Insight: From darkest India, an enlightened leader

PATNA, India (Reuters) - There's an apocryphal story about Bihar, a sprawling state on the Gangetic plains of eastern India that for decades held the dubious honor of being the most violent, poverty-stricken and corrupt in the land.

A Japanese minister visiting in the 1990s, shocked at the decrepit buildings, the darkness at night even in the centre of town and the crumbling roads, declared that it was all solvable.

"Give me three years," he told a state leader, "and I can turn Bihar into Japan."

"That's nothing," came the laconic reply from his host. "Give me three days and I will turn Japan into Bihar."

Bihar is no longer the butt of jokes, however, not since Nitish Kumar took charge of the ruined state in 2005 and began to turn it around -- winning such respect that he stands a decent chance of one day becoming prime minister of India.

"My first priority was governance, my second priority was governance and my third priority was governance," Chief Minister Kumar told Reuters at his office in the state capital, Patna, a dusty city where property prices have soared to levels paid in far away New Delhi, even as its streets teem with the desperately poor.

"Bihar suffered not because of bad governance but because of a lack of governance."

When India launched reforms to open up its state-stifled economy 20 years ago, many states surged ahead, leaving behind the 3.5 percent "Hindu rate of growth" that had plagued the decades after the country's independence from Britain in 1947, and with it Bihar.

Bihar is still India's most impoverished state: landlocked, not blessed with resources and prone to catastrophic flooding, its annual per-capita income of about $400 is just a third of the national average. Its 104 million overwhelmingly farm-dependent people have India's worst literacy rate and the lowest proportion of households with electricity, and the state scores miserably on the U.N.'s Human Development Index.

It's hard to imagine that in ancient times Bihar was the centre of the flourishing Magadha empires and the region where the Buddha lived and attained enlightenment.

And yet the state's dismally low income level has grown 250 percent since Kumar took the helm, more than double the national average. The growth of its economy has surged into double figures to become India's second-fastest growing state, driven by hefty public spending on roads and buildings and rapid expansion in services such as hotels and restaurants.

RESTORING FAITH

Kumar has done much more than bring growth. Working until midnight most days for the past six years, he has declared war on crime and corruption, introduced an act that gives citizens the right to efficient public services, launched a frenzy of road-building, empowered women and promoted education, offering a free bicycle to every girl that registers in a Grade 9 class.

"Everything had gone to the dogs," said Prakash Jha, one of Bihar's favorite sons, a Bollywood film-maker who has chronicled many of the state's ills, including the once-thriving industry of kidnapping businessmen.

"What Nitish Kumar has been able to do is restore faith in the society of Bihar. We had almost given up, but now you feel you can do things in Bihar," said Jha, who has put his money where his mouth is, spending $12 million on a shopping mall and cinema multiplex in Patna, the state's first.

Kumar is not without detractors: critics say he is poor at delegating, causes bottlenecks by amassing all decision-making in his office and accomplishes far less than he claims.

"This is a government of denting, painting and decorating," said state opposition leader Abdul Bari Siddiqui. "It's all on the surface. Nitish Kumar will hold a ceremony to inaugurate the ditch and then another for the bridge built over it."

Still, the contrast between the hyper-active chief minister of Bihar and the central government in New Delhi could hardly be more stark after months of drift and policy paralysis under Prime Minister Manmohan Singh that have contributed to a slowdown in the country's stellar economic growth.

AN IDEOLOGY OF HUMANISM

A vegetable garden borders the path that leads to the simple Patna bungalow where the chief minister has his office. On a shelf inside his sparsely furnished room, there are several trophies awarded by media groups for "Indian of the Year." There is just one picture on the wall, an image of Mahatma Gandhi, father of independent India.

Kumar's father was a freedom-fighter during British rule, but the son has always been implacably opposed to the Congress party that led the struggle for independence and its Nehru-Gandhi dynasty of leaders, defining himself more by his vision of social justice than any political group.

"His is not an ideology of a political party, it's an ideology of humanism," said M.J. Akbar, one of India's best-known newspaper editors and a former member of parliament for a Bihar constituency.

Meticulously turned out in a creaseless cream tunic, sleeveless Nehru jacket and a grey scarf, 60-year-old Kumar smiles gently as he explains his style of governance: "pro-poor and pro-people."

An engineering graduate, Kumar first got a toehold in state politics and then in New Delhi, where he was a member of parliament and the country's railways minister in a coalition led by the Hindu nationalist Bharatiya Janata Party (BJP).

He won elections in Bihar for his Janata Dal (United) party six years ago and, in a ringing endorsement of his policies, he was voted back to power in 2010.

Kumar's party is still aligned with the BJP, and popular wisdom has is that if their coalition wins the general election in 2014 he could be a strong contender to become prime minister.

Does he dream of leading the country one day?

