Bihar's Joblessness Challenge: NDA Faces Uphill Battle Amidst Stagnant Exports and Low FDI

Bihar's National Democratic Alliance (NDA) government is confronting a substantial hurdle in addressing the state's joblessness, primarily due to its lagging industrial and export sectors. A recent analysis reveals that Bihar's participation in global value chains and its attractiveness to foreign investment remain critically low, severely restricting its capacity to generate employment opportunities.

Exports Lagging Significantly:

Bihar's contribution to India's total merchandise exports stands at a meager 0.5 percent. In FY25, the state exported goods worth $2.04 billion. This starkly contrasts with industrial powerhouses like Gujarat, which exported over $116 billion, and Tamil Nadu, with $52 billion. Gujarat alone accounts for nearly 30 percent of India's total exports.

The export basket itself is narrow and showing signs of weakness. Petroleum products, though comprising 63 percent of Bihar's exports, represent only a small 2.8 percent share of India's total petroleum product exports. Meat and dairy products, the second-largest category, contribute about 10 percent to Bihar's export revenue but only 3 percent nationally. Worryingly, Bihar is among the few states where the value of exports has declined, falling by 11 percent between FY23 and FY25, indicating a shrinking industrial footprint. The state's presence in high-growth sectors like electronics and engineering goods is almost non-existent, with shares of 0.01 percent and 0.06 percent, respectively.

Bleak Investment Scenario:

The picture for Foreign Direct Investment (FDI) is equally discouraging. From October 2019 to June 2025, Bihar attracted a mere $215.9 million in FDI, accounting for just 0.07 percent of India's total inflows. This amount is significantly less than what leading states like Maharashtra (31.2 percent), Karnataka (21 percent), and Gujarat (15.3 percent) received. Even smaller states like Himachal Pradesh and Uttarakhand attracted more FDI during the same period. The recent trend is even more concerning, with Bihar receiving only $0.91 million in investment between June 2024 and June 2025, ranking just above Tripura.

Impact

This news has a moderate impact on the Indian stock market by highlighting regional economic disparities and challenges in a large state. It suggests potential headwinds for businesses operating or looking to invest in Bihar and could influence investor sentiment towards the eastern region of India. The focus on job creation is a key economic indicator relevant to national growth.

Rating: 5/10

Key Terms Explained:

• Global Value Chains (GVCs): These refer to the entire range of activities involved in creating and delivering a product or service, from conception to final use. It includes design, production, marketing, distribution, and customer service, often across multiple countries.
• Foreign Direct Investment (FDI): This is an investment made by a firm or individual in one country into business interests located in another country. It typically involves establishing business operations or acquiring business assets, including an ownership or controlling interest in a foreign company.
• Merchandise Exports: These are the physical goods that a country sells to other countries. They include items like manufactured goods, agricultural products, and raw materials.
• Export Base: This refers to the range and variety of goods and services a country or region exports. A narrow export base means a country relies heavily on a few products, making it vulnerable to market fluctuations.
• Sectoral Clusters: These are geographic concentrations of interconnected companies and institutions in a particular field. They benefit from shared infrastructure, skilled labor pools, and specialized suppliers.