India struggles to tame its heart of darkness

( Reuter )- Young girls and their mothers huddle under shawls in the central reservation of one of the city's main streets, picking through trash for grimy metal scraps that might earn them 20 rupees (half a dollar) a day.

Buses and auto rickshaws belt out black fumes beside them on the congested, muddy street, dogs pick through huge piles of garbage by the roadside, men urinate at their side.

This is Patna, the capital city of Bihar, India's poorest and one of its slowest growing states economically. On a rainy day, Patna can seem like some post-apocalyptic nightmare, with poverty, misery and ugliness around every corner.

So far, India has failed to trickle the benefits of its economic boom down to Bihar, a failure which could have serious political and economic repercussions. People here feel the rest of the country is simply not paying attention.

"Everyone has discarded Bihar, they think of it as a nightmare," said businessman Rajesh Singh.

"They only talk about the good things in India, they don't even look at Bihar. But this is 10 percent of India's population, you can't just chuck it away."

Bihar is home to around 90 million people and has one-seventh of India's poor, but accounts for just 1.6 percent of its gross domestic product. By any measure, literacy, infant mortality, malnourishment, it sits at or near the bottom in South Asia.

The World Bank put the challenge in its most tactful terms when lending Bihar's government $225 million (115 million pounds) last December.

"If large differences in growth rates between rich and poor states persist, these could eventually translate into vast differences in material well-being," it said. "Bihar lies at the heart of India's inclusive growth agenda."

Shaibal Gupta of the Asian Development Research Institute (ADRI) in Patna divides India into the sunrise states, those which are integrating into the global economy, and the sunset states, like Bihar and its larger neighbor Uttar Pradesh, which are rapidly being left behind.

Bihar is metaphorically and sometimes literally India's heart of darkness -- there is so little power in Bihar, night-time satellite images show it as a massive black hole.

Crumbling roads, corrupt or inept governance and a reputation for unbridled lawlessness only add to the gloom.

" India will face problems if Bihar doesn't develop," Gupta said.

Bihar's economy failed to register any growth in the first half of the 1990s, and has grown at just under four percent since, less than half the current national growth rate and barely one percent in per capita terms.

Chief Minister Nitish Kumar took over two years ago promising a new era, and his reforms won some praise from the World Bank.

Criminal convictions were almost unheard of in the reign of Laloo Prasad Yadav and his wife Rabri Devi. A new system of speedy trials helped secure nearly 10,000 convictions in 2007.

Kidnapping for ransom, Bihar's biggest industry in Laloo's days, has fallen four-fold. In the past two years, more than 200 cases have been registered against corrupt government officials.

But private investment remains tiny, and a new era of fiscal responsibility in New Delhi means the kind of public investment required to transform Bihar is almost out of the question.

" Japan and Korea developed as industrial countries with the full support of the state," said the ADRI's Gupta. "In Bihar the state is very weak."

Rural migrants squat on the grass verges outside government ministers' houses in Patna, under plastic sheets, encampments that they say are "too horrible" when it rains.

Thousands of homes were damaged in last year's floods, and villagers tired of waiting for work under a new government rural employment guarantee scheme have left.

Bihar has a long history of migration dating back to the 19th century, when large numbers of people left as indentured labor to overseas British colonies or to find work on plantations in neighboring Assam or in factories in West Bengal.

Today, as much of India booms, laborers from Bihar are migrating all over the country.

In the cities, the influx spells tension, and sometimes violence. Today nearly 11 percent of New Delhi's population hails from Bihar, another 40 percent from Uttar Pradesh.

Biharis are often looked down upon in Delhi, and blamed for rising crime -- the city's chief minister Sheila Dikshit publicly wonders how to turn back the tide.

In Mumbai, tensions between locals and migrants boiled over this month when a small right-wing Hindu-nationalist party stoked the flames with a campaign against "outsiders."

Taxi drivers, most of whom hail from Bihar or Uttar Pradesh were beaten up, a few vehicles damaged, and a bottle thrown over the wall of the house of Amitabh Bachchan, India's biggest film star, himself from Uttar Pradesh.

But the problem of Bihar -- and by extension the problem of India's widening inequality -- has even broader implications.

The Hindu-nationalist Bharatiya Janata Party was kicked out of office in 2004 in a shock general election result, seen partly as an indictment of its failure to reach the rural poor.

The Congress-led coalition which has succeeded has made little headway with the type of economic reforms its prime minister and finance minister are associated with.

Put simply, the political consensus for further economic reforms which India may need to sustain its boom, will simply not be there if those reforms do not benefit the poor.

Some companies are already suffering shortages of skilled labor that are pushing up wage costs. If India leaves millions of rural poor unskilled and illiterate, its economic upturn could find itself built on a shaky foundation, economists warn.

"If you think Bihar is not your problem, it will be your problem very soon," said businessman Singh.

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