Two months after a Bihar caste survey report showed that over a third or 94 lakh of the state’s families earned less than Rs 6,000 a month, Chief Minister Nitish Kumar has announced the Laghu Udyami Yojana under which one member of each family will get Rs 2 lakh over five years. On Tuesday, the Bihar Cabinet sanctioned the first instalment under the scheme, which the party hopes will pay rich dividends in the coming elections.

Under the scheme, the Rs 2 lakh amount will be split into three instalments – the first instalment, amounting to a total outlay of Rs 250 crore for 2022-23, is of Rs 50,000 to be disbursed in February to five lakh families chosen through a computerised randomisation process. The next instalment of Rs 50,000 is set to be disbursed in April to another 20 lakh families amounting to a total outlay of Rs 1,000 crore for 2024-25.

The caste survey report released in November showed that 36.1% of Bihar’s population belongs to Economically Backward Classes (EBCs) and 19.65% to Scheduled Castes – with many now set to benefit from the government scheme, which will be implemented by the state’s industries department. The government said Tuesday that the programme could enable some poor families to engage in forms of self-employment, including small industrial and processing units.

“Rs 2 lakh to a poor family to boost their income is a winning scheme,” a leader of the ruling JD(U) said, admitting that the party’s hope is that after receiving the first instalment of Rs 50,000 before the elections, people would be inclined to go with the same government for getting the remaining Rs 1.5 lakh. “Call it competitive populism or doles, we are seeing it as a scheme that can win us elections.”

A government official said that having already announced the scheme, the state government would escape the model code of conduct. “Plus, the funds are sanctioned in a manner that the government can go ahead with adding extra funds to the token amount of Rs 1,000 crore in 2024-25, with additional fund allocations in the next budget,” the official added.

With the total estimated cost of the scheme touching Rs 50,000 crore per year, including the costs of a housing scheme for 67 lakh families without homes, the government said it had approached the Centre for funding support. “The CM has already made a request to the Centre at the Eastern Zonal Council meet in Patna in December,” a government official said.

A Finance Department official said: “The state has a total annual budget of Rs 2.75 lakh crore. This scheme, if continued for five years as promised, almost equals the annual budget of Bihar. The mainstay of our revenue is commercial tax. While the government may not add any tax in an election year, new taxes can come in subsequent years.”

The official said the government could also cut down budget allocation of some departments to meet the expenses.

BJP Rajya Sabha MP and former deputy CM Sushil Kumar Modi, however, was critical of the scheme. “The government has not taken a holistic look at the caste survey report. Are not 32 lakh EBC families earning less than Rs 10,000 per month poor? And why is there no scheme for over two crore sharecroppers? There is no scheme for Scheduled Castes either,” he said.

BJP national spokesperson Guru Prakash Paswan added, “The scheme is politically motivated and lacks elementary economic calculations. The state government needs Rs 37,000 crore for this scheme but the government has allocated only Rs 1,250 crore. The budget of Bihar in 2023-24 is Rs 2.75 lakh crore while the debt of Bihar is Rs 2.9 lakh crore. The Central government’s PM Garib Kalyan Anna Yojana covers eight crore in Bihar, covering 66% of its population. The Bihar government’s scheme has been announced clearly because of electoral concerns.”

In recent months, the Bihar government has been focusing on employment with several ‘rozgaar melas (job fairs)’ across the state. Last week, Nitish and Deputy CM Tejashwi Prasad Yadav attended a teachers’ employment drive at Patna’s Gandhi Maidan, where 96,823 teachers were hired.

Addressing the event, Nitish said: “It is a matter of great happiness that people from other states such as Delhi, Haryana, UP, Karnataka, Uttarakhand, and Jharkhand are among the newly appointed teachers….We had started the drive in 2006-07, and appointed over 3.68 lakh teachers. We are on course to give jobs to 10 lakh people or even more.”

In November 2023, during the first phase of the teachers’ mass recruitment, the government had appointed 1,20,336 teachers.

The government claimed the overall recruitment of 2.17 lakh people in the Education Department was a “world record” of sorts.