeting, the proposal was approved. Currently, Rs 1250 crore has been granted for the initiative.
The CM Nitish Kumar-led government would provide this benefit based on data from the recently conducted caste census. According to the Bihar government’s caste census, the state has 94 lakh 33 thousand poor families. The Bihar government classifies families earning less than Rs 6000 per month as poor.
The Nitish government plans to provide Rs 2 lakh in financial help to 94 lakh families to ‘launch small businesses’ over the next five years under the ‘Bihar Small Entrepreneur Scheme’. The funds will be distributed to poor families in three installments.
The Bihar government will provide Rs 250 crore in 2023-24 and Rs 1000 crore in 2024-25 for the implementation of this scheme. This move by the Nitish government has come ahead of the Lok Sabha elections and is being interpreted as an effort to lure voters.
However, some are raising concerns regarding the ‘Bihar Small Entrepreneur Scheme. According to the recent census, the Bihar government estimates that approximately 2.7 crore families reside in the state. 94 lakh people, or about one-third of them, are classified as poor.
If the aid of Rs 2 lakh is extended to each of these families, that figure comes to a staggering amount of Rs 1.88 lakh crore. Questions have been raised as to how the Bihar government will raise the whopping amount.
The Bihar government has stated that the scheme will be completed within the next five years. Even if the Bihar government is committed to completing the scheme in five years, it appears to be a long way off. For this, the Bihar government will need to allocate roughly Rs 37000 crore annually which would be a herculean task for the RJD-JDU coalition government.
Bihar’s budget for 2023-24 was Rs 2.62 lakh crore. To allocate Rs 37,000 crore, the budget needs to increase by at least 15%. Bihar does not receive a large amount from tax collection, and this amount cannot be raised through loans either.
Bihar currently has a state debt of approximately Rs 2.90 lakh crore, as stated in Parliament. This constitutes approximately 38% of Bihar’s overall GDP. According to the guidelines for taking out a loan, Bihar’s debt has already reached its ceiling. In such a scenario, the question arises as to how can the Bihar government secure additional loans.
Providing Rs 2 lakh to 90 lakh families appears to be a daunting fiscal undertaking, notwithstanding the scheme’s temporary success on paper and in speeches. Conspicuously, Bihar CM Nitish Kumar seems to be rolling out this scheme only for electoral gain, rather than to alleviate poverty.