"Not really," he says diffidently. "Serving my own people gives me satisfaction. I don't have any ambition. I don't have that kind of desire."

Not content to sit in Patna for long, Kumar gets around Bihar's 38 districts, talking to people on streets and in village squares to find out what they want fixed. These audiences are followed by meetings with district officials at which he prods the state's bureaucracy to respond.

"Why is there darkness around the lamp?" he asked at one such meeting in Patna recently, when he was informed that a scheme to provide free meals for schoolchildren was least effective in and around the city. "This is the capital, you all live here, we have to improve this."

Later, when told of plans to hire more land records staff, he instructed officials to make sure there were desks and offices ready for them. "We don't want them loitering in the corridors," he said, his voice restrained but still dominating the room filled with more than 100 bureaucrats.

This direct and no-nonsense delivery belies his apparent bonhomie.

"He is a very confident person who disguises his confidence with a great amount of modesty," said Akbar.

VOTES ARE 'CASTE'

It is sometimes said that in Bihar people "don't cast their votes, they vote for their caste."

That is because, besides being blighted by poverty, its people have long been sharply divided by Hinduism's social hierarchy. In the fairly recent past, upper and lower caste groups kept private armies, and pitched battles between them or massacres by one side or another were common.

Fanning the caste-based politics of Bihar in the 1990s was Lalu Prasad Yadav, now a lawmaker in New Delhi. A charismatic leader from a "backward" caste whose trademark humor can make a budget speech sound like a stand-up routine, Yadav's reign was dubbed the "Jungle Raj" as the rule of law broke down.

Kumar also belongs to a minority "backward" caste and was aligned with Yadav for years before they parted ways. One factor behind his rise has been his resolve to woo voters not by social blocs but on the basis of his government's performance.

"Caste is the reality in the Indian system, but I have proved that caste does not decide the outcome of an election," he said.

Corruption is still endemic despite Kumar's crackdown. He has confiscated the houses of two corrupt officials to turn them into schools, and many others face the same fate, but critics say he is actually too tolerant of the graft around him.

Law and order remains a serious problem, too. In 2010, Bihar ranked second among the country's states for the number of people killed in violent crimes, and police seize tens of thousands of illegal firearms every year.

Still, many feel that Bihar is a safer place since Kumar launched an anti-crime drive. Residents now feel less frightened to drive at night in rural areas, where roadside hold-ups and kidnappings were once routine.

"Five years ago, if we had to travel from Gaya to Patna, we would leave by 3 in the afternoon so we could get to the city before dark," said Navendu Kumar Thakur, who runs a construction company in the state. Gaya is about 100 km (60 miles) south of the state capital. "Now, it doesn't matter if we leave at 9 at night, there's no problem on the road."

Kumar says restoring faith in the police and judiciary was a top priority.

"A reign of terror used to prevail in the society, Bihar used to be in the news for all the wrong reasons," he said. "My first task was to ensure rule of law and trust in the system."

WEAK ECONOMIC BASE

With the improvement in law and order, there has been tentative interest in setting up industries in Bihar, which is 90 percent dependent on agriculture after the mineral-rich region of Jharkhand was hived off into a separate state in 2000.

New industries in Bihar can receive up to 300 percent of capital invested in VAT refunds over 10 years, in addition to a host of other incentives.

"He (Kumar) has shown that grass can grow in a desert," said Prem Kumar Agrawal, part-owner of a biscuit-making plant in the Hajipur industrial park near Patna, where half a dozen factories have opened in the past six months. With 300 workers, his enterprise produces 70-75 tonnes of biscuits per day.

"I give Nitish 9 out of 10 in terms of industrial policy," Agrawal said. "Bihar is now on the map."

But the new factories are only part of the story: abandoned buildings litter the rest of the industrial park, the metal fences on road dividers are rusty and the link to the nearby highway is a potholed and narrow road.

Manufacturing has in fact contributed very little to the surge in the economy's growth: with power cuts common, highways often jammed and graft still thriving, few investors are willing to brave Bihar yet. No surprise, then, that Bihar was ranked bottom last year in a state-by-state survey of economic freedom.

Official figures show that even agriculture, the mainstay of the economy, has contracted for the past six years, suggesting that the Bihar boom has been far from inclusive. Much of the growth has instead been generated by hefty public spending on construction, which means the Bihar boom may not have a solid enough base to be sustainable.

Indeed, Bihar is Exhibit A for the case that India is a two-track economy, with industry-friendly seaboard states rushing ahead as others grow from extremely low bases.

Shaibal Gupta, secretary of the Asian Development Research Institute in Patna, reckons that even if Bihar's growth continues at its current double-digit clip it would take 18 years to catch up with the present-day wealth of Maharashtra, home to the financial capital, Mumbai.

"We can't call it a miracle," Gupta said. "It's some change at an initial level that should have happened 60 years ago."

(Editing by Alex Richardson)