India struggles to tame its heart of darkness

PATNA, India (Reuters) - Young girls and their mothershuddle under shawls in the central reservation of one of thecity's main streets, picking through trash for grimy metalscraps that might earn them 20 rupees (half a dollar) a day.

Buses and autorickshaws belt out black fumes beside them onthe congested, muddy street, dogs pick through huge piles ofgarbage by the roadside, men urinate at their side.

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

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

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

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

Bihar is home to around 90 million people and hasone-seventh of India's poor, but accounts for just 1.6 percentof its gross domestic product. By any measure, literacy, infantmortality, malnourishment, it sits at or near the bottom inSouth Asia.

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

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

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

Bihar is metaphorically and sometimes literally India'sheart 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 areputation for unbridled lawlessness only add to the gloom.

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

A SMALL STEP IN THE RIGHT DIRECTION

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

Chief Minister Nitish Kumar took over two years agopromising a new era, and his reforms won some praise from theWorld Bank.

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

Kidnapping for ransom, Bihar's biggest industry in Laloo'sdays, has fallen four-fold. In the past two years, more than200 cases have been registered against corrupt governmentofficials.

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

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

MIGRATION SPELLS TROUBLE

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

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

Bihar has a long history of migration dating back to the19th century, when large numbers of people left as indenturedlabour to overseas British colonies or to find work onplantations in neighbouring Assam or in factories in WestBengal.

Today, as much of India booms, labourers from Bihar aremigrating all over the country.

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

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

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

Taxi drivers, most of whom hail from Bihar or Uttar Pradeshwere beaten up, a few vehicles damaged, and a bottle thrownover the wall of the house of Amitabh Bachchan, India's biggestfilm star, himself from Uttar Pradesh.

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

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

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

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

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

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

(Editing by Alistair Scrutton and Megan Goldin)

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