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Jharkhand: Challenges of Inclusive Development

Jharkhand: Addressing the Challenges of Inclusive Development

Jharkhand: Addressing the Challenges of Inclusive Development

Report Summary:
(June 12, 2007) Jharkhand has immense potential to tap its mineral and forest wealth in a people and environment friendly manner for faster and inclusive growth.

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- Mining – coal and iron ore - contributes nearly 15% of GSDP – six times the all-India level.
- Impressive progress has been made in education: 95% of 6 to 14 year olds are now in school.
- However, 59% of children are malnourished - one of the highest levels in India.
- Only 36% of villages have access to all weather roads – 57% is the all India average.
- A mere 11% of rural households have access to electricity – the all India average is 48%.

Executive Summary
The new state of Jharkhand, carved out of southern Bihar in 2000, has immense potential to tap its substantial mineral and forest wealth in a people and environment friendly manner. It can reduce its high degree of income inequality and high incidence of rural poverty through faster and more inclusive growth. This can be done by achieving a balance between growth in mining and agriculture. However, the state must put its fiscal house in order – its fiscal deficit reached 10.1% of GSDP in 2005/06 -and address its administrative constraints. It must also build infrastructure, particularly rural infrastructure, and address the weakness of its institutions as these translate into poor services that bypass a large segment of poor people. Crucially, popularly elected, and administratively and fiscally empowered Panchayati Raj Institutions - vital for inclusive development – are missing in the state.
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Chapter 1: A New State: Emergence, Features and Challenges
Weak institutional capacity, poor infrastructural development and lack of rural opportunities are major constraints for Jharkhand’s inclusive growth. Despite this, there are signs of hope. Poverty in the state has declined by an average of two percentage points a year between 1994 and 2002. Equally impressive progress has been made in primary education and some key health indicators. However, challenges are aplenty and the state needs to put its fiscal house in order; address administrative constraints; and manage its large endowment of forests and mines.
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Chapter 2: Building Institutions and Improving Performance
Improving the institutional capacity of the state will help in reducing “transaction costs”, which in turn will increase productivity as well as the rate of investment because of its favorable effects on investment climate. Moreover, in the long run, creation of norms and values, efficiency-culture, competitive democratic polity, and strengthening the state finances and administrative systems, improving infrastructural investments and managing its minerals and environment effectively will help Jharkhand achieve inclusive and sustainable growth.
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Chapter 3: Improving Rural Opportunities for Shared Growth
Providing opportunities to rural people is key. Land distribution is extremely uneven - almost half (41%) the land is owned by the top 8% of the population. Agriculture is overwhelmingly rainfed - only 10% of farmland is irrigated, one of the lowest in India. A mere 3% of villages have NGOs that support microfinance making access to credit difficult, and gender inequality is high. More irrigation, roads, power, and credit are needed to raise rural incomes. In tribal upland regions, community-led water harvesting techniques can increase food security and make a considerable difference. Across the state, improved farm practices and the adoption of better technology can raise farm productivity and reduce migration from the area. This is particularly relevant in Jharkhand where almost 2/3 of the rural population works as wage labor in the construction and transport industries at very low wages, in sharp contrast to neighboring West Bengal and Bihar, as well as Bangladesh. Extending access to secondary and post-secondary education can also help the people to build their human capital to earn better wages.
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Chapter 4: Strategies for Growth: Assessment of Options
One view contends that the development of the mining sector can unleash a new decade of development in Jharkhand. A counter view suggests that in the absence of strong governance mechanisms, the risks associated with the unregulated development of the mining sector are quite high. The study suggests a balance between the two. It says that in the short to medium term, the agriculture sector will need to be continuously addressed. Mining and broad based industrial growth can lead to progress in the medium to long term, as efforts to force their development can backfire without first putting institutional safeguards in place, especially in Jharkhand's socially and spatially polarized economy. The state's experience over the past fifty years shows that in spite of the significant increase in mineral extraction, its per capita income has remained one of the lowest in the country, with areas affected by mining facing acute poverty and environmental problems. Therefore, raising crop yields, increasing irrigation, bringing more land under cultivation, tapping forest resources, creating employment in the non-farm sector through the development of SMEs, and broadening the manufacturing base into labor-intensive sectors beyond mineral-based industries, seem to be the way forward.
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Chapter 5: Promoting Social Inclusiveness for Effective Citizenship
Social inclusiveness is particularly relevant in a society divided by caste, religion and ethnicity, and where tribal people constitute a significant minority. Improving the population’s health, nutrition, and education can accelerate growth. To its credit, Jharkhand has made considerable progress in health indicators, despite adverse initial health conditions including high rates of child malnutrition and a significant incidence of TB and malaria. Nevertheless, stark disparities persist and much more needs to be done. In education too, while there has been an impressive increase in enrollment, with greater gender and social equity, attendance is poor, large numbers remain out of school, and the state has among the poorest learning scores in the country. The study suggests broad-based social sector investments as well as civic and community empowerment. Public-private-NGO partnerships need to be further developed to ensure efficient service delivery. An important step would be to bridge the current gap between “legal” and “customary” rights by explicitly recognizing tribal institutions in Jharkhand as an expression of direct democracy. Finally, political commitment is needed to “make development happen” in the shortest possible time.
